CLT is one of the most profitable cities in the US system, it has one of the lowest operating costs of any airport and has grown and will continue to grow, it also has more flights than any other city in the US system.
US Airways, American to Meet Tuesday
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robbedagain
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[sub]I THINK THAT PHL WOULD BE OK BUT CLT I CAN SEE EXPANDING TO S AMERICA MORE EUROPEAN SERVICES CLT HAS THE ROOM TO GROW TOO PHL MAY OR MAY NOT BUT I THINK IN ANY CASE PHL WILL BE OK AND IT COULD BE THE ALTERNATE TO JFK ESP FOR EUROPEAN SERVICES[/sub]
USA320Pilot
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US Airways, American to Meet Tuesday
By MIKE SPECTOR And SUSAN CAREY
CHICAGO (WSJ.com) - American Airlines creditors committee and US Airways Group Inc. are set to meet on Tuesday to discuss revenue increases and cost savings that could be realized in a merger as part of crucial negotiations that could determine whether the rival airlines pursue a deal, said people familiar with the plans.
The gathering is viewed as significant because potential financial synergies are among the most critical issues that will determine whether a marriage will create a more valuable airline for creditors of American parent AMR Corp. than another plan for the company to reorganize independently, the people said. Lawyers and bankers advising the parties are expected to attend the meeting, and some airline executives could also be present, some of the people said.
One person cautioned the date of the meeting could change.
Fort Worth, Texas-based AMR filed for bankruptcy protection last November and is weighing a merger with US Airways as well as a plan to emerge from court proceedings as an independent airline.
The meeting at the New York offices of Weil, Gotshal & Manges LLP, the law firm representing American, is part of an effort to get the airlines and American's creditors to come to some kind of consensus on how much additional revenue and costs savings a marriage would generate, said people familiar with the process.
Combining the airlines has the potential to increase sales by creating a larger network of routes and save money through the elimination of redundant executives, airplanes, headquarters and other facilities, the people said. The parties for weeks have been analyzing minute details of the airlines' operations to form opinions on overall synergy numbers, some of the people said.
US Airways, in hot pursuit of a marriage all year, said publicly in April that a merger would create roughly $1.2 billion in financial benefits. American representatives believe a deal would be less beneficial to the combined airline's finances, according to people familiar with the matter.
Another possible point of contention could be two airlines' view on so-called transition costs—the expenditures on repainting planes, closing facilities, hooking together computer systems and negotiating new labor contracts for all unionized employees as part of a merger, one of the people said.
The summit, called a "Big Tent" meeting by some involved in the process, comes at a pivotal time, as American approaches a year under bankruptcy protection and tries to negotiate a new contract with disgruntled pilots so it can finish restructuring. The meeting is the next in a series of similar gatherings the parties have had since confidential merger discussions started two months ago and aims to build on previous negotiations over synergies and a number of other details related to the airlines, the people said.
Depending on how the gathering goes, some creditors believe US Airways could make a formal merger proposal to American and its creditors in coming weeks. Other people familiar with the matter cautioned that US Airways hasn't yet decided when it will make a formal merger proposal, though it is keen to do so.
American's hedge-fund bondholders, unions and other creditors have been clamoring to see the direction American chooses for emerging from bankruptcy proceedings and how they would be treated under each scenario.
American and US Airways signed a confidentiality agreement in late August so they could exchange nonpublic financial information. Since then, working groups from the two airlines' fleet, finance, real-estate and information-technology operations have scrutinized possible merger synergies, according to people familiar with the deliberations.
As advisers explore a merger, they're spending time looking at recent big airline deals that combined United Airlines Corp. and Continental Airlines Inc. in 2010 and Delta Air Lines Inc. and Northwest Airlines Corp. in 2008, people familiar with the matter said. They are studying what each airline's financial projections were when the mergers were announced and whether those predictions have been realized, the people said.
American initially criticized US Airways as small and desperate. But the company's creditors committee eventually pressured the airline to explore a merger alongside a standalone reorganization plan, leading to the current secret discussions.
US Airways, for its part, has been muzzled by the terms of the confidentiality agreement after months of robust and public efforts to promote a combination with American.
USA320Pilot comments: The meeting between AMR, US Airways, & the UCC could be affected by Hurricane Sandy.
