AA LOOKING FOR FULL MERGER WITH BA
- Thread starter Hopeful
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Frank Szabo
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Couldn't read but a small amount of the article (sub rqd) but not surprising. All that needs be done is raise the cap on foreign ownership and AA, BA and Iberia will be one.
The pandering to BA and now the orders for the Scarebus fleet makes sense.
Hopeful
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I agree. I have felt all along that AA's main focus was a full blown hook up with BA and international travel as well.
How this plays out is anyone's guess.
robbedagain
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question is will the US govt increase foreign ownership or no? isnt that the first step for a process like this?
Hopeful
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Sure is....Don't be surprised if you see a concerted effort by airlines to change the law.
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AMERICAN Airlines has raised the prospect of a merger with British Airways and Iberia in a move that would create the world's largest carrier. Tom Horton, president of American Airlines, said he believed that limits on the foreign ownership of US carriers would be relaxed before he retires. He is 50.International Airlines Group, which owns the BA and Iberia brands, was given regulatory approval to form a transatlantic alliance with AA last year. The $US7 billion-a-year ($6.36bn) joint venture allows them to co-operate on schedules, sell tickets for each other's flights and share revenue from transatlantic operations.
That is as far as the co-operation extends, because the US restricts foreign ownership of domestic carriers to 25 per cent, although Washington is under pressure from the European Union to relax these rules. Mr Horton said: "This alliance agreement with BA and IAG is effectively a synthetic merger. Over time -- I think in my working lifetime -- foreign ownership rules in the US will become more flexible. This alliance could form the basis of a cross-border merger between our airlines."
If AA and IAG were to combine, the resulting entity would have about 163 million passengers a year, overtaking Delta-Continental, with 162 million. While a full merger remains a possibility, Mr Horton said that AA and IAG were working on plans to develop their existing alliance. They have already co-ordinated schedules so that AA and BA do not have flights leaving at the same time. That has allowed them to create a shuttle service from New York to London, with flights leaving every 30 to 60 minutes during evenings. The partners are also considering how to price their products to offer passengers as many options as possible. For example, BA's business class is widely regarded as superior to AA's and this creates the option to have a premium-priced business class and a cheaper option. Mr Horton said: "The alliance with BA is a huge deal and is really just now getting traction. We are looking at putting as much product on the shelves as we can. In BA's business class, the beds are fully flat and selling that at a different price to our business class is under discussion." AA announced a $US41bn deal last week to buy 460 aircraft from Boeing and Airbus. The purchase could rise in value to $US80bn if AA exercises all its options. The deal is significant for Airbus as it is the first time that a big US carrier has used a European aircraft for its domestic fleet.
Mr Horton said: "If we had made the deal with just Airbus, there might have been some raised eyebrows, but we are a global company so it makes sense to source globally. Airbus wanted our order to validate their position in North America. Boeing doesn't want to lose us as a customer and that tension created very good competition for us."
THE TIMES
That is as far as the co-operation extends, because the US restricts foreign ownership of domestic carriers to 25 per cent, although Washington is under pressure from the European Union to relax these rules. Mr Horton said: "This alliance agreement with BA and IAG is effectively a synthetic merger. Over time -- I think in my working lifetime -- foreign ownership rules in the US will become more flexible. This alliance could form the basis of a cross-border merger between our airlines."
If AA and IAG were to combine, the resulting entity would have about 163 million passengers a year, overtaking Delta-Continental, with 162 million. While a full merger remains a possibility, Mr Horton said that AA and IAG were working on plans to develop their existing alliance. They have already co-ordinated schedules so that AA and BA do not have flights leaving at the same time. That has allowed them to create a shuttle service from New York to London, with flights leaving every 30 to 60 minutes during evenings. The partners are also considering how to price their products to offer passengers as many options as possible. For example, BA's business class is widely regarded as superior to AA's and this creates the option to have a premium-priced business class and a cheaper option. Mr Horton said: "The alliance with BA is a huge deal and is really just now getting traction. We are looking at putting as much product on the shelves as we can. In BA's business class, the beds are fully flat and selling that at a different price to our business class is under discussion." AA announced a $US41bn deal last week to buy 460 aircraft from Boeing and Airbus. The purchase could rise in value to $US80bn if AA exercises all its options. The deal is significant for Airbus as it is the first time that a big US carrier has used a European aircraft for its domestic fleet.
Mr Horton said: "If we had made the deal with just Airbus, there might have been some raised eyebrows, but we are a global company so it makes sense to source globally. Airbus wanted our order to validate their position in North America. Boeing doesn't want to lose us as a customer and that tension created very good competition for us."
THE TIMES
Frank Szabo
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Also making sense now is the twu junket to Britain and other European points a few years ago to talk (deal?) with other unions. I'd call that lying by omission, wouldn't you?
Next question - what cushy positions will the present Centrepork infestation negotiate for themselves with this new entity?
All it takes is money to lobby (bribe) the Congress. Since corporations like AMR can now contribute to politicians on an unlimited basis, it's only a matter of which corporation pays the most - we all know the other airlines will be lobbying (bribing) the Congress to disapprove to increase in foreign ownership.
As unsual, the only winners will be the politicians and lawyers.
As previously noted BA CEO Willie Walch has been in the hunt for AMR even before OneWorld. AMR would be Willie's prized trophy head.
US airline deregulation has failed to give airline workers pride and pay, customers better service and airline consistent profits.
Sadly, the only way forward is globalisation.
Non US investors own just about every US industry anyway. Communist China is our biggest creditor.
These antiquated US protection rules will fall, if protecting them means further loss of US jobs.
Mr Red
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Grease the right palms in washington and its a done deal,we all know how it works !
Frank Szabo
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I still think Willie and Little Jimmy are family - they look too much alike not to be.
Both born in Ireland, if I recall, and that's where the communist Mike Quill was from - he even looks a little (no pun intended) like them.
This "someday" merger might keep it all in the family.
whatkindoffreshhell
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Doug Parker and the USAir folks would orgasm if the foreign ownership rule was relaxed.
FrequentFlierCA
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False. The cap is still very much in place. And if Congress can't even get an FAA authorization bill passed do you really think they are going to be able to change something as political as the ownership cap? It's very unlikely.
There is a huge difference between spending money and relaxing rules on ownership rules of this industry. Airlines continue to struggle and with the right carrot in front Washington will bite.
In the short term it is likely AA wil become part of IAG and Delta part of AirFrance/KLM, United part of the new German Luftwaffe and SWA as part of, or owner of Ryanair. In that senario I am not sure where that leave Usaiways.
In the short term it is likely AA wil become part of IAG and Delta part of AirFrance/KLM, United part of the new German Luftwaffe and SWA as part of, or owner of Ryanair. In that senario I am not sure where that leave Usaiways.
Flying low
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Wasn't AA one of the most vocal on supporting that 25% ownership rule when Virgin America was starting up?
flyastrojets
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