aafsc said:
Looking at doing something and considering to do something sounds like the same to me. We will just have to wait and see what happens.
Having been around HDQ for 12 years, and watching a lot of good and bad ideas go thru the due dilligence process, here are a few of my favorites which got very serious consideration but were never acted on:
* Buying America West about 12 years ago, and operating it as a single class airline within an airline
* Buying Pan Am's intra-German routes before reunification
* Operating an intra-Asian hub at SEL (similar to UA and NW's hubs at NRT)
* Merging with US Airways
Hopefully, that will show there's a huge difference between considering an idea, and actually executing it.
aafsc said:
About how much cash did sabre generate for AMR? Would not it have been better for AMR to just sell sabre for cash? I know that they probably did it as a spinoff for tax reasons but if they had sold it for cold hard cash, could they have offset the taxable gains from the sale with the huge losses we are now incurring? I would think that they would have gotten a good size chunk of cash for it.
[post="199622"][/post]
There really wasn't a single buyer interested in Sabre at the time if I recall.
Sabre was IPO'd in 1996, with 17% going into the open market. The remaining 82% was sold in 2000 for around $560M. Today, their market cap is $3B, or almost 3x AMR's market cap.
Yes, we probably made more off the sale of the stock than we'd be getting back in net profits today. But we still spend a lot of money with Sabre (and now EDS) that prior to 1996 was considered internal spending. The money we made off the stock has probably gone back to Sabre twice over with their 20% markups.
Aside from the cash, some of our best IT development was done in those days because many of the Sabre people were former airline people and knew our business. People could flow back and forth between airline jobs and Sabre jobs without losing benefits, pay, seniority, etc. So we got a lot more for our money back then because we didn't have to worry about their domain knowledge.
Today, Sabre can't attract airline people into these jobs, so we have to explain every little nuance of what an airline does, and every process we're trying to automate. That costs us money in the long run, because we have to pay for their learning time, and the extra time it take to get products to market means that we're not getting the cost savings benefit from having those products in place.
Some of those issues aren't as big of a deal with Eagle, but several are. Eagle's management folks can flow back and forth to AA, and that works to both carrier's advantage. Take away that ability to cross-promote people, and Eagle's ability to attract quality managers is diminished. They also have some pricing power for health benefits, hull insurance, fuel, etc. which come thru their association with AMR. Take that away, and their costs go up, which is eventually passed on to us as a customer.