By MIKE SPECTOR And SUSAN CAREY
CHICAGO (WSJ.com) - American Airlines creditors committee and US Airways Group Inc. are set to meet on Tuesday to discuss revenue increases and cost savings that could be realized in a merger as part of crucial negotiations that could determine whether the rival airlines pursue a deal, said people familiar with the plans.
The gathering is viewed as significant because potential financial synergies are among the most critical issues that will determine whether a marriage will create a more valuable airline for creditors of American parent AMR Corp. than another plan for the company to reorganize independently, the people said. Lawyers and bankers advising the parties are expected to attend the meeting, and some airline executives could also be present, some of the people said.
One person cautioned the date of the meeting could change.
Fort Worth, Texas-based AMR filed for bankruptcy protection last November and is weighing a merger with US Airways as well as a plan to emerge from court proceedings as an independent airline.
The meeting at the New York offices of Weil, Gotshal & Manges LLP, the law firm representing American, is part of an effort to get the airlines and American's creditors to come to some kind of consensus on how much additional revenue and costs savings a marriage would generate, said people familiar with the process.
Combining the airlines has the potential to increase sales by creating a larger network of routes and save money through the elimination of redundant executives, airplanes, headquarters and other facilities, the people said. The parties for weeks have been analyzing minute details of the airlines' operations to form opinions on overall synergy numbers, some of the people said.
US Airways, in hot pursuit of a marriage all year, said publicly in April that a merger would create roughly $1.2 billion in financial benefits. American representatives believe a deal would be less beneficial to the combined airline's finances, according to people familiar with the matter.
Another possible point of contention could be two airlines' view on so-called transition costs—the expenditures on repainting planes, closing facilities, hooking together computer systems and negotiating new labor contracts for all unionized employees as part of a merger, one of the people said.
The summit, called a "Big Tent" meeting by some involved in the process, comes at a pivotal time, as American approaches a year under bankruptcy protection and tries to negotiate a new contract with disgruntled pilots so it can finish restructuring. The meeting is the next in a series of similar gatherings the parties have had since confidential merger discussions started two months ago and aims to build on previous negotiations over synergies and a number of other details related to the airlines, the people said.
Depending on how the gathering goes, some creditors believe US Airways could make a formal merger proposal to American and its creditors in coming weeks. Other people familiar with the matter cautioned that US Airways hasn't yet decided when it will make a formal merger proposal, though it is keen to do so.
American's hedge-fund bondholders, unions and other creditors have been clamoring to see the direction American chooses for emerging from bankruptcy proceedings and how they would be treated under each scenario.
American and US Airways signed a confidentiality agreement in late August so they could exchange nonpublic financial information. Since then, working groups from the two airlines' fleet, finance, real-estate and information-technology operations have scrutinized possible merger synergies, according to people familiar with the deliberations.
As advisers explore a merger, they're spending time looking at recent big airline deals that combined United Airlines Corp. and Continental Airlines Inc. in 2010 and Delta Air Lines Inc. and Northwest Airlines Corp. in 2008, people familiar with the matter said. They are studying what each airline's financial projections were when the mergers were announced and whether those predictions have been realized, the people said.
American initially criticized US Airways as small and desperate. But the company's creditors committee eventually pressured the airline to explore a merger alongside a standalone reorganization plan, leading to the current secret discussions.
US Airways, for its part, has been muzzled by the terms of the confidentiality agreement after months of robust and public efforts to promote a combination with American.
USA320Pilot comments: The meeting between AMR, US Airways, & the UCC could be affected by Hurricane Sandy.
All of your points are well known and I agree with AS LONG AS US REMAINS A STANDALONE CARRIER. We are talking about a relatively low O&D airport, which relies on 70+% of its traffic from connecting sources - it is not ATL. In a AA/US combination, CLT would be placed in a situation where it competes with a significantly better airport - geographically and physically, for Latin/South American services - MIA. Additionally, it just doesn't seem reasonable to project that CLT would retain any Trans-Atlantic traffic (except possibly to OW hub LHR) with JFK/PHL in much better proximity to major Euro cities (i.e., Less Fuel cost) and with a much larger international O&D base. I'd project CLT will become a significant (but downsized) Domestic Mid-South - E/W connecting point - supported in great part by its obscenely low aircraft usage fees.
The one problem with the "MIA will replace CLT" line of thinking is that CLT serves a much greater purpose than simply connections to Latin America. In addition, MIA doesn't have nearly the logical connecting opportunities that CLT does. Whether CLT will retain South American routes is dubious, but I otherwise see CLT remaining as it is today with or without an AA merger.
Not sure what you're asking. MIA serves a very useful yet different purpose than does CLT or ATL. For example, why would anyone fly from GSP to MIA to get to SEA? Most wouldn't, which is why a combined AA-US would still need CLT for getting to places other than Latin America.
wings396
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Exactly, I'm trying to substantiate why a MIA hub doesn't doom CLT. If DL has ATL and would have a need for MIA, no reason a combined AA/US can't use CLT & MIA.
CLT is a smaller version of ATL, and serves the same purpose for US that ATL does for Delta.
CLT is a smaller version of ATL, and serves the same purpose for US that ATL does for Delta.
Walmartgreeter
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Wings said: "CLT is a smaller version of ATL, and serves the same purpose for US that ATL does for Delta."
Yes indeed, MUCH smaller. Smaller in size, smaller in O/D, smaller in INTL departures. The CLT facility is a filthy mess, cheap carpet, dirty ceiling tiles, beat up walls, hot smelly concourses that are way too narrow. If I took the worst concourse D in ATL, and compared it to the A, B, or C in CLT it would rate as the Taj. And they are currently upgrading "D" in ATL now.
CLT, with difficulty, could be replaced by RDU, PIT, or even MCO in a few months. Probably won't happen, but CLT is a dump (a cheap dump, low passenger fees.) But it ain't even a small Atlanta. No way.
But you are correct sir, it does serve the same "purpose."
Greeter
Yes indeed, MUCH smaller. Smaller in size, smaller in O/D, smaller in INTL departures. The CLT facility is a filthy mess, cheap carpet, dirty ceiling tiles, beat up walls, hot smelly concourses that are way too narrow. If I took the worst concourse D in ATL, and compared it to the A, B, or C in CLT it would rate as the Taj. And they are currently upgrading "D" in ATL now.
CLT, with difficulty, could be replaced by RDU, PIT, or even MCO in a few months. Probably won't happen, but CLT is a dump (a cheap dump, low passenger fees.) But it ain't even a small Atlanta. No way.
But you are correct sir, it does serve the same "purpose."
Greeter
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All true except the dirty, smelly carpet has been replaced with dirty, used carpet. And you forgot to mention that only half the people mover conveyer belts work at any one time.
I guess Delta didn't get the memo, as DL is doing just that at LGA and JFK, and there's just 11 miles separating those two airports.
I agree with zethya, PHL is essentially the third international airport for the greater NYC metro area. If PHL has suffiencient international O&D, then there's no reason that PHL won't continue to feature internationl flights even if US and AA combine.
ContUNITEus
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They wouldn't need to fly to CLT. They could do it through DFW (which already exists - GSP-DFW-SEA). So, no, not a good example as a reason to keep CLT around.
Several months ago, one of the Wall St analysts mentioned RIC-JAX as an example of the utility of CLT - AA currently has no practical way of carrying that customer. That's a better example of how CLT would be useful to AA. Both PHX and CLT are at risk of fewer passengers if US is currently double-connecting them with the barbell hub strategy, like my favorite example of TUS-JAX. On US, that requires connecting at PHX and CLT, but AA currently flies mainline flights to both TUS and JAX from DFW. AA also flies to TUS from ORD and LAX, so if AA and US combine, there won't be the need for as many seats between TUS and PHX, except perhaps for some connections around the southwest for which DFW or LAX wouldn't be rational hubs. There are a lot of examples of city pairs where the AA hubs are more logical connections than PHX or CLT and both DFW and ORD have plenty of excess capacity.
Harry Callahan
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Greeter you hit the nail on the head. Jerry Orr needs to get his #### together.
The articles where Orr talks about CLT eventually being as big as ATL with a fifth runway shows just how far from reality he sometimes strays. The Atlanta metro area (9th largest) is three times larger than the Charlotte metro area (33rd largest). The CLT metro area is just barely larger than the Austin or Indianapolis metro areas (neither of which is home to an airline hub). To be sure, CLT has geography on its side (no shortage of hubs near IND or AUS) but it has very low O&D. Very low O&D percentages generally translate to lower yields. Of course, that's consistent with Parker's claim that US hubs don't produce enough premium revenue to enable US to pay the same wages as UA, DL or AA, all of which have much larger operations in the larger premium-revenue heavy cities like NYC, LAX, ORD, ATL, IAH, DFW, etc.
