Interesting Or Just Plain Bull?

[geo1004]

If US goes under and there is a sell-off...

I never said who'd be doing the selling.

 

[High Iron]

You cant shrink to profitability but you can shrink to a neatly packaged, smaller version of yourself fit to be bought. For the time being, you can make up for the shrinkage by handing any fool with an RJ a bucket of blue paint to do your flying. If you can get massive concessions from employees and hopefully force a large number to leave, even better. And better yet, if you can start an in-house alter-ego airline to quietly transfer employees to sub-regional contracts then your in shape to sell. But the unions would never fall for, much less agree to any of that, now would they?

You're psychic Light Years. Much too true for comfort in fact.

 

[jimntx]

If US goes under and there is a sell-off, I would imagine that a prudent move for AA might include:

1. DCA & LGA slots
2. the Shuttle
3. a significant presence at CLT (remember the east coast base they could not make out of RDU BECAUSE of US at CLT?) for a more significant east-coast ppresence (not to mention the Caribbean).
4. additional flights to PHL (an underserved market) including possibly a "BOS-like" set of international flights to key Europe markets (LHR, CDG, MAN).
5. the DM program to capture as much of US's customer base as possible.

Of course, you also have DL and UA trying to make the above NOT happen....

1. DCA & LGA slots: Today's program is brought to you by the phrase, feeding frenzy. Can you say feeding frenzy, children? Yes, that's right. I knew you could. Of course, AA wants those slots. Who doesn't? The slots will end up selling for a premium. And, there will be endless lawsuits of unfair advantage, yada, yada, yada, from the also-rans.

But, remember, if U goes under, those slots will not be part of the late, lamented's estate. Those slots will be re-sold by the operating authorities of each airport--well, at DCA, since it's Federally-owned, the slots will be "awarded"; so, of course, no money will change hands in that case. B)

2. The Shuttle. There's nothing to buy, really, other than the DCA and LGA slots [see #1 above]. There is a plethora of a/c available, and AA, at least, has enough employees on furlough right now to quickly fill up the available jobs needed to operate the Shuttle. And, you don't think the operating authorities are going to let the estate hang on to the gates, do you? Those will go with the slots.

One other point: AMR already operates an East Coast Shuttle. It's just done by Eagle rather than mainline. It's been pretty successful even with the smaller a/c; so, they may not be interested in a mainline version. As I understand it, the Shuttle isn't the moneymaker it used to be, anyway.

3. CLT: I don't know about that. When I was flying I had several trips into CLT. I don't remember that the flights were ever full. Interestingly, every flight I ever worked into or out of RDU was always packed. AA does a lot of business at RDU, but I don't think it would ever elevate to hub status. There's just the one flight to London a day--which is a story unto itself. It's a successful operation, but I don't think there is a clamor for more Int'l flights from RDU. Also, why would AA want a hub at CLT when they already have crew bases at RDU, MIA, DCA, LGA, and BOS. I thought one of U's problems is that PHL and PIT are too close to each other to be effective as hubs. Probably everyone who serves CLT would want to "increase their presence", but I don't see a hub by anyone other than an LCC or one of the left coast airlines--say, AWA--that doesn't currently have a major right coast operation.

4. Same with PHL. PHL has it's own set of problems that make it less than attractive. Not the least of which is, proximity to LGA, EWR, and JFK where AA already has substantial operations. Some increase, but not a major operation.

5. I'll be honest, my brain is not working all that well this morning. I can't think what you mean by DM program. Direct Marketing, maybe. Well that goes without saying.

As far as DL and UA in the running. Well, yes and no. Depends upon the timing. With the latest news that DL has hired Blackstone, the BK advisers, and with UA still in BK, neither of them may be "eligible" to bid. BK limits your "flexibility" and your ability to take advantage of opportunities. You, as a creditor, may not look kindly upon the acquisition of new assets when one is trying to avoid paying for the assets previously purchased from you.

 

[700UW]

Once again the Slots are collateral to the ATSB loan.

CLT is a connecting hub and the second largest gateway city to the carribean.

 

[ITRADE]

1. DCA & LGA slots: Today's program is brought to you by the phrase, feeding frenzy. Can you say feeding frenzy, children? Yes, that's right. I knew you could. Of course, AA wants those slots. Who doesn't? The slots will end up selling for a premium. And, there will be endless lawsuits of unfair advantage, yada, yada, yada, from the also-rans.

But, remember, if U goes under, those slots will not be part of the late, lamented's estate. Those slots will be re-sold by the operating authorities of each airport--well, at DCA, since it's Federally-owned, the slots will be "awarded"; so, of course, no money will change hands in that case. B)

There are slots. There are also gates and terminal space. US has a premium on both.

3. CLT: I don't know about that. When I was flying I had several trips into CLT. I don't remember that the flights were ever full. Interestingly, every flight I ever worked into or out of RDU was always packed. AA does a lot of business at RDU, but I don't think it would ever elevate to hub status. There's just the one flight to London a day--which is a story unto itself. It's a successful operation, but I don't think there is a clamor for more Int'l flights from RDU. Also, why would AA want a hub at CLT when they already have crew bases at RDU, MIA, DCA, LGA, and BOS. I thought one of U's problems is that PHL and PIT are too close to each other to be effective as hubs. Probably everyone who serves CLT would want to "increase their presence", but I don't see a hub by anyone other than an LCC or one of the left coast airlines--say, AWA--that doesn't currently have a major right coast operation.

