PLEASE, TELL ME WHY?

[737823]

Less seats + 10,000 heads gone = even more profits

Is that right ??

That's only part of the picture but yes, those are examples of some of the synergies this transaction could produce. In any deal the terms and distribution of the equity among the legacy shareholders must be established and each side does their due diligence to evaluate the proposal. The creditors want a stock deal and would have to reach an agreement with the legacy LCC shareholders on a ratio for LCC: new AMR stock. But the premise of any M&A deal is to achieve synergies (cut costs, leverage brands and network to generate higher revenues, increase EPS/net income). Much of the executive compensation is keyed to earnings per share, and its easy to slice and dice a deal that is sour for the shareholders, employees, and other stakeholders but boosts EPS and enriches senior management. That is purely a function of the numbers-even absent any synergies.

Josh

 

[WorldTraveler]

Less seats + 10,000 heads gone = even more profits

Is that right ??

who knows how many heads will have to go ... but AMR says they need 10K less people in order to run their existing operation - plus some level of growth.

AMR and US combined - based on AA's former staffing had about 110,000 employees and generated revenues comparable to UA.

DL and UA each have about 80K mainline employees. Take out Eagle and any owned subsidiaries at all companies and AA/US still has at least 10K and probably more like 20K more employees than DL or UA do to generate the same level of revenues.
It doesn't take a rocket scientist to figure out that AA/US still has too many employees to have comparable revenue to DL and UA - which seems to continually be the stated goal for AA/US to achieve.

Take out PHX and then push RASM for the combined airline up by about 5% - not unreasonable on the combined level of cuts - and you have revenues comparable to DL and UA but with 20K or more fewer employees......

There is no way that AA/US combined can generate the level of revenues and profits Parker is promising without dramatically cutting capacity and thus headcount.

 

[usa1]

USAir has a long record of taking over, merging, or attempting to merge with numerous other Airlines in the last 46 years:

1953 - USAir started out as “Allegheny Airlines”

1966 – took over “Lake Central Airlines”

1968 – Merged with “Mohawk Airlines”

1986 – Purchased “Pacific Southwest Airlines”

1987 – Purchased “Piedmont Airlines”

1997 – Purchased the “Trump Shuttle”

2000 – USAir made plans to be acquired by United Airlines,
UAL withdrew offer
2002 – USAir declared Bankruptcy (1[sup]st[/sup] time)

2003 – Exited Bankruptcy – Liquidated the Pilot Pension Plan
(turned over to PBGC - First Major Carrier to do so)

2004 – Deadlocked Negotiations with their Labor Groups,
USAir filed for Bankruptcy a 2[sup]nd[/sup] time

2005 – USAir Emerged from Bankruptcy and was taken over
by America West Airlines

Carrier name changed from America West to USAir for better name recognition – Headquartered in Tempe Arizona


2006 – “New” USAir bid on Delta Airlines – Bid Rejected


2008 – USAir announced plans to again attempt merger
with United Airlines - talks failed

2010 – USAir announced new talks with United – talks ended
and United merged with Continental Airlines


2012 – USAir now attempting a Merger/take-over of American Airlines


USAir Management implies they have a good operation that AA Unions would benefit from, but they’ve not even been able to negotiate a single contract for their Pilots or Flight Attendants Unions, since their merger 7 years ago

2005 – USAir Emerged from Bankruptcy and was taken over by America West Airlines

Carrier name changed from America West to USAir for better name recognition – Headquartered in Tempe Arizona

If that line is true, how come I can't draw my frozen US Air / PBGC pension at 55? That says there has been no US Air since 2005 .... It's America West using the US Airways name?