Read this article this morning. Don't you just love how Horton mentions Southwest for the first time as potential merger partner? Now that would be scary...
Home>Collections>American Airlines
American Airlines is single and looking
Analysis: Evaluating AMR’s options in M&A
July 18, 2012|Arti Patel, MarketWatch
SAN FRANCISCO (MarketWatch) — When American Airlines, the third-largest U.S. carrier, announced last week that it would seriously entertain the idea of a corporate merger, Chief Executive Tom Horton identified a short list of potential partners.
US Airways Group Inc.(US:LCC), JetBlue Airways Corp. (US:JBLU) and Alaska Air Group (US:ALK) are favored options, with Republic Airways’ Frontier Airlines (US:RJET), Virgin America and Southwest Airlines Co. (US:LUV) as other possible contenders.
Of the six, US Airways is the front-runner.
“For many years, I have publicly been a proponent of consolidation as one path to a healthier U.S. airline industry,” Horton wrote in a letter to employees on July 10. “We have assessed many possible combinations in the past, including, of course, an acquisition of US Airways.”
American’s parent company AMR Corp. (US:AAMRQ) filed for Chapter 11 bankruptcy protection in November 2011 and has until Dec. 28 to file a plan for reorganization with a federal court.
Tempe, Ariz.-based US Airways, the country’s fifth largest carrier, is the only other large-scale independent airline left. It has shown interest in a merger with American in the past.
US Airways‘ hubs in Charlotte, N.C., Philadelphia, Phoenix and Washington, D.C. would help expand routes for American, which retains hubs in Chicago, Dallas, Los Angeles Miami and New York.
Analysts have been anticipating the merger between the two for some time. A consolidation would help both airlines better compete against the country’s two biggest carriers, United Continental Holdings Inc. (US:UAL) and Delta Air Lines Inc. (US
AL) Both United and Delta are the product of megamergers themselves. See a slide show of buyouts and busts in the U.S. airline industry.
On Wednesday, AMR reported a loss of $241 million for its second quarter, down from $286 million in the same period a year ago. Revenue was up 5.5% to $6.5 billion from $6.1 billion, the highest in company history.
“Our revenue performance has topped the industry for several months, leading to our first second-quarter profit in five years excluding reorganization and special items,” Horton said in a statement, referring to $95 million in net income once one-time items and restructuring costs were taken out.Matchmaking
The long-discussed deal with US Airways is by far American’s best option. The second best option, on paper, would be for American to merge with Southwest, the No. 4 U.S. airline.
Southwest has been dealing with issues of its own in recent months after its latest acquisition, with AirTran Holdings, earlier this year. The company is facing some rather large technological challenges and is currently working off an outdated system for recording passenger reservations.
Home>Collections>American Airlines
American Airlines is single and looking
Analysis: Evaluating AMR’s options in M&A
July 18, 2012|Arti Patel, MarketWatch
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SAN FRANCISCO (MarketWatch) — When American Airlines, the third-largest U.S. carrier, announced last week that it would seriously entertain the idea of a corporate merger, Chief Executive Tom Horton identified a short list of potential partners.
US Airways Group Inc.(US:LCC), JetBlue Airways Corp. (US:JBLU) and Alaska Air Group (US:ALK) are favored options, with Republic Airways’ Frontier Airlines (US:RJET), Virgin America and Southwest Airlines Co. (US:LUV) as other possible contenders.
Of the six, US Airways is the front-runner.
“For many years, I have publicly been a proponent of consolidation as one path to a healthier U.S. airline industry,” Horton wrote in a letter to employees on July 10. “We have assessed many possible combinations in the past, including, of course, an acquisition of US Airways.”
American’s parent company AMR Corp. (US:AAMRQ) filed for Chapter 11 bankruptcy protection in November 2011 and has until Dec. 28 to file a plan for reorganization with a federal court.
Tempe, Ariz.-based US Airways, the country’s fifth largest carrier, is the only other large-scale independent airline left. It has shown interest in a merger with American in the past.
US Airways‘ hubs in Charlotte, N.C., Philadelphia, Phoenix and Washington, D.C. would help expand routes for American, which retains hubs in Chicago, Dallas, Los Angeles Miami and New York.
Analysts have been anticipating the merger between the two for some time. A consolidation would help both airlines better compete against the country’s two biggest carriers, United Continental Holdings Inc. (US:UAL) and Delta Air Lines Inc. (US
AL) Both United and Delta are the product of megamergers themselves. See a slide show of buyouts and busts in the U.S. airline industry.On Wednesday, AMR reported a loss of $241 million for its second quarter, down from $286 million in the same period a year ago. Revenue was up 5.5% to $6.5 billion from $6.1 billion, the highest in company history.
“Our revenue performance has topped the industry for several months, leading to our first second-quarter profit in five years excluding reorganization and special items,” Horton said in a statement, referring to $95 million in net income once one-time items and restructuring costs were taken out.Matchmaking
The long-discussed deal with US Airways is by far American’s best option. The second best option, on paper, would be for American to merge with Southwest, the No. 4 U.S. airline.
Southwest has been dealing with issues of its own in recent months after its latest acquisition, with AirTran Holdings, earlier this year. The company is facing some rather large technological challenges and is currently working off an outdated system for recording passenger reservations.
