WSJ blog says: How Bad Does It Have To Get Before American Airlines Does A Deal?

Given the history of downsizing/rightsizing in the U.S., how many times have you seen management types lose their jobs in these activities? Usually, they let go worker bees, move the excess management into those job titles (whether or not they know anything about the job to be done), and all done without a reduction in salary. Where is the savings?
 
FWAAA said:
http://blogs.wsj.com/deals/2008/05/21/how-...og?mod=yahoo_hs

I agree with the author. UAL closed down 29.5% today with a market cap under a billion dollars. Time to make a move. Probably have to divest some slots, etc. but still well worth it. Lotsa management could be let go and other duplicative areas could be downsized.
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I agree with the article also, but there's a problem that wasn't addressed - UAL is more top-heavy than American and we both know the last ones to hit the street are managment. American lays off mechanics, shuffles the deck and makes new positions for its management types. I can't imagine any different deal being cut for UAL's people of the ozone layer.
 
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Gentlemen, details, details. :D

AA, get in the sack with someone before all the pretty ones are taken. It's getting late, the bar is clearing out, and last call will sound soon. And ya don't want to be stuck with either of those two ugly dogs over there in that booth, do you? B)
 
FWAAA said:
Gentlemen, details, details. :D

AA, get in the sack with someone before all the pretty ones are taken. It's getting late, the bar is clearing out, and last call will sound soon. And ya don't want to be stuck with either of those two ugly dogs over there in that booth, do you? B)
Click to expand...

That's another story for another time.
 
FWAAA said:
I agree with the author. UAL closed down 29.5% today with a market cap under a billion dollars. Time to make a move. Probably have to divest some slots, etc. but still well worth it. Lotsa management could be let go and other duplicative areas could be downsized.
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Forget about UA. If doing a deal to survive high oil prices is the solution (which I don't think it is), then why not do a deal with BA? I'm thinking about AA and BA forming some sort of a holding company (British American Airways???) which would have the 25% control of AA and 25% control of BA, maybe keep AAdvantage, dump Eagle, etc. Is something like this possible so that both US and EU foreign ownership restrictions of airlines would be met?

The other option is to just sit back and wait for natural selection (high oil prices) to take the weaklings out of the industry, then expand/purchase the desireable assets of the bankrupt airline.

I know that comparing SW to AA is not an apples-to-apples comparison, but you don't see SW being in a hurry to merge or buy any of its LCC competitors. AA should follow SW's example. Isn't better to be a lean & healthy #2 or #3 profitable company rather than be the largest but weak?
 
This is an easy solution, and it gets tossed around in every pack of mergers.

Alaska.

Figure out the future capacity of the combined entity and ditch the MD80s/AB6 as necessary.

Merge.

Reallocate capacity as necessary. (Combining LAX ops would definitely help). 738s that match and a handful of 73Gs, 739s and 734s. Get a bunch of Q400s, the ideal commuter airliner for this era.

I'm sure there would be union problems of some sort of course. Alaska's pilots aren't happy right now.

Or keep those "alliance" (secretly splitting up OALs when they file for bankruptcy) discussions open with CO and split up whoever files CH11 first.
 
whlinder said:
This is an easy solution, and it gets tossed around in every pack of mergers.

Alaska.

Reallocate capacity as necessary. (Combining LAX ops would definitely help). 738s that match and a handful of 73Gs, 739s and 734s. Get a bunch of Q400s, the ideal commuter airliner for this era.

I'm sure there would be union problems of some sort of course. Alaska's pilots aren't happy right now.
Click to expand...
Here's the problem with going for AS, AA's cost structure is way too high to make a go of it for another west coast airline. Buying AS in the end only inherits the state of AS operation, Horizon's fleet, a SEA focus city, and some a/c. A good chunk of AS' operation would end up getting wiped out. It would be another AirCal / RenoAir situation.
 
flyJOE said:
Here's the problem with going for AS, AA's cost structure is way too high to make a go of it for another west coast airline. Buying AS in the end only inherits the state of AS operation, Horizon's fleet, a SEA focus city, and some a/c. A good chunk of AS' operation would end up getting wiped out. It would be another AirCal / RenoAir situation.
Click to expand...

No doubt there would have to be some sort of B-Scales set up for former Alaska Employees if such a merger were to happen.
 
Comments like "AA will be the first to go into bankrupcty" and "it's obvious AA should merge with AS" are absolutely idiotic.

Whether or not AA goes into bankruptcy is anybody's guess. Personally, I think they should, because they can dump pilot pensions, lower wages, etc. and do other things that are necessary and have an easier time doing it. However, they are in far, far, far better shape than US or UA are.

AS cost structure, as already pointed out, is too low. AA and AS can't work together.
 
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