US Airways Confirms It Has Hired M&A Advisors For Possible AMR Takeover
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No Land Green
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- Oct 2, 2010
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That's our past, present and future problem here at this Company, what is fact and what is fiction. Many, not me, believe everything that spews out of Corporate's mouths. Yet, their compensation and golden parachutes indicate something completely different.
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USA320Pilot
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USA320Pilot
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I believe Ray Neidl is right when he said, “An AMR with the right cost structure would be an attractive merger partner but we have serious doubts that regulators would allow either of the two large U.S. legacy carriers (Delta and UAL) to acquire AMR. We also believe that regulators would have a problem with a Delta acquisition of LCC due to the extensive overlap in their systems. On the other hand we believe that a US Airways acquisition of AMR could get regulatory approval and the combined airline would have enough market mass to be competitive with Delta and UAL.”
In my opinion, the investment community does not want US Airways and American to wait one-year to announce a deal and then another 9-12 months to close the transaction.
They want to close a deal sooner to make money; therefore, it would not surprise me if somebody from the investment community floated both the idea that Delta was interested in AMR and then Delta's interest in US Airways to move Tom Horton and Doug Parker to action sooner-rather-than-later. Delta may be interested in US Airways, but they can't get the whole airline because there is too much overlap. And, this could cause US Airways pilot furloughs by seat position because Delta could want turn key assets if there is a major divestiture and history repeats itself like with PanAm. In the Delta-PanAm European fragmentation PanAm employees had to interview for jobs at Delta.
There is no question USAPA could screw up a Delta-US Airways combination because of the CoC provision, which enables USAPA to prevent the deal. Why? Too much downsizing. I believe US Airways' employee's best outcome is for US Airways to acquire AMR and Doug to bypass USAPA and APA with a DAL+1 percent contract offer like before, but this time not only tell Cleary and Mowrey, but all of the pilots from both companies in a letter. This could prevent AA's pilots from objecting to the deal because they would not take a S.1113 contract haircut and prevent USAPA objections because AA has a lot of pilot furloughs who would likely go to the bottom of the joint seniority seniority list.
AA is about to deliver their new contract demands to its unions. This time management has the threat of court ordered imposition to obtains dramatic concessions, which will get APA's attention. This scenario with an American-US Airways merger would also soften the effects of the Nicolau Award to East pilots and eliminate USAPA with APA becoming our likely union.
This message and $2 will get you a cup of premium coffee.
Does A US Airways-American Airlines Merger Make Sense? Click here to read the story.
In my opinion, the investment community does not want US Airways and American to wait one-year to announce a deal and then another 9-12 months to close the transaction.
They want to close a deal sooner to make money; therefore, it would not surprise me if somebody from the investment community floated both the idea that Delta was interested in AMR and then Delta's interest in US Airways to move Tom Horton and Doug Parker to action sooner-rather-than-later. Delta may be interested in US Airways, but they can't get the whole airline because there is too much overlap. And, this could cause US Airways pilot furloughs by seat position because Delta could want turn key assets if there is a major divestiture and history repeats itself like with PanAm. In the Delta-PanAm European fragmentation PanAm employees had to interview for jobs at Delta.
There is no question USAPA could screw up a Delta-US Airways combination because of the CoC provision, which enables USAPA to prevent the deal. Why? Too much downsizing. I believe US Airways' employee's best outcome is for US Airways to acquire AMR and Doug to bypass USAPA and APA with a DAL+1 percent contract offer like before, but this time not only tell Cleary and Mowrey, but all of the pilots from both companies in a letter. This could prevent AA's pilots from objecting to the deal because they would not take a S.1113 contract haircut and prevent USAPA objections because AA has a lot of pilot furloughs who would likely go to the bottom of the joint seniority seniority list.
AA is about to deliver their new contract demands to its unions. This time management has the threat of court ordered imposition to obtains dramatic concessions, which will get APA's attention. This scenario with an American-US Airways merger would also soften the effects of the Nicolau Award to East pilots and eliminate USAPA with APA becoming our likely union.
This message and $2 will get you a cup of premium coffee.
Does A US Airways-American Airlines Merger Make Sense? Click here to read the story.
usfliboi
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Does A US Airways-American Airlines Merger Make Sense?
Ever since AMR (AAMRQ.PK) filed for bankruptcy in November, there has been rampant speculation about whether it will merge with or be acquired by one of its competitors. Speculation further escalated last week, with US Airways (LCC) publicly confirming that it is looking into an acquisition of AMR. Moreover, the company finally completed a labor agreement with its flight attendants, suggesting that it is in a hurry to square away its own house. Delta (DAL) and TPG Capital are also apparently considering making offers for American, and Delta is even weighing a potential bid for US Airways, according to recent reports.
Delta, being the second largest carrier in the world (and only slightly behind United Continental (UAL)), would have a hard time convincing regulators to sign off on either deal. Delta and US Airways compete heavily throughout the East Coast, and dominate the Southeast in particular. Delta and American compete at JFK and LAX, the two most important international gateways in the U.S. Given the amount of route overlap and the size of a combined entity, any merger attempt would risk being bogged down in antitrust review for years.
US Airways therefore seems like the logical partner, if there is to be one. (TPG would take AA private and run it as a standalone carrier.) The major benefit to both carriers would be an expansion of their route networks (though some cuts on overlapping routes would be likely). American would gain access to the US Airways hubs in Charlotte and Philadelphia, which are much better able to serve domestic traffic than American's hubs at New York's JFK and Miami. Furthermore, whereas Delta's JFK operation and United's Newark hub are both signigicantly larger than American's transatlantic gateway at JFK, US Airways dominates the Philadelphia market.
Some might argue that the JFK and Philadelphia hubs are incompatible, but this is not necessarily true. Due to slot constraints, American has basically limited its JFK flying to international markets and major domestic routes. US Airways, by contrast, serves a vast number of small-medium size East Coast and Midwest markets from Philadelphia. A combined carrier could route passengers from small markets through Philadelphia, while focusing on more lucrative large market origin-destination passengers at JFK. Alternatively, a combined carrier could downsize at JFK and sell off some of its very valuable slots there.
US Airways would particularly benefit from a combination by gaining American's global reach. American has a much stronger position in the transatlantic market, and is the market leader to Latin America. While American is relatively weak on transpacific routes, US Airways currently has zero exposure there, so it would still stand to gain. A combined carrier could reorganize the route structure to focus on the markets it would dominate (Philadelphia, Charlotte, Miami, Dallas/Fort Worth, and Phoenix), while cutting back somewhat in the ultra-competitive New York, Chicago, and LA markets.
The biggest downside of a potential merger is that the two companies could have trouble executing as they attempt to combine the two carriers and the various work groups. This is a recurrent worry with major airline mergers. Perhaps for this reason, US Airways management has stated that the company can survive as a standalone entity and does not necessarily need a merger.
Another potential issue is coordination with American's OneWorld partners. American's biggest problems are that it competes from the #2 or #3 slot in the major markets of New York, Chicago, and Los Angeles. However, its partners, such as BA, Iberia, and JAL want to serve those major international gateways for obvious reasons. In terms of providing connections to international Oneworld carriers, US Airways is at a disadvantage due to its focus on primarily second-tier cities.
On balance, I think a merger would probably be good for both carriers, and it would also be a positive for the industry as consolidation generally leads to lower capacity and higher fares. Both AMR and US Airways suffer from lower RASM than Delta and United. Combining to increase passenger options and cut down on management overhead would improve matters dramatically. But it is still an open question whether such a move is worth the risks inherent in a major merger. The biggest beneficiaries of an AMR-US Airways merger might actually be their competitors.
Ever since AMR (AAMRQ.PK) filed for bankruptcy in November, there has been rampant speculation about whether it will merge with or be acquired by one of its competitors. Speculation further escalated last week, with US Airways (LCC) publicly confirming that it is looking into an acquