New Merger Rumor

[JAMAKE1]

What's the new airline going to be named?

How about American Airways?

 

[tom barry]

This whole thing(possible merger with Tempe etc.) would be one of those RARE times that AMR stockholders would reject the higest offer(US's offer) for the second/third highest offer to avoid the dregs that is Parker/Tempe.

 

[JFK Fleet Service]

Maybe I'm in the minority,but I have no faith in Horton to guide AA forward.The whole "plan" seems predicated on reducing labor costs and larger regional jets.

I've yet to see anything other than vauge claims of "growing cornerstone capacity" by 20% over 5 years.

Maybe I'm too cynical but I don't think Horton has the chops to pull it off.

 

[robbedagain]

several analysts dont believe that AA can go it alone and they also have said they would like to see a US/AA tie up. But the ???? remains to be seen as to whether or not and how much of a roll say DL/AA and the DOJ play and see how AA will fair during the remainder of the CH11 process
For all of you AA folks for your sake I hope and wish you the best and hope you emerge better and stronger carrier

 

[AAviator]

Thanks,
There are an equal number, if not more analysts that report AA will be fine as a stand alone, and may be the buyer of another airline post BK. Some even report US offers nothing in an AA combination.

For your sake Mickey, I hope you're able to pull a rabbit out of your hat one last time if Parker and the "US crew" aren't able to complete a hostile buyout of AA.

Oh the irony of your screen name.....

 

[Deleted member 17588]

Maybe I'm in the minority,but I have no faith in Horton to guide AA forward.The whole "plan" seems predicated on reducing labor costs and larger regional jets.

I've yet to see anything other than vauge claims of "growing cornerstone capacity" by 20% over 5 years.

Maybe I'm too cynical but I don't think Horton has the chops to pull it off.

I'm in 100% agreement with you. Whether or not you and I hold a minority/majority view, I'm not sure. I don't see myself as being overly cynical. I'm just thinking realistically based on past and current actions by AA management. There's a reason Wall Street asked Arpey, "Is that all you got?" For the past few years this company has been piecing together a "business plan" little by little, like grasping for straws, hoping things would get better, but with no overall coherent financial plan to support and back up their "vision" for the future of this airline other than to impose more cuts on labor. Horton is not Aprey, but at this point I only see Horton continuing this same desperate, grasping-at-straws, piece-together business plan. The only difference now is we are using the same failed and overly vague financial plan under the supervision of the bankruptcy court.

 

[CactUS4Ever]

It's not looking good for employees with less than 25years seniority and it doesn't look good for the people that survive to stay afloat because it's gonna hurt in the pocket...God Bless You All

 

[wings396]

This whole thing(possible merger with Tempe etc.) would be one of those RARE times that AMR stockholders would reject the higest offer(US's offer) for the second/third highest offer to avoid the dregs that is Parker/Tempe.

If I'm not mistaken, the shareholders have ZERO to say given that their stock is toilet paper in BK....

 

[JFK Fleet Service]

On a related note,on Bloomberg TV's news ticker is a quote from US Airways CFO about "One more airline merger left" and " US Airways will be involved in further consolidation".

This is turning into the worst kept secret...lol.

 

[FWAAA]

If I'm not mistaken, the shareholders have ZERO to say given that their stock is toilet paper in BK....

Yes, the current shareholders have no say, but the unsecured creditors will become the shareholders if/when AA emerges from Ch 11. If AA emerges prior to the marriage with US, then the shareholders will have a say. If US and AA attempt to wed while AA is in Ch 11, then the unsecured creditors (who will get the new stock) are essentially the "shareholders" to whom Bears refers.

 

[WorldTraveler]

On a related note,on Bloomberg TV's news ticker is a quote from US Airways CFO about "One more airline merger left" and " US Airways will be involved in further consolidation".

This is turning into the worst kept secret...lol.

except that US somehow seems to think that if you say "I think I can, I think I can" enough times you can do something, even if the "something" is beyond their control anyway.
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What US fears right now is soaring oil prices that COULD threaten US' future before they have a chance to make a bid for AA. All US wants is a shotgun wedding now, with no regard to where the new couple will live, how they will feed their new offspring, or even what they will name the little one.
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2012 will be a pivotal year in the industry... US continues to look elsewhere for solutions to its problems, even if can't demonstrate it is any more capable of running a consolidated company than it is today a half decade after its last uncompleted merger.

 

[wings396]

If fuel prices continue to rise, your boys at DL will have their hands full as well. And if anything happens that causes international travel to slump on top of that, they will be hurtin right along with everyone else. Or is DL now so big and mighty that nothing can phase them? Get a life already instead of giving all of your page long theories on the airline industry. Stop crying about all of the reasons that AA shouldn't hook up with US , when it is crystal clear that you fear they will be a stronger competitor for DL.

 

[dfw gen]

lets buy US air so we can staple cactus to the bottom just to hear him cry about the injustice of it all!

 

[WorldTraveler]

If fuel prices continue to rise, your boys at DL will have their hands full as well. And if anything happens that causes international travel to slump on top of that, they will be hurtin right along with everyone else. Or is DL now so big and mighty that nothing can phase them? Get a life already instead of giving all of your page long theories on the airline industry. Stop crying about all of the reasons that AA shouldn't hook up with US , when it is crystal clear that you fear they will be a stronger competitor for DL.

AA by itself COULD be a viable competitor again to DL - assuming they can successfully restructure.
But the reality that you and others don't seem to want to hear is that AA is trying to restructure in the midst of an industry that is in generally fairly stable shape financially and at a time when fuel prices are soaring.... which means capacity needs to come out of the industry and out of AA in order to force fares up.
AA has yet to come up with a plan to reduce the capacity that every airline has had to do in order to restructure... and there is simply no way that AA can turn itself around without making those major route cuts.
Of course AA continues to fight labor which is central to figuring out what kind of money AA has to spend in order to run its business - and fleet costs that go with it.
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So the day when AA will be ready to become a viable competitor again is a long way off - and continued increases in fuel will push that day even further off.
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And as much as you would like to think otherwise, US is a higher cost producer right now... they are not NOW in a position to effectively compete with DL and there is no reason to think they are going to get costs out in such a way that they can be a leaner competitor.
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And that just means once again that US cannot make AA work - if AA is able to compete, it will be on the basis of what AA does.
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This whole topic highlights once again how desperate US is to pull off a merger with AA because US' future is finished if AA restructures w/o a US merger or if AA merges with anyone else.
We will see the US PR machine crank out one story after another trying to convince everyone how needed an AA-US merger will be... but it still won't change the business fundemantals which are clearly stacked against it happening.
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BTW, you might be interested in knowing that several airlines presented at JP Morgan's transportation conference including UA, WN, and DL. WN's guidance that they do not expect to be profitable came as they stated that they expect to pay $3.50 per gallon for fuel for the quarter, a 15 cent increase compared to their forecast just a couple months ago. At the same time, DL said it expects to pay $3.27 per gallon for the quarter. Remember how much WN was able to expand a couple years ago and how much competitive advantage they gained because of their fuel price advantage? Now the table has turned. No other carrier released guidance on fuel today (that I found) but DL beat the industry on fuel prices for the last quarter.
WN's business model simply does not work with these kinds of fuel prices because they are choking off demand every time they raise fares and they cannot get capacity out of markets and redeployed elsewhere fast enough to restabilize their business model.
http://www.marketwatch.com/story/us-airlines-cut-capacity-profit-forecasts-2012-03-13
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At the same time, DL is generating RASM growth that is 3X the levels WN has reported and 2X what AA and UA is reporting.
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It simply cannot be underestimated the financial strength that DL has relative to the rest of the industry when they have a fuel cost advantage - on top of the fact that DL was already the low cost mainline producer among network carriers as well as WN AND is increasing revenues faster than anyone else in the industry.
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AA is trying to restructure and present a case that it can successfully compete and US is saying they can run AA better than AA can do on its own - despite the fact that AA and US both have significant financial disadvantages.
It is simply mythical to continue to think that an AA-US merger will happen against overwhelming evidence that they do not have what it takes to compete now and have no plan to gain that advantage now - and if anyone is able to gain it, it will be AA by virtue of its position in BK.
US is simply a noisy sideshow trying to convince everyone that it is important while anyone who knows a thing about financials in the airline industry knows what US really is.

 

[johnny kat]

WT, with all due respect, if US is as inconsequential as you say they are, then why do you wear your typing fingers down to the knuckles everytime something is said about a US/AA combination? Could it be that there is this unknown variable about these two that you don't understand? It may just boil down to egos in the end. It has happened many times before.

Do you honestly think that just because DL is in a great position at the moment that the other airlines are just going to let you run away with all the goodies? What may be great for DL may not fly with regulators. With so much at stake for US and AA I think both managements and the unions will have to seriously consider a merger. Whether one happens is yet to be seen. If one happens it will sure put water in DL's wheaties. If not then I am sure the competitive reponse to DL will be just as robust from both carriers.
What would happen if AA does a second BK? Don't you think your employer would be looking to cut labor costs even further. What happens if UA decides to pickup the pieces
of US and use them to further squeeze DL's position. You are so naive to think there is no value to US and even more so if you think AA will just shrink away and have no bearing on what is going to happen at DL in the future.

At any rate DL is a great airline. And AA will be great again one way or the other. And the question that still has yet to be answered from the 1996 book "Hard landing" is what will happen to US? It always boils down to that question. Like it or not, just like NW, US has to be placed somewhere in order to optimize the value of the slots and strategic hubs to the surviving partner. It would be utter insanity to let a 13 B dollar yrly revenue producer go away entirely.