While CLT is smallish O/Dwise, it is a very successful hub, free of most LCC competition, and is a great competitor to Delta at Atlanta. I too have had several trips to CLT and they have ranged from moderately full to full. In any event, why does a plane have to be full to be profitable? Hint: it doesn't

I don't think you'll see an AA RDU hub. Been there done that.

A likely candidate for CLT, I would think, would be CO.

4. Same with PHL. PHL has it's own set of problems that make it less than attractive. Not the least of which is, proximity to LGA, EWR, and JFK where AA already has substantial operations. Some increase, but not a major operation.

PHL has runway issues and WN's presense. However, you vastly underscore the abilities of PHL. Its the largest metro city in the United States with ONE airport. Proximity to the New York airports is irrelevant. You might as well argue that PHL is close enough to IAD and DCA. But neither is a factor. I would expect NWA to come play there.

5. I'll be honest, my brain is not working all that well this morning. I can't think what you mean by DM program. Direct Marketing, maybe. Well that goes without saying.

The frequent flier program. How many million members???

 

[ZMAN777]

Because of AFA and ALPA bylaws that require DOH for merged employees, my guess is that everyone is going to try to pick up assets other than employees. Harsh, but reality.

Just to set the record straight, ALPA by-laws DO NOT mention DOH at all. Not sure what AFA says about them.

No big deal, I just wanted inquiring minds to know the correct answer to this issue. That aside, I'm not sure it's going to matter in the near future anyway.

Best Wishes!

Cheers,
Z B)

 

[jimntx]

Just to set the record straight, ALPA by-laws DO NOT mention DOH at all. Not sure what AFA says about them.

No big deal, I just wanted inquiring minds to know the correct answer to this issue. That aside, I'm not sure it's going to matter in the near future anyway.

Best Wishes!

Cheers,
Z B)

Sorry. I thought all AFL-CIO unions had a DOH clause in their by-laws. Is ALPA not AFL-CIO affiliated? As I understand it, AFA by-laws state that any AFA shop which is purchased/merged into another airline must be given DOH seniority in the acquiring/surviving shop. Not sure if that's enforceable, but hey it doesn't hurt to ask does it?

 

[jimntx]

Once again the Slots are collateral to the ATSB loan.

CLT is a connecting hub and the second largest gateway city to the carribean.

That's an interesting issue, then. I wonder how the Port Authority in New York would feel about the ATSB holding an auction of the U slots at LGA if U goes under. Seems to me that's the same as I go out, lease a car, then use it as collateral for a personal loan.

I understand that as long as U is flying they can "sell" their slots to another airline--much as airlines have sold route authorities to each other over the years. But, if U were to go into Ch. 7, wouldn't the ownership of the slots revert to individual airport operating authorities?

Is CLT the second largest gateway to the Caribbean because there is a great demand for Caribbean destinations in that area? Or, is CLT the 2nd largest gateway because U established a hub there and requires their undeniably substantial Caribbean business to change planes at CLT?

After all, I'm sure that a major factor in the decision to establish the CLT hub was the fact that every other city of comparable or larger size in that area of the country was already a fortress hub for another airline or growth constrained--like DCA and LGA.

 

[hp_fa]

The following is from the current AWA FA contract.

SECTION 1 - RECOGNITION AND SCOPE


D. SUCCESSORSHIP AND MERGERS

1. This Agreement shall be binding upon any successor or assign of the Company unless and until changed in accordance with the provisions of the Railway Labor Act, as amended. For purposes of this paragraph, a successor or assign shall be defined as an entity (other than an air carrier or an entity which owns or is owned by an air carrier) which acquires all or substantially all of the assets or equity of the Company through a single transaction or multi-step related transactions which close within a twelve (12) month period.

In the event of a complete merger between the Company and another air carrier (i.e., the combination of all or substantially all the assets of the two carriers) where the surviving carrier decides to integrate the pre-merger operation, the following procedures will apply:
If the Company is the surviving carrier, the Company will integrate the two Flight Attendant groups in accordance with AFA Merger Policy if both groups are AFA-represented, and in accordance with Sections 3 and 13 of the Allegheny Mohawk LPP’s (Labor Protective Provisions) if Flight Attendants of the Company’s merger partner are not represented by AFA.
If the Company is not the surviving carrier, the Company will make reasonable efforts to have the surviving carrier integrate the two Flight Attendant groups in the same manner as stated in (a) of this Paragraph.
In the event the Company acquires all or substantially all of the assets or equity of another air carrier, or another air carrier acquires all or substantially all of the assets or equity of the Company, the Company will meet promptly with the Union to negotiate a possible "Fence Agreement" to be in effect during the period, if any, the two carriers are operated separately without integration of the Flight Attendant work force. These discussions shall not be pursuant to Section 6 of the Railway Labor Act, and reaching an agreement with the Union shall not be a prerequisite for closing, or any other aspect of the transaction or operations pursuant to the transaction.

 

[ClueByFour]

There are slots. There are also gates and terminal space. US has a premium on both.

Well, sort of.

They have the BOS terminal, but no slots.

They have the LGA slots, which I believe are in hock to the ATSB.

They have the LGA terminal, but not really--CO owns the thing, and probably has language in the lease allowing them to torpedo the idea of US "selling" it to anyone.

They have (presumably) gates at DCA. The DCA slots are in hock to the ATSB, and probably have to go thru a regulatory process to be moved in any case.

CLT is behind RDU in O/D traffic, and only supports the Caribbean operation because US had a hub there to begin with. CO is not going to open a hub at CLT--they can grab the southeast traffic by slapping codes on stuff (as the government will allow) out of MEM (NW) and ATL (DL). Finally, if a superior connecting hub was all that is required, PIT would not be going out to pasture.