WorldTraveler
Corn Field
- Dec 5, 2003
- 21,709
- 10,662
- Banned
- #106
I see the speculation continues and will at least until AA emerges and then longer....
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It is indeed very possible for any existing airline to buy AMR and obtain approval to do so with at least a certain amount of divestitures - but what is divested and what is kept makes the difference in how any potential merger could work. EVERY combination of AA with an existing network carrier will present antitrust issues that have to be addressed but all are possible.
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It is clear that DL's interest - involves the Latin system, LHR, and probably DFW for which DL still has a hole in its network in the southwest that hasn't been filled since it pulled down its own DFW hub. Given that those 3 entities plus ORD as a large focus operation and some of the LGA/JFK slots (DL is still below 50% of the slots at LGA and less than that at JFK so they do have some room to grow compared with UA at EWR and US at DCA), form 75% or more of the size of AA today, a merger or very large asset acquisition is possible. ORD-Asia and Europe is a valuable market to DL as well.
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But speculation about DL and AA as merger partners misses the fact that DL can obtain alot of strategic value simply by letting the creditors know that DL is interested and remains a very credible bidder and has a very strong track record in making mergers and acquisitions work. TPG is no slouch but let's not kid ourselves that they are interested in getting a return on their investment and will have to work with AA as it exists when it is acquired.
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DL's growth in NYC including to/from MIA/DFW and in Latin America (there will be further DL growth in the region) make it clear that AA will have to deal with DL as a strong and healthy competitor that will continue to chase AA's top revenue markets.
But a DL bid for AA - even if it never materializes has strategic value for DL with regard to other partners including VS, AS, WS and in Latin America. DL could win as much by obtaining closer cooperation from those partners - in some cases at AA's expense - than by acquiring AA.
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UA is not going to sit by silently in all of this and could also be quite interested in Latin America.
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AA will continue to be vulnerable to competitors as a result of being the only carrier that is restructuring at this time. The notion that AA will come out as it is now is not realistic. The rest of the industry will seek to gain what it needs to grow - and AA still has alot of premium revenue that is of interest to others... while AA will have to shrink in order to return to profitability. We'll know how much more in the next couple weeks.
Either way, AA's ability to defend itself as a smaller airline amidst strong competitors is even more compromised as it moves through the reorg process.
.
It is indeed very possible for any existing airline to buy AMR and obtain approval to do so with at least a certain amount of divestitures - but what is divested and what is kept makes the difference in how any potential merger could work. EVERY combination of AA with an existing network carrier will present antitrust issues that have to be addressed but all are possible.
.
It is clear that DL's interest - involves the Latin system, LHR, and probably DFW for which DL still has a hole in its network in the southwest that hasn't been filled since it pulled down its own DFW hub. Given that those 3 entities plus ORD as a large focus operation and some of the LGA/JFK slots (DL is still below 50% of the slots at LGA and less than that at JFK so they do have some room to grow compared with UA at EWR and US at DCA), form 75% or more of the size of AA today, a merger or very large asset acquisition is possible. ORD-Asia and Europe is a valuable market to DL as well.
.
But speculation about DL and AA as merger partners misses the fact that DL can obtain alot of strategic value simply by letting the creditors know that DL is interested and remains a very credible bidder and has a very strong track record in making mergers and acquisitions work. TPG is no slouch but let's not kid ourselves that they are interested in getting a return on their investment and will have to work with AA as it exists when it is acquired.
.
DL's growth in NYC including to/from MIA/DFW and in Latin America (there will be further DL growth in the region) make it clear that AA will have to deal with DL as a strong and healthy competitor that will continue to chase AA's top revenue markets.
But a DL bid for AA - even if it never materializes has strategic value for DL with regard to other partners including VS, AS, WS and in Latin America. DL could win as much by obtaining closer cooperation from those partners - in some cases at AA's expense - than by acquiring AA.
.
UA is not going to sit by silently in all of this and could also be quite interested in Latin America.
.
AA will continue to be vulnerable to competitors as a result of being the only carrier that is restructuring at this time. The notion that AA will come out as it is now is not realistic. The rest of the industry will seek to gain what it needs to grow - and AA still has alot of premium revenue that is of interest to others... while AA will have to shrink in order to return to profitability. We'll know how much more in the next couple weeks.
Either way, AA's ability to defend itself as a smaller airline amidst strong competitors is even more compromised as it moves through the reorg process.
