US Airways CEO agrees to meet Emanuel

[usa1]

http://finance.yahoo.com/news/us-airways-ceo-agrees-meet-231358875.html

The executive who will lead the new American Airlines after its merger with U.S. Airways has agreed to meet with Chicago Mayor Rahm Emanuel for discussions likely to include the massive modernization project at O'Hare International Airport.

 

[PHL]

Doug should never get in bed with Rahm, aka the Godfather of Chicagoland. Just stick to LAX, PHX, DFW, CLT, MIA, PHL and JFK and relegate ORD to a focus city for "the new AA".

And, frankly, if a city wants to expand an airport they should get the capital funds through public means (i.e. bonds and FAA funds). If the airline(s) want to contribute, then they should agree to different lease terms to help pay for terminal improvements that directly benefit them.

 

[cynic]

You don't step on any toes until after you get approval. Especially toes that have extensive contacts in Washington. Doug also won't be putting his signature on anything.

 

[FWAAA]

Doug should never get in bed with Rahm, aka the Godfather of Chicagoland. Just stick to LAX, PHX, DFW, CLT, MIA, PHL and JFK and relegate ORD to a focus city for "the new AA".

I disagree that AA should downsize its operations in the third largest metro area in the country. The population of CHI is about 50% larger than the Metroplex or Houston or Philly or WAS metro areas. AA's hub at ORD is more than 30 years old and despite AA's contraction at ORD during its high-cost years (which coincided with the unprecented economic meltdown - the Great Recession), AA still has almost 500 peak day departures. That's a bigger hub than US at PHL.

One of the major goals of AA's bankruptcy was to force the pilots to agree to an affordable contract that permitted AA to catch up to UA and DL in the number of large 2-class RJs, which AA accomplished. IMO, AA needs to grow at ORD and take back some of what it gave up to UA. Replace a number of 50-seaters with 76-seat E175s and add some A319s for larger markets where 150-seat 738s are too big.

And, frankly, if a city wants to expand an airport they should get the capital funds through public means (i.e. bonds and FAA funds). If the airline(s) want to contribute, then they should agree to different lease terms to help pay for terminal improvements that directly benefit them.

One of the publicly stated reasons for AA's purchase of TWA in 2001 was Mayor Daley's repeated insistence that ORD had no capacity issues and that ORD would never rebuild its runways in an efficient parallel configuration. During the Summer of 2000, ORD was completely maxed out and AA said that it could route lower-yielding connections over its new runway at STL, freeing up seats for ORD O&D. Of course, lots of things in the aviation world changed a great deal later that year and in the years that followed, all of which conspired to make STL superfluous. And one of the things that changed was Mayor Daley's objection to fixing ORD's deficiencies. No more talk of Peotone but instead a plan to realign ORD's runways so that it could handle more simultaneous takeoffs and landings.

IMO, AA and UA have shown good negotiating skills but I assume that both UA and AA want ORD to be fixed. As with most big corrupt cities, the costs are astronomical compared to, say, Charlotte, where Jerry Orr was proud that he could construct a new runway for 10% to 20% of what new runways cost in places like ORD or PHL or LAX.

AA filed a bankruptcy petition to lower its costs and to enable it to fix the problems that hampered its ability to compete in CHI and NYC. AA didn't have any trouble competing in DFW, LAX or MIA before the bankruptcy - its problems were centered in CHI and NYC (the # 1 and # 3 markets in the country), where its competitors had big advantages thanks to earlier bankruptcies and more flexible contracts (permitting them to fly hundreds of 2-class large RJs).

 

[autofixer]

Emanuel means God is with us. I thought Doug was going somewhere far away.

 

[NewHampshire Black Bears]

Just an observation, and 'maybe' I could be way-out-of-line here.(FWAAA will tell me.)

Unlike UAL who is Wedded to ORD for Life, if AA wanted to(and I'm not suggesting they are), they could tell Rahm to 'Kiss-Off', and downsize ORD slightly, without having to KISS R-E's ASSS about anything !

Do you 'oldie-goldies' remember when CRANDALL wanted to set-up-shop in Wichita (smack-dab-in-the-MIDDLE-of the USA) Kansas ?

Think THAT might come in Handy NOW ?

 

[usa1]

The original Piedmont Airlines considered Wichita in the 80's.

 

[JFK Fleet Service]

Why would AA abandon ORD? And why would they "Set up shop" in ICT when there is plenty of space in STL?

 

[FWAAA]

If we allowed clueless government officials and bureaucrats to tell airlines where they could fly and where they were permitted to open hubs, then we'd probably see forced relocations to empty inconvenient airports like MidAmerica St. Louis Airport and Palmdale. But fortunately, the airlines get to decide where they want to fly, and they tend to respond to passengers - and passengers choose crowded crappy airports like LGA, JFK, EWR, PHL, SFO, LAX and ORD. Yes, they're old, and crowded and if people drove 50-100 miles away, they might find less crowded, convenient alternatives. People like to piss and moan, but when push comes to shove, they don't prefer long drives to the airports.

