Someone posted recently about whether the government still distinguishes between DCA commuter slots and DCA mainline slots. Quite a few of the US and AA slots are commuter slots - Does that still matter? I don't know - perhaps someone here knows. I don't recall it being an issue in the DL-US slot swap, but perhaps it was.
Today's Proposed Merger Thoughts
- Thread starter USA320Pilot
- Start date
robbedagain
Veteran
fwaa i think most of the gates in lga we gave to dl was operated by our commuters.. but dont remember if it was a major issue.. i think what the doj would love is for those gates to be turned into mainline jet gates and have lit commuters as possible but it certainly could be a factor but only time will tell
roabilly
Veteran
- Thread Starter
- #49
Robbedagain,
[background=transparent]It's in Document Doc 45 from the joint filing, paragrpah, 16 (c)(2). The filing says, "Plaintiffs expect to file an Amended Complaint, and agree to do so no later than September 6, 2013. The Airlines have agreed to answer the Amended Complaint on or before September 10, 2013." [/background]
[background=transparent]USA320Pilot[/background]
robbedagain
Veteran
thanks usa320.. also just found it on www.justplanenews.com i think its motley fool has an article that is quite interesting.. due to the sequestration and the cuts the doj has been forced to deal with including hiring freeze since 2011 or 2012 they may be more willing to allow us/aa to merge with few concessions...
- Thread Starter
- #51
I'm going to be in DCA this week and I was going to check the slot totals for both companies while there, but you helped us out by providing the exact number. The 50 AA/AE slot number makes sense with another comment I heard. Combined US/USX and AA/AE operate about 280 slots per day.
I have been told, but I don't know if it's for certain, that Doug Parker offered to relinquish 10 slots and Bill Baer wanted 28. 28 are 10% of the combined business enterprise's current allocation.
DCA is the second most profitable airport in the country behind EWR and marketing and planning currently views DCA revenue as "bullet proof," which is no secret. I suspect Doug is trying to prevent revenue from being destabilized.
But, for the deal to proceed there will likely need to be a Structural Remedy that may be around 18-20 slots sold with the parties negotiating a settlement in between their opening positions, if these numbers are accurate.
And, the New American should be permitted to sell these slots. Suring US Airways' Slot Transaction they sold JetBlue 8 slots for $40 million or $5 million/slot. If the New American gives up 18-20 slots they could reap $90 to $100 million,
Next, they parties will most likely need to negotiate the Behavioral Remedies too.
Finally, the next two weeks have an interesting timeline. No later than September 6th the DOJ's amended complaint will be filed in U.S. District Court and then Rich Parker's reply will be filed on or before September 10th. Then two days later Judge Lane is scheduled to make a ruling on whether or not he will confirm AMR's POR, which Lane said last week was "fairly persuasive."
I wonder if the feds and the two companies will signal the bankruptcy court again, which they may have done before AMR's last POR confirmation hearing on August 29th, when the night before the parties filed a brief in District Court indicating they were open to settlement talks?
USA320Pilot
Phoenix
Veteran
- Thread Starter
- #53
What's interesting is that the parties filed a joint brief in District Court indicating the parties were open to settling the lawsuit the day before the Bankruptcy court was scheduled to confirm, provide a stay, provide a conditional confirmation or block AMR's POR.
And, "(The) Plaintiffs expect to file an Amended Complaint, and agree to do so no later than September 6, 2013. The Airlines have agreed to answer the Amended Complaint on or before September 10, 2013."
This obviously indicates discussion by the parties, the possibility of a settlement, and an amended complaint that should further formally illustrate the Justice Department's amended position and Rich Parker's response.
I'm not sure of each side's amended position, but the parties are open to a settlement and are willing to amend their positions. Will this lead to a settlement and a corporate transaction? Maybe, maybe not, but there is a lot of new information available that points towards a deal.
USA320Pilot
WorldTraveler
Corn Field
- Dec 5, 2003
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interesting information on the size of the DOJ's "ask" and seems to confirm what I have been saying that the DOJ wants a lot more slots at DCA than US was willing to give.
If Parker was willing to give up 10, that is right in line with the 8 he had to give up as part of the slot deal. The much higher percentage would seem to indicate that the higher level of concentration now justifies a higher "ask."
Parker's goal at this point is to reduce the amount of slots given to LFCs who will use full-size aircraft and give away RJ slots if he has to give up slots to reduce AA-US' slot portfolio to a certain size.
There is a greater chance of making money by selling mainline slots to low fare carriers - and it is possible that network carriers could bid as well - but the price he can expect to receive for RJ/small city slots will be minimal.
OTOH, RJ slots will do far less damage to the DCA hub down the road... so he has to decide if he would rather make money selling slots now or protect the hub down the road. I think the preference will be to forego the money today to help keep the hub viable long-term.
I doubt if slots will go for what they once did.... I would be surprised if B6 is making money on its flights that it operates with purchased slots.
If Parker was willing to give up 10, that is right in line with the 8 he had to give up as part of the slot deal. The much higher percentage would seem to indicate that the higher level of concentration now justifies a higher "ask."
Parker's goal at this point is to reduce the amount of slots given to LFCs who will use full-size aircraft and give away RJ slots if he has to give up slots to reduce AA-US' slot portfolio to a certain size.
There is a greater chance of making money by selling mainline slots to low fare carriers - and it is possible that network carriers could bid as well - but the price he can expect to receive for RJ/small city slots will be minimal.
OTOH, RJ slots will do far less damage to the DCA hub down the road... so he has to decide if he would rather make money selling slots now or protect the hub down the road. I think the preference will be to forego the money today to help keep the hub viable long-term.
I doubt if slots will go for what they once did.... I would be surprised if B6 is making money on its flights that it operates with purchased slots.
LD3
Veteran
Sure, the low-fare Advantage Fares program detailed in the complaint by which US undercuts the fares (on connecting itineraries) of the other legacies where the others offer nonstops. Low-fare competition and the likelihood that it will end with the merger is one of the features that attracted their attention.
It's amazing how the DOJ seems to think that Parker invented the "Advantage Fares" concept. It's nothing new. Ever since deregulation, when airlines dropped being more point-to-point and became hub-centric networks, they have all tried skimming away customers from their competitors non-stops by offering discounted fares for the inconvenience of a stop and aircraft change.
But now, since US has a cute name for it, the DOJ sees it as the savior of low air fares for the huddled masses yearning to fly free. What a bunch of bureaucratic nitwits!
Maybe we can start that "lawyers at the bottom of a lake" thing with the DOJ. Sequester the entire Department, I say, starting with Holder.
- Thread Starter
- #60
I believe Rich Parker will bring up Nycbusdriver's point. Advantage Fares are not unique to US Airways and fare discounting occurs all the time. Is that not a Southwest and JetBlue strategy? Furthermore, have other companies started fare wars too? Is US Airways the only airline that offers Advantage Fares and it cannot be allowed to merge because without US Airways as an independent airline last minute fare discounting will cease to exist?
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