Who would be the big loser if no merger?
- Thread starter Topcat187
- Start date
traderjake
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Jester
Veteran
Doug Parker... his raison d'être is to put deals together by getting investment bankers to finance mergers and to make money through Wall Street IPOs. Not to mention, being the Cat Daddy of the airline industry would lend him creditability as a deal maker who took a struggling discount air carrier and through a series of mergers into the largest airline in the world. Without a merger, Doug Parker has few other merger options worth a damn, and it is time to look for a different industry with new opportunities.
In terms of employees, AA employees will feel more pain sooner because without a merger, AA Management will be heading back to look for more contract concessions and the possibility of liquidation. However, in the long term, US employees will continue to suffer through below industry wage rates, as the hub and route structure just cannot support higher fares. The merger would be good for BOTH work groups as a whole, but make no mistake, there will be downsizing, in particular, US hubs.
In terms of employees, AA employees will feel more pain sooner because without a merger, AA Management will be heading back to look for more contract concessions and the possibility of liquidation. However, in the long term, US employees will continue to suffer through below industry wage rates, as the hub and route structure just cannot support higher fares. The merger would be good for BOTH work groups as a whole, but make no mistake, there will be downsizing, in particular, US hubs.
AA would watch its status of one of the "big" carriers dwindle to status of "also ran."
US, being the "also ran" of the industry for the last two decades, would not see that mark of distinction change.
Welcome to the Minor League, AA. We've been waiting for you. It's been lonely here.
US, being the "also ran" of the industry for the last two decades, would not see that mark of distinction change.
Welcome to the Minor League, AA. We've been waiting for you. It's been lonely here.
Black Magic
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- Jan 4, 2008
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Yep, AA employees aren't used to being a underpaid overworked airline that US has had to adopt for sometime. No merger and it will be just another day at US.
This is something that concerns me more than almost anything else. I think it is not outside the realm of possibility that there will be downsizing at both airlines, merger or no. If it doesn't happen...oh well, have to cut costs. If the merger does happen, the combined AA/LCC operation will be slightly larger than DL or UA. However, the combined employee total for the merged airline will be something like 30,000 employees more than DL or UA. Something has to give.
They could start by firing Vice Presidents. That should cut the number down to 4 digits, anyway.
cactusboy53
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- May 9, 2007
- 2,649
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whatkindoffreshhell
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The employees of both airlines would be the biggest losers.
Doug/Tom/the consultants & bankers are second-place. They won't sweat the mortgage payments.
Doug/Tom/the consultants & bankers are second-place. They won't sweat the mortgage payments.
Kev3188
Veteran
My vote: All the aviation geeks/armchair analysts out here in the cyberworld
Thanks for trying to class up the joint...
Thanks for trying to class up the joint...
In the end everyone loses. Share holders, employees, even the consumer. The reduction in compitetion might have only been temproary and opened the door for the next wave of start ups in an industry that is very difficult to get new entries. That is what is so strange about the DOJ ruiling there really is no one harmed much by this merger. It seems just to be more politcal cover to claim we are fighting for the litlle guy the consumer. And since airlines are not very popular anyway they figured large public support for the governments posiiton.
You can really never tell. If Parker sees no further acceptable opportunities, his strategy could change significantly. IMO, the major reason the airline has not (yet) expanded internationally, is the lack of acceptable aircraft. Part of that is Parker's push out of the A350 deliveries. The $ are in a network which supports profitable international flying. US far surpasses AA in the area of domestic feed to its international routes (except for Latin America), but is far behind all legacies in flying to high end international destinations (LHR, NRT, etc.). Joining One World may solve a part of that deficiency with code sharing and hopefully a few JVs, but will never compensate for a relatively small international network. Parker could decide to accelerate the A350 deliveries and lease 787s as an interim solution, since it likely would be difficult to entice another carrier into a JV relationship (e.g. add to the BA/AA JV) with the existing US international network. Another is the disparity of international inflight services. Maybe going back to the original USAir Envoy concept (then evaluated as the Best 1st Class Trans-Atlantic Service) would solve the latter. Obviously making all of those radical changes would require significant investment and risk, but what's the alternative - a forever LCC and a probable ill supported *A like step child of the OW Alliance. One + in joining OW is the potential for US providing connecting traffic to QR at PHL and working that relationship. QR has an excellent network to Asia and Australia, via DOH - usually with = or better services AND fares than BA. I'd bet that QR will still begin PHL-DOH next year, regardless of the merger outcome, but the route will need connecting traffic to exist more than about a year. In summary, I believe US will either survive at the lowest rung of the Legacies as an LCC, or jump into the fray of the international community. Parker and his investors may be too gun shy if this merger is disallowed to pursue any further acquisitions, such as HA. We'll likely witness a preview of what's going to happen on Aug 30th. If the Judge approves the DOJ trial date of Feb/Mar 2013, I believe the merger may unwind at AA's request.
ContUNITEus
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- May 4, 2011
- 501
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In order of biggest loser to winner
1) US Employees - Still stuck with in-fighting and substandard contracts.
2) HP/US Management - They will not be the leadership of the largest airline in the world. Not able to complete their previous merger.
3) AA Employees - They will not have to deal with integration issues and infighting. Competing with DL/UA might be a little tougher.
4) AA Management - They keep their jobs and control of a new, very successful company
5) Consumers - Maintain an additional competitor, which loves to undercut competitors' pricing...and does it on the backs of its employees.
1) US Employees - Still stuck with in-fighting and substandard contracts.
2) HP/US Management - They will not be the leadership of the largest airline in the world. Not able to complete their previous merger.
3) AA Employees - They will not have to deal with integration issues and infighting. Competing with DL/UA might be a little tougher.
4) AA Management - They keep their jobs and control of a new, very successful company
5) Consumers - Maintain an additional competitor, which loves to undercut competitors' pricing...and does it on the backs of its employees.
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