Yesterday someone on Flyertalk asked whether AA would abandon LAX to UA and DL in favor of PHX. There aren't rolleyes smileys big enough for nonsense like that. I put that in the same category as those who think that AA will walk away from JFK. Yes, Parker did walk away from most of US' assets at LGA, a mistake for which new AA will forever pay as DL continues to grow and dominate in NYC thanks to that slot giveaway.

AA and UA will talk tough with the Mayor of Chicago and try to bargain down the prices just like both airlines have always done with their employees. I realize that guys like Bob Owens think that airlines are free-spenders with everyone and everything EXCEPT the rank and file employees, but the reality is that airline execs try to bargain down the price of everything they buy, not just the labor of the downtrodden workers.

Move to Wichita? St Louis? Kansas City? I don't see any of those happening. Not only is Chicago still a very big business center, but it's a place where people actually want to visit. Bazillions of foreigners visit Chicago every year. Just like SFO, LAX, PHL, SEA, NYC, BOS, etc. They're not interested in Wichita, St Louis or Kansas City. For that matter, they aren't interested in visiting Charlotte, either.

Long haul flights tend to be where people want to go. AA isn't leaving Chicago. Or NYC. Or LAX. Or BOS. Or WAS.

 

[NewHampshire Black Bears]

If we allowed clueless government officials and bureaucrats to tell airlines where they could fly and where they were permitted to open hubs, then we'd probably see forced relocations to empty inconvenient airports like MidAmerica St. Louis Airport and Palmdale. But fortunately, the airlines get to decide where they want to fly, and they tend to respond to passengers - and passengers choose crowded crappy airports like LGA, JFK, EWR, PHL, SFO, LAX and ORD. Yes, they're old, and crowded and if people drove 50-100 miles away, they might find less crowded, convenient alternatives. People like to piss and moan, but when push comes to shove, they don't prefer long drives to the airports.

Yesterday someone on Flyertalk asked whether AA would abandon LAX to UA and DL in favor of PHX. There aren't rolleyes smileys big enough for nonsense like that. I put that in the same category as those who think that AA will walk away from JFK. Yes, Parker did walk away from most of US' assets at LGA, a mistake for which new AA will forever pay as DL continues to grow and dominate in NYC thanks to that slot giveaway.

AA and UA will talk tough with the Mayor of Chicago and try to bargain down the prices just like both airlines have always done with their employees. I realize that guys like Bob Owens think that airlines are free-spenders with everyone and everything EXCEPT the rank and file employees, but the reality is that airline execs try to bargain down the price of everything they buy, not just the labor of the downtrodden workers.

Move to Wichita? St Louis? Kansas City? I don't see any of those happening. Not only is Chicago still a very big business center, but it's a place where people actually want to visit. Bazillions of foreigners visit Chicago every year. Just like SFO, LAX, PHL, SEA, NYC, BOS, etc. They're not interested in Wichita, St Louis or Kansas City. For that matter, they aren't interested in visiting Charlotte, either.

Long haul flights tend to be where people want to go. AA isn't leaving Chicago. Or NYC. Or LAX. Or BOS. Or WAS.

THAT (my loooongtime associate) is...'telling it-like-it-is/CRYSTAL CLEAR ' !!!!! : )

 

[desertgal]

Ia mistake for which new AA will forever pay as DL continues to grow and dominate in NYC thanks to that slot giveaway.

Actually, it wasn't a "give-away". It was a trade. And it made excellent sense.
US got more slots and space at DCA.
And there's not really a lot of room for growth out of LGA. That was the problem there. Congestion and delays.
DCA is a better fit and now combining with what AA has there it will be quite the stronghold. And then we have AAs operation at JFK. Dumping LGA was a good move.

As far as ORD?
Doug will do whatever is best for the bottom line.
Period.

 

[FWAAA]

Actually, it wasn't a "give-away". It was a trade. And it made excellent sense.
US got more slots and space at DCA.

I disagree. It was a gift to Delta. Parker gave DL three times as many LGA slots as DCA slots that DL gave to US. It didn't make sense for US then and now that US is merging with AA, it makes even less sense.

And there's not really a lot of room for growth out of LGA. That was the problem there. Congestion and delays.

And yet Delta is growing at LGA to use the slots that Parker gave DL.

DCA is a better fit and now combining with what AA has there it will be quite the stronghold. And then we have AAs operation at JFK. Dumping LGA was a good move.

This is the part that many US employees like you really don't understand. Had US not made the slot swap, the combined US-AA would dominate LGA and would have about half the DCA slots. But instead, the combined US-AA will have about 1/3 the slots at LGA and will probably have to divest DCA slots, as the slot swap gave US about half of them, and the government said that half was the upper limit it would allow. So now, with the merger, the new AA will have to give up roughly the same number of slots as AA currently holds. So new AA won't be any bigger at DCA as US is now. What did the slot swap get you? A much smaller presence at LGA, the convenient airport in the largest market in the country and no extra strength at DCA.

