AA - Jetblue - Alaska Airlines

[777 fixer]

As far as operations Alaska with its up and down the west coast and Jet Blue with its up and down the east coast bring more to the table than USAIR. It helps with the Oneworld partners as well. The coasts are where the people are, so thats where the money is as well. People who want to go north-south dont want to go to DFW in between.

Has'nt merging with a west coast north/south carrier been tried before with AA? Twice.

 

[777 fixer]

I do not believe that these other airlines mechanics are ready to become TWU members ......

That's irrelevant.

 

[eolesen]

the more it demonstrates that you can't handle the reality that US will have to compete with other potential buyers IF it comes down to a bidding process.
.
The sooner you accept that, the sooner you can start planning for that reality.
.
The most likely outcome remains that AA will restructure and emerge on its own - and NO bids will be accepted. Since I've said that several times a week for the past two months, I have a hard time grasping how you think DL has anything to do with it.

I see you've left yourself an out --- IF it comes down to a bidding process.

If the UCC decides that a merger with US is the outcome they're going to support, they have the power to push that with management BEFORE the exclusivity period ends. And it's possible that management may decide to embrace the idea.

There's a great write-up in PlaneBusiness this week on the issue. Compelling enough that I've moved away from my belief that there will be a standalone AMR when they emerge from the Ch.11 process.

If the current AMR management also realizes their opportunity to emerge as a standalone has come & gone, it's entirely feasible that DL or someone else friendly to the UCC and management wouldn't be able to do squat.

And I don't think a DL offer will be viewed as friendly.

Anything which involves an AA-DL tie-up is going to require "optimization"....

ORD and DFW might remain, but you can kiss goodbye AA's entire slot holdings at JFK and LGA. MIA? Not really sure, but there's an awful lot of overlaps to the Caribbean and the Deep South. Who knows if DL would be able to propagate further concentration of the Asia market to just DL & UA.

 

[WorldTraveler]

First,
I think it is WAY too early to argue that AA can't successfully restructure, esp. in light of their financial performance for the quarter just announced. What is most important in those announcements is that they are growing revenue, something you cannot expect BK to fix. BK fixes costs and AA has enormous capacity to do that in BK. If AA can continue to build revenue - which it likely can do if it no longer has to keep capacity in the system which cannot produce good revenues, then it can build a profitable business plan.
Notably, the reason why US underperforms the rest of the industry is that they cut their presence in so many key markets so deep that they cannot now compete with the larger network carriers. AA mgmt surely realizes they still have access to alot of premium revenue and it is entirely possible for AA to compete with DL and UA even with a smaller size. AA's RASM growth was better than average of what is expected for the industry and undoubtedly superior to UA's. If UA stumbles for several months in revenue production as a result perhaps of the new res system (perhaps the revenue mgmt system is new too, I don't know), then AA has a very good chance of having a good foundation on which to restructure.
.
As such I see no reason to believe that AA cannot successfully restructure.
.
Discussions about what AA's future might look like if it can't restructure make little sense in light of the reality that it likely will successfully restructure.

 

[eolesen]

Two reasons, Tim....

1) Labor has no confidence in the current management team

2) Wall Street has no confidence in the "grow by 20%" plan

If you can't get get those two constituencies onboard with the restructuring team, executing on the recovery will be quite difficult.

 

[WorldTraveler]

Doesn't really matter what labor thinks or likes, quite frankly. The company has the power to restructure labor contracts based on what they think they need to make the company viable. Labor will be compensated for the losses they incur. It is up to AMR mgmt to demonstrate that they can run the company with the new cost structure. I think they can.
.
I am not at all saying that AA is out of the woods w/ respect to its turnaround but they reported a quarter of solid revenue performance - and that is exactly what they need to do.
The creditors want to see a solid, viable company - and with the right costs coming out of BK and the ability to continue to generate revenue, AA will have a viable company again.
.
To be sure, they have alot to work to do to defend their network from the ongoing competitive assaults - including at DFW - but AA has so far shown a far better ability to hold onto the revenue generating ability which is almost singularly what will determine if they can survive long-term - and something that a certain PHX based airline lost and never recovered in BK.
.
DO you realize what is happening, Eric?
.
After years and years of being perceived as being the great enemy of AA, I am arguing FOR AA's ability to successfully emerge as a standalone carrier while you are arguing it can't make it.
Really? What has the world come to? 😀

 

[eolesen]

I'm not saying they can't emerge as a standalone, I'm saying they won't unless labor and Wall Street cooperate.

Labor has apparently decided they are better off with someone else than Horton. Horton's team hasn't come out with a plan that the investment capitalists like (otherwise wouldnt we have seen TPG already backing them?).

In some perverse way, I can almost see a scenario by which Parker throws the pm-US guys in CLT under the bus, and preserves DCA, NYC, and the rest of the AA & HP networks....

 

[WorldTraveler]

We are still way too early in the process to know if Wall Street will support AMR's plan.... and since they are interested in money, if AMR can deliver that, then they will support the plan.
.
BK is a horribly labor unfriendly process... somehow that gets forgotten since it has been a few years since the last legacy carrier emerged but there was no labor peace during the process. And there will continue to be labor discord... but as long as employees show up for work, labor doesn't have a whole lot of power.... that's just the way the process works whether it is fair or not.
.
I could easily see that Parker would like to divide US and throw half of the employees under the bus - but that doesn't mean it is the right call for AA - and AMR's creditors are not interested in what it takes to save US.
Given that AA is a much larger airline and AMR's finances are on the line right now, not US', then the creditors are not going to sign onto a deal that fix US' problems if it comes at the expense - or even risk - of minimizing recovery for AMR creditors. US fans hear don't seem to get the message that US is not financially strong enough for AMR's creditors to risk a tie up when the potential is more than there to pull down all the work that AMR has endured.
.
I am all the more convinced after AA's earnings report today that they will be able to emerge as a standalone entity - and US will have to figure out how to solve their problems on their own.

 

[777 / 767 / 757 Love]

This would be a good match for AA, they bring 291 newer a/c and 138 new a/c orders that are 737's and a320's, and a good western and east coast presence, with a happy work force. Why go with USairways that has labor problems and not much to offer outside of the east coast. Jetblue brings JFK and Alaska brings the west.

I have been saying this for years....

Cheers,
777 / 767 / 757

 

[777 / 767 / 757 Love]

Agree 100% Bob. USAir would not contribute to AA, jetBlue and Alaska are great airlines. I take jetBlue to places AA doesn't fly and take the Alaska non-stop to SEA

Josh

I agree 100%......I go on both JB when AA doesn't go there, and the two airlines seem similar in many ways. Both trying to be service leaders, not just price leaders, in their segments.

Cheers,
777 / 767 / 757