JetBlue playing hard to get?

[WorldTraveler]

Apparently even Parker realizes that US acquiring AA has a questionable future - he wants the US pilots to drop their change of control language so it won't be a factor if AA acquires US. For those not familiar with the language, it provides a rather large increase in pay if US is acquired and is why the US/HP merger was considered a reverse acquisition.

Jim

and the response to said request is.....?

why would US pilots want to entertain a merger in which they couldn't participate in the fruits?

 

[wings396]

Jim, is this a recent request or someting from a while back? The last time that I watched one of his meetings, he said that no deal would be structured to trigger coc language.

 

[BoeingBoy]

why would US pilots want to entertain a merger in which they couldn't participate in the fruits?

Possibly because the pay with a merger would be within a dollar of what it would be under the CoC language so other improvements would be pluses???

Jim, is this a recent request or someting from a while back? The last time that I watched one of his meetings, he said that no deal would be structured to trigger coc language.

Today (Tuesday) - the BPR just unveiled the MOU in an open meeting today and the vote on whether to release it to the pilots for ratificatiion will be taken tomorrow (Wednesday). That's why I said that Parker's hope that the AA union support would push the acquisition over the top may be changing - he's talking about AA acquiring US.

Jim

 

[FWAAA]

The way around this is to figure out how many total assets you need in each city and then reject any surplus from the AA end of things. Once you are merged, you are one carrier anyway and you combine what you have left in the same location. For example, suppose AA and US have a combined 20 gates in a particular city and it is determined you only need to keep 15. You reject 5 gates from the AA side and keep all the US gates. Once merged, you will move all your operations to one terminal anyway and the gate space will be combined as one.

I'm well aware of the concept. It's one thing to write the above in the abstract, but there are very few real world examples. In fact, I can't find one.

Could you list three cities where US + AA control a combined 20 gates that are not NYC, ORD, LAX, DFW, MIA, WAS, PHL, PHX or CLT?

And even if you could list three (or even one), as eolesen pointed out, if the goal is for AA+US to grow and compete against UA and DL, then in which cities would the combined airline reduce the 20 gates to just 15?

If/when US and AA combine, the airline may have too many gates at PHX, CLT and PHL (yes, the AA gates would be surplus). And the combined airline would have surplus gates at LAX, DFW, ORD, MIA and JFK (all would be current US gates, and there's nothing that can be done with them short of a Ch 11 filing by US).

The combined airline wouldn't give up gates at LGA or DCA voluntarily, although government could force some asset divestitures.

 

[DCaf]

I think this goes to the heart of the problem that there is no plan or solution other than buying AA for its assets. As it has been said time and again. What does usair offer to AA, answer nothing, what does AA offer to usair, the world.

Yeah, yeah, US is not good enough for you, we get it.. You just finish up AArrogance Recurrent?

 

[RowUnderDCA]

eagle's are the assets that parker would wish to reject more in a merge than amr would do in a standalone reorg, i originally suspected airport facilities not as important unless there are redundent express terminals

 

[WorldTraveler]

Possibly because the pay with a merger would be within a dollar of what it would be under the CoC language so other improvements would be pluses???

you mean pay from US current to AA term sheet levels?

 

[eolesen]

eagle's are the assets that parker would wish to reject more in a merge than amr would do in a standalone reorg, i originally suspected airport facilities not as important unless there are redundent express terminals

They may be subleasing from AA in a few places where they couldn't achieve signatory status on their own, but for the most part, Eagle has its own facility leases.

Nobody has talked much about Eagle in the bankruptcy proceedings... If the APA scope clause can finally be restructured to eliminate the restrictions on regional partners operating larger airframes for other carriers, it wouldn't surprise me if Eagle is finally divested in a deal with one of the independent players (ie Skywest, Mesa or Republic). Maybe this becomes part of the exit financing, or is distributed as collateral for the unsecured creditors...

 

[whatkindoffreshhell]

Did anyone consider that perhaps AA is playing the B6 merge option merely as a negotiating tactic with US?

(aside from the fact that AA doesn't need the headaches US would bring to a merger...)

 

[BoeingBoy]

you mean pay from US current to AA term sheet levels?

Not AA term sheet but the MOU with Parker if there is a merger with AA. If US were the acquired carrier the CoC language puts the pay rate at $174.xx/hour. As I recall, Parker is offering about $175/hour to the AA pilots and the MOU has those pay rates kicking in at bankruptcy exit. So as long as giving up the CoC is tied to merging with AA there's no real loss there.

Jim

 

[FWAAA]

According to the document linked below (which may not be accurate), the COC provisions would immediately increase the A330 captain rate to "more than $350/hr" and the A321 night rate to "more than $244/hr." Those numbers are practically double the current rates.

http://www.unbiasedfacts.org/ChangeOfControlProvisions.pdf

 

[WorldTraveler]

So, Jim, the US pilots would get a nice pay raise but I'm still not seeing how the AA pilots gain much over what they have today - and why they would settle for wages that are well below DL rates which is what they say they expect - and their request seems even more reasonable if UA actually is itself within $1/hour of the DL contract (rumored but yet to be confirmed publicly).

According to the document linked below (which may not be accurate),

you think?

or viable.

 

[FA Mikey]

increasing East pilot labor expense by more than $400 million per year. This annual
labor expense increase does not include West pilots.

http://www.unbiasedf...lProvisions.pdf

So usair who is squeaky out a profit on baggage and seating fees will see this all this washed away. Again how does usair bring anything to the table for AA?

Jetblue is playing it cool, either woking out a deal or just waiting until they are being shopped by a larger carrier. We shall see.

 

[wings396]

So usair who is squeaky out a profit on baggage and seating fees will see this all this washed away. Again how does usair bring anything to the table for AA?

Jetblue is playing it cool, either woking out a deal or just waiting until they are being shopped by a larger carrier. We shall see.

And what profit did AA "squeak" out?
I'm sure that upon exiting BK, they will be profitable. The problem is that they are going to do it on your back, but your to foolish to see that due to your extra large KoolAide.
Correct me if I'm wrong, but doesn't AA also charge all of those same fees?

 

[BoeingBoy]

According to the document linked below (which may not be accurate), the COC provisions would immediately increase the A330 captain rate to "more than $350/hr" and the A321 night rate to "more than $244/hr." Those numbers are practically double the current rates.

http://www.unbiasedf...lProvisions.pdf

That language was superceded in one of the concessionary agreements. Change of control would force an immediate return to LOA 84 rates (I think that's the one) of about $175/hour for TOS A320-family captains. IIRC, that's about what the APA/Parker MOU calls for but I haven't seen every provision of that MOU.

Jim