 

[wings396]

At some point, I would like to see someone actually ask Parker what his reasoning was behind the slot swap deal. While many good points have been made here, perhaps there were/are some behind the scenes issues that we are not aware of. I understand that not everyone likes Parker, but I think that most of us can agree that he is no dummy when it comes to running the operation by the numbers.Given this, I can't see it as the complete "giveaway" that some have labeled it as. Maybe the PHL/JFK proximity factored into the decision, if not there has to be more to it than meets the eye.

 

[CactUSmx]

I disagree. It was a gift to Delta. Parker gave DL three times as many LGA slots as DCA slots that DL gave to US. It didn't make sense for US then and now that US is merging with AA, it makes even less sense.



And yet Delta is growing at LGA to use the slots that Parker gave DL.



This is the part that many US employees like you really don't understand. Had US not made the slot swap, the combined US-AA would dominate LGA and would have about half the DCA slots. But instead, the combined US-AA will have about 1/3 the slots at LGA and will probably have to divest DCA slots, as the slot swap gave US about half of them, and the government said that half was the upper limit it would allow. So now, with the merger, the new AA will have to give up roughly the same number of slots as AA currently holds. So new AA won't be any bigger at DCA as US is now. What did the slot swap get you? A much smaller presence at LGA, the convenient airport in the largest market in the country and no extra strength at DCA.

Your right the slot swap was a gift but keep in mind Terminal C at LGA was in need of major renovations as you can see Delta is investing close to $300 million for the upgrades and facelift. 3 years ago before the slot swap Parker told US that LGA was losing money and costing the company $75million a year in expenses to operate. So If you look at it Parker's way he's saving $75 million a year, he got prime DCA slots that make US money and we still havev$300 million in the bank because he refused to upgrade the Teminal. The man is a genious. Parker is the reason he turned America West and US profitable and AA will be profitable soon. By the way It was Parker that pulled the US HUB in PIT down due to the mayor trying to milk him. Don't be surprised if he cuts ORD back. The man does not like to be milked. He's not a Cow.

 

[FWAAA]

At some point, I would like to see someone actually ask Parker what his reasoning was behind the slot swap deal. While many good points have been made here, perhaps there were/are some behind the scenes issues that we are not aware of. I understand that not everyone likes Parker, but I think that most of us can agree that he is no dummy when it comes to running the operation by the numbers.Given this, I can't see it as the complete "giveaway" that some have labeled it as. Maybe the PHL/JFK proximity factored into the decision, if not there has to be more to it than meets the eye.

Parker was asked about it at the JP Morgan Chase conference last week and here's the exchange:

Robert Pollack [ph] with Anchor Ball Capital [ph] . This past year, you made the gate transfer with Delta to get stronger in DC from New York. Can you just comment if that's met or exceeded your expectations? And as you look at the combined network now with American, do you see further opportunities to enter into similar perhaps gate transfers?

William Douglas Parker - Executive Chairman, Chief Executive Officer, Chairman of Labor Committee, Chairman of US Airways and Chairman of AWA
To your first point, we're really happy with that transaction. It has met -- I think somewhat exceeded our expectations as to what it would add, and my guess is Ed told you earlier their happy with it, so again it's consistent, much like this transaction, with one where you see airlines focusing on where they actually have a competitive advantage and doing what makes sense for them. And you can get -- that simple swap took some assets we have in LaGuardia that we couldn't utilize as well as Delta could and getting some slots in DC that they couldn't utilize as well as we could and creating value for everyone. So that has done that for both of us, I believe. I know it's done for us. Are there more of those? I don't know. That was a fairly unique situation, but there may be others. We'll see, but nothing that I -- nothing to announce, that's for sure.

http://seekingalpha.com/article/1245541-us-airways-group-s-ceo-presents-at-jpmorgan-aviation-transportation-and-defense-conference-transcript?page=6&p=qanda&l=last

Basically, he gave the corporate talking point answer that US is very pleased with the slot swap (note the idiot analyst talked about "gate swap" which was not the important part of the deal).

It's too bad that none of the analysts actually acted like a news reporter and asked him the tough question: "Mr Parker: isn't it true that the new AA will be much smaller and weaker at LGA and no larger or powerful at DCA as a result of the slot swap?" Giving Delta 3 times as many LGA slots as you get back in DCA slots was one big mistake.

Earlier in that transcript, Parker opines that US does not believe that Justice Dept will require any DCA divestitures - and that's the uninformed ignorant nonsense that I've come to expect from him. When DL and US did their swap, the government was clear that 50% of the slots at LGA or DCA was the upper limit, and US has just about half of the DCA slots now.