Could US Airways Take Over American?

[Hatu]

However, just because American does not want to do a merger with US Airways does not mean that US Airways wouldn't try to put one together. It made a hostile bid for bankrupt Delta(DAL_) in 2008.

It is worthwhile to consider that American's market capitalization is a surprisingly low $2.2 billion. By contrast, American's peers, Delta and United (UAL_), have market caps of $9.5 billion and $8.7 billion, respectively. In fact, US Airways' market cap of $1.6 billion isn't that far below American's.

Of course, a takeover would be far easier in bankruptcy court, and American does not appear to be remotely near bankruptcy. In fact, its management has steadfastly opposed a bankruptcy filing, largely on moral grounds. "This company stands for something, more than just any old company," Arpey declared, in an August 2010 interview.

"If American went into bankruptcy, it's a given, US Airways would be there," said Mike Flores, president of the US Airways chapter of the Association of Flight Attendants. "I truly think that (Doug) Parker and his companions from America West are just sitting there waiting for the day that American files."

http://www.thestreet.com/_yahoo/story/11129226/1/could-us-airways-take-over-american.html?cm_ven=YAHOO&cm_cat=FREE&cm_ite=NA

 

[FA Mikey]

Based on the ramblings of the chapter president of the afa. Rather than looking at market cap, how about each airlines cash position. AA has about 6 billion, Usair?

 

[Frank Szabo]

... snip

In fact, its management has steadfastly opposed a bankruptcy filing, largely on moral grounds. "This company stands for something, more than just any old company," Arpey declared, in an August 2010 interview.

... snip

Moral grounds? An executive with moral convictions??

 

[FWAAA]

There's no dobt that Ted Reed, author of this story in The Street and several other similar articles over the past couple of years, has a major hard-on for a takeover of AA by USAir. Watching it is becoming comical - like listening to a friend/co-worker who has a crush on someone talk about them all the time, looking for ways to work the object of their crush into the conversation.

Yes, AA could find itself in Ch 11, but it's a huge stretch to conclude that Doug Parker and his Tempe-based team would be able to present a winning bid for AA. If AA is forced to seek bankruptcy protection, I predict a pre-packaged plan where management has worked out most of the details ahead of time and has a plan of reorganization ready to go.

Parker was successful just once out of his several consolidation attempts (failed to take over ATA and DL plus failed to convince UA to marry US) and I wouldn't bet money that he'd be successful at taking over AA. Sure he attracted some financing to marry two losers that were headed for liquidation, HP and US, but that doesn't mean he'd be the only shining star looking to take over AA if it became apparent that AA management would not be running the show.

 

[Bob Owens]

I agree and really the market cap doesnt mean anything. Just because shares were selling at $6.55 that doesnt mean that someone could walk in with $2.1 billion and buy all the stock. Obviously once it got out that there was a takeover attempt that alone would likely drive the price way up. While they would only have to buy a controling interest in the company I suspect that the same people who own the debt also have controlling interest. When we went to Wall Street there was a difference of opinion at one firm as far as AA, they were from different sections, one handled selling the stock, the other handled selling the debt.

AA is predicting some pretty hefty profits over the next five years in contract negotiations, for what thats worth, despite paying huge amounts of interest to the banks. So at $6.55 AMR may be a good buy, if I wasnt in so much debt after taking such a hit for the last eight years I'd buy some.

 

[JFK Fleet Service]

The world was supposed to end Saturday too...

 

[Kev3188]

There's no doubt that Ted Reed, author of this story in The Street and several other similar articles over the past couple of years, has a major hard-on for a takeover of AA by USAir. Watching it is becoming comical - like listening to a friend/co-worker who has a crush on someone talk about them all the time, looking for ways to work the object of their crush into the conversation.

It probably doesn't hurt that he used to work at US...

 

[eolesen]

Yep, Teds got a questionable streak going. Not to be confused with Dan Reed, who is usually far more objective...

 

[FrequentFlierCA]

US Airways tried with Delta. That didn't go too well, now did it?

US is basically a "low cost carrier" (hence their stock ticker LCC). I don't see them as a good fit with AA.

 

[eolesen]

Well, AA has been slowly morphing more and more in the LCC direction... The only thing separating AA and WN right now is premium clubs and cabins, international service, and travel agency participation.

AA's doing their best to drive more direct bookings via the website, and WN's brand will be international once they integrate with AirTran. If you consider things like fees, WN winds up being more of a full service carrier than AA is...

I don't think it's a huge stretch to imagine a pair-up of US and AA. There isn't a whole lot of overlap in the networks to mess with the DOJ, but the labor dynamic is simply frightening....

 

[WorldTraveler]

Well, AA has been slowly morphing more and more in the LCC direction... The only thing separating AA and WN right now is premium clubs and cabins, international service, and travel agency participation.

AA's doing their best to drive more direct bookings via the website, and WN's brand will be international once they integrate with AirTran. If you consider things like fees, WN winds up being more of a full service carrier than AA is...

I don't think it's a huge stretch to imagine a pair-up of US and AA. There isn't a whole lot of overlap in the networks to mess with the DOJ, but the labor dynamic is simply frightening....

it would be more accurate to say that AA is leading the pack AWAY from traditional distribution systems (whcih AA pioneered) to something that is more LFC compatible... but given that most other aspects of AA's operation is very much a high cost network carrier model, it isn't at all accurate to say that AA is becoming an LFC. Premium clubs and cabins, international service, and agency participation are very big cost components and identifiers of network carrier service...
further, AA operates a heavilly hub and spoke network which is becoming less point to point with every schedule change.
.
Given that WN is one of the few carriers in the US - and even in other countries - that doesn't "bundle price" its product, I don't think you can make a statement about whether AA or WN is LFC based on its pricing strategies.. most carriers now have unbundled their product - LFCs just happen to have started the trend.
.
AA and US are more than reasonable possibilities... once AA's financial situation is improved to the point that it won't take two airlines down. No airline wants to get any closer financially to AA until it is turned around.

The labor situation at AA and US is similar only in that neither carrier has figured out how to get along w/ their employees; the difference comes that AA mgmt doesn't seem to care that the lack of employee involvement is costing the company billions of dollars in lost revenue and higher costs per year while US mgmt has taken the approach of doing what has to be done for the sake of the company regardless of the impact on employees... and US probably has a greater chance of outliving AA because of that.

 

[eolesen]

You are so clueless at times, Babbler.

WN's been bundling using fare families for as long as I've been flying them as a paying customer. They may not extend it to bags, but if you want flexibility, you pay extra for it. If you want early boarding, you pay for it either thru Early Bird or a higher fare family. If you wanted to fly at a certain time, you paid for it.

It's probably true that they didn't have to unbundle things like pillows, blankets, entertainment or food. But that's because THEY NEVER OFFERED IT.

It may be time for you need to find a different hobby. You've apparently been away from the industry long enough to only be informed to what you see in a press release...

 

[Hopeful]

The labor situation at AA and US is similar only in that neither carrier has figured out how to get along w/ their employees; the difference comes that AA mgmt doesn't seem to care that the lack of employee involvement is costing the company billions of dollars in lost revenue and higher costs per year while US mgmt has taken the approach of doing what has to be done for the sake of the company regardless of the impact on employees... and US probably has a greater chance of outliving AA because of that.

And AArogance is continually destroying any chance of good labor relations....Three unions and NO agreements.
It seems it is "AA'S WAY OR NO WAY."

It cannot only be the unions who have to soften their positions, AA continually hardens theirs..

 

[Imjustsayin]

And AArogance is continually destroying any chance of good labor relations....Three unions and NO agreements.
It seems it is "AA'S WAY OR NO WAY."

It cannot only be the unions who have to soften their positions, AA continually hardens theirs..

Can you tell me what the AA F/A union's proposals are? I've been to thier website and Facebook and can't find anything. They seem to have quite a few Youtube videos.

 

[damajagua]

And AArogance is continually destroying any chance of good labor relations....Three unions and NO agreements.
It seems it is "AA'S WAY OR NO WAY."

It cannot only be the unions who have to soften their positions, AA continually hardens theirs..

There is plenty of arrogance on both sides. Just like AA some of the unions in the property are in la la land.