Idle Musings: Are talks between AA and US Airways a smokescreen?

[jimntx]

Just some idle musings that come from being housebound. (Dallas streets are icy and it's barely above freezing here.)

DL "talked" with Doug Parker and company until they got their stuff together, then rejected the merger offer. (Dec. 2006)

One year and four months after DL rejected DP, they announced a merger with NWA. (April, 2008) A move that almost no one anticipated. Furthermore, they managed to get the two airlines completely integrated in another year and eight months. (FAA granted single carrier certificate, 12/31/2009.) A feat almost unheard of--particularly with two airlines of that size with such different corporate cultures--unionized vs. non-union, etc.

Could DL have been chatting with NW all that time (during bankruptcy) and just used DP as a smokescreen? Could the merger announcement have been the end point of a process rather than the beginning? A lot of "details" must have been worked out in advance to get the whole thing done so quickly.

Is AA doing same while they work on a merger with someone else? JetBlue? Alaska? (Get their congressmen to pass a law allowing greater foreign ownership percentages? Think BA/IB.) Just asking.

 

[AAviator]

🙂

 

[WorldTraveler]

DL wasn't using US as a smokescreen.... from the day when Parker called DL's then CEO and told him of the unsolicited hostile takeover, DL made it clear it opposed the US takeover attempt.
I believe the DL/NW merger was set years before - when KL and AF merged in Europe - and they knew they were going to push CO out of Skyteam and into the arms of UA.

But, yes, it is very possible that AA has been playing along with US and has no intention of a merger....
I still don't see any other merger partner offering as much as US does but there are alot of other airlines that have the potential to be a whole lot easier to execute than AA/US.
It could be very possible that AA decides to choose a smaller merger, do it quickly, and then do another one in a year or two rather than taking on US which could take years to integrate, perhaps never fully achieving the desired results.

Stay warm, dry, and safe.

 

[jersey777]

Wishful thinking

 

[1AA]

USAir has nothing to offer AA except misery.

 

[Bob Owens]

And an ancient workforce, that means even with low wages higher labor costs.

 

[WorldTraveler]

And an ancient workforce, that means even with low wages higher labor costs.

yeah Bob, we're on the same page.
Now you know why AA's labor costs kept going up after 2003 even though the number of employees went down.

Furloughs get rid of the lowest seniority people whereas voluntary programs such as what that other airline 800 miles east on I20 has largely used to trim its employment numbers during the past decade focus on mid to high seniority employees - keeping average labor costs from going up even w/ reduced capacity.

 

[Bob Owens]

yeah Bob, we're on the same page.
Now you know why AA's labor costs kept going up after 2003 even though the number of employees went down.

AA furloughed less than their competitors and has since recalled all that wanted to come back. They have been hiring off the street for several years, but they had to hire them at step three because they could not get anyone even though they lowered standards. When I was hired you had to have at least five years of heavy turbine experience, now they accept Eagle experienece and you only need two years of that.

The fact is that our hourly wage is still lower than it was in 2003, plus we get less vacation, less Holidays, Less sick time etc. The reason why labor costs didnt go down is because they gave their non-union workers, including management several raises. One program, called "rise" made the Supervisiors managers, so in theory they didnt raise manager salary, they just paid more people managers wages for doing supervisors work. The OT could also be a factor as workers dont put out like they used to and that drives OT.

 

[signals]

A smokescreen?

Good thing these thoughts weren't put up by me 🙄

 

[jimntx]

(Ok. And I won't tell anyone that you told me to start this thread. It'll be our secret. )

 

[700UW]

http://www.nbcdfw.com/news/business/Three-Week-Delay-in-AAs-Merger-Decision-185958422.html