AA and US (maybe not)

[AAOHNO]

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but for now, AA still has control of its restructuring... or more appropriately, AA's employees do since they could make or break AA's ability to restructure.

Ever heard of the song "Ring of Fire" by Johnny Cash?

 

[topDawg]

I believe it is highly unprecedented that a carrier would be able to order 230 aircraft less than a year prior to BK on top of 60 previously ordered. and just so you know GE,Boeing,APA,ALPA and TWU spell majority of the creditors committee good luck trying to get one of them to signoff on a outside offer in the unlikely event one is ever allowed.

Few things,
Your forgetting one company had two of the same creditors as AA. Matter of fact if said company went back into BK, GE and boeing would once again be on the Delta creditors committee. Delta would likely keep all or most of the Boeing orders, thus the GE orders and dump some or all of the Airbus orders(a good bit of which are part of lease deal with AB. Anderson orders planes to own, not lease. I would expect at least a major re-work of the deal.).
If it came down to US or DL, which way do you think the unions go?

I hope you guys can make it on your own, i really do. I do however think, like the rest of us, consolidation is going to be your future. 🙁
(note, it may not be US or DL. Maybe B6 or AS or VX or whoever, but i think wall street will like DL or US more)

 

[topDawg]

from the article, apparently BA considers a DL bid for AA possible and would use it as a chance to convince DL to move from Skyteam.

"Willie Walsh, IAG’s chief executive, told the Financial Times that the Oneworld global alliance – which the group’s UK and Spanish airlines belong to – should be able to recruit Delta Air Lines if it combined with American, already a Oneworld member....

Asked if he thought a Delta-American entity could be persuaded to choose the Oneworld alliance instead of SkyTeam, Mr Walsh said: “Personal view – most definitely."
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usa,
DL has done a pretty good job of using the assets it has acquired in mergers and asset acquistiions... it isn't beyond the realm of possibility that DL and US could decide to cooperate for each others' benefit in an AA acquisition as they did in the DCA-LGA slot transaction....
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but for now, AA still has control of its restructuring... or more appropriately, AA's employees do since they could make or break AA's ability to restructure.

AA wont be picked apart. That does no one any good because a hole AA is much more valuable than a one time asset sale.
If DL/US/B6/AS or who ever buy/merge with AA it will be an all or nothing deal. (with exception to any part the gov. makes them dump. Most likely NYC slots)

 

[WorldTraveler]

There was an argument at one time that could have been made that Pan Am would have best been bought by all one company - but that's not the way it worked out. Market forces then and now were the overriding factor.
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There really is no economic basis for saying that the US needs 3 major network airlines plus WN which will largely be a nationwide domestic airline and then a few smaller airlines. It is very possible that the network segment could consolidate into DL including significant portions of AA and UA with the most valuable parts of US - and then divide some markets between B6 and AS and then throw VX in as well.
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Fuel prices continue to rise and with it demand will decrease. DL and UA are reducing their staffs and will cut more capacity later this year - which will make it increasingly difficult for AA to restructure without cutting more and more of its own capacity. It will be harder and harder for "niche" network carriers like AA and US - which don't have networks the size of DL and UA - to be able to compete. They either will have to shrink down to a different business model - which has never successfully been done - or have their best assets acquired and the rest of their network dismantled.
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WN's business model which is based on stimulating traffic with low fares will increasingly require fewer frequencies in many markets.
Regional jets will continue to be pulled from network carriers... with 2 or even 3 network carriers, do you really need 20 RJ flights a day from cities like MSN and SHV? No. You have 3 mainline going east and 3 going west with a couple 70 seaters thrown - but that is about it.
The airline industry will look a whole lot more like it did pre-deregulation with fewer flights but most of them on mainline equipment. The urge to build new runways and the ATC system will end and we will find out that we have plenty of capacity in the US air transportation system for an industry that must live with $3.50 and higher per gallon jet fuel.
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Airplane orders will sort themselves out but as fuel prices increase and demand worldwide decreases, airlines will regain greater control from the manufacturers. Alot of growth in the industry worldwide has come from new entrants whose business models for high growth won't work at these kinds of sustained fuel prices.
But at the same time, the concept of a national airline for every country will finally end - and many traditional airlines worldwide will be forced to shrink - or go extinct. This isn't just a US problem. Compared to Europe and some of the countries of Asia, the US might come out looking pretty good.
It is not a given that Europe needs 3 major network carriers - still operating multiple hubs.
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Fuel prices have messed up more than one strategic plan in the airline industry.
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When you combine fuel prices with ongoing labor discord at some carriers, both of which do affect profitability, then it isn't hard to believe that the industry will further consolidate - and as in the rest of the industry, the weakest fall to the strongest.

 

[jimntx]

AA wont be picked apart. That does no one any good because a hole AA is much more valuable than a one time asset sale.
If DL/US/B6/AS or who ever buy/merge with AA it will be an all or nothing deal. (with exception to any part the gov. makes them dump. Most likely NYC slots)

I wouldn't be too sure about that first statement if I were you. We (AA) have nothing domestically that other airlines don't already have or that other airlines could re-create in short order. Internationally, the one real jewel is South/Central America. Should there be a yard sale, there would be spirited bidding for those routes. Follow that with some fairly lively bidding for the LHR slots. Other than that, if a surviving airline is interested they can just increase frequencies to the other locations that they fly to already in competition with AA.

 

[BoeingBoy]

The most important part is:

Should there be a yard sale

Personally, I don't see a yard sale in AA's future (barring something completely unexpected from left field). WT is big on DL acquiring parts of AA and as you say the remainder isn't worth that much, which is partially why it won't happen although he desperately wants DL to be king of the hill. US brings little other than the Shuttle to AA. Other than some idle musing by analysts, there really is no other carrier that makes much sense.

Jim

 

[WorldTraveler]

I have said for years that AA would face a much more difficult reorg because they waited and are now doing it while other carriers are much healthier financially. Throw in continuing increases in fuel prices, a weak economy in much of the west both of which reduce demand and there are a whole lot of assumptions about how the industry works that will be reevaluated.
Those companies that are in the best position financially will have much more control over their future while the weaker ones might face a different outcome.
It won't be the first time that external factors have forced airlines to readjust their expectations and the industry has been restructured.

 

[jimntx]

The most important part is:



Personally, I don't see a yard sale in AA's future (barring something completely unexpected from left field). WT is big on DL acquiring parts of AA and as you say the remainder isn't worth that much, which is partially why it won't happen although he desperately wants DL to be king of the hill. US brings little other than the Shuttle to AA. Other than some idle musing by analysts, there really is no other carrier that makes much sense.

Jim

I was responding primarily to the bravado statement that AA can't be broken up--that it is worth more as a whole. The history of U.S. business (particularly, the airline business) is littered with the carcasses of companies that believed themselves "too big to fail." And, as an insider I can tell you that the sentiment is growing among employees to just let this business go. If the company gets what it wants from the bk court--namely, abrogation of the three major contracts (don't kid yourself that there is any real negotiation going on)--there is a lot of speculation that we will all simply walk off the job and let the company figure out how to put us all in jail. Management really thinks (another example of their inability to make contact with reality) that they can keep this airline running without pilots or flight attendants. We'll see.

If the company goes under, there WILL be a yard sale.

 

[WorldTraveler]

It is precisely that mindset which was bound to occur that may make it impossible for AA to accomplish what it wants. AA will join US as the only two timers in the past 20 years in reorg/paycuts...whether it happened in BK or not... CO did it but came up w/ some pretty grand ideas to turn the business around. The environment is alot less forgiving today and unless AA has some great ideas that no one has yet to see, they will be turning around the company based largely on cost cuts - primarily off the backs of employees. No other airline employee group will fall as fast and as deep as AA employees are being asked to do....and there is a limit where AA employees will see it isn't worth fighting anymore esp. w/ pensions gone (which is an incredibly strong "glue" to keep employees motivated) and 10-15 years worth of seniority, new hires, and pay/benefit progress wiped out.
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Obviously no one here wants to see AA fail... but it would be foolish to believe that they can proceed w/ their reorg as easily as they have said they would in the face of the enormous challenges in the form of labor cooperation and motivation, fuel, and the global economy.
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Thus, it comes down to who can best use AA's assets and continue the legacy that AA built. No single airline can do it all - but there are and will be some fits that are better than others.

 

[jimntx]

The environment is alot less forgiving today and unless AA has some great ideas that no one has yet to see, they will be turning around the company based largely on cost cuts - primarily off the backs of employees.

A friend who was able to attend the company briefing to the unions on it's "business plan for 2012-2017" said that he saw absolutely nothing different other than cutting employee pay and benefits. The attitude of the company's plan presenters was basically that the company has made no errors in judgment or decisions in the last 10 years; so, the only possible reason for the current situation is that we pay the employees too much.

As I have said before. I spent 20+years in the oil business, and there is no more cut-throat business than the oil business. However, I have never seen an executive group that so openly displays its contempt for the front line employees as AMR corporation's executives. They expect to run a customer service business with employees who redefine disgruntled for our generation.

A lot of us are figuring that our pensions will come from the PBGC regardless of what happens; so, why should we enable further bonusses to executive management?

 

[Zom JFK]

A lot of us are figuring that our pensions will come from the PBGC regardless of what happens; so, why should we enable further bonusses to executive management?

The judge will enable managements bonuses. At the end of the day what do people think the money from cost savings is for? Running the airline better?

 

[BoeingBoy]

I think you'll be surprised at how many, faced with the choice of a job or no job, will come to work the day after contracts are abrogated (assuming that will happen). I saw the bravado at US in both bankruptcies, the "this jobs not worth having" and "shut'er down if this is all I can expect" attitudes, and both times the company kept right on operating with the vast majority of employees showing up for work.

If you're so sure that you'll only get the PBGC pension, that the execs will get bonuses (they will in the form of "new" AA stock), it'll be so bad under AA's proposals, why are you still there? Look at those who have contacts lined up, resumes updated, see greener pastures outside of AA - why are they still there? As is said, "Talk is cheap."

Jim

 

[ebwgs]

FWIW

http://www.thestreet.com/story/11447187/2/analyst-amrus-airways-deal-makes-sense.html

 

[JFK Fleet Service]

AA can fly you anywhere you want to go...as long as it is Dallas,Chicago or Miami...

 

[AANOTOK]

I think you'll be surprised at how many, faced with the choice of a job or no job, will come to work the day after contracts are abrogated (assuming that will happen). I saw the bravado at US in both bankruptcies, the "this jobs not worth having" and "shut'er down if this is all I can expect" attitudes, and both times the company kept right on operating with the vast majority of employees showing up for work.

If you're so sure that you'll only get the PBGC pension, that the execs will get bonuses (they will in the form of "new" AA stock), it'll be so bad under AA's proposals, why are you still there? Look at those who have contacts lined up, resumes updated, see greener pastures outside of AA - why are they still there? As is said, "Talk is cheap."

Jim

"Talk is cheap" as it is when you have no dog in the fight, Jim!

And exactly why does all this matter to you? :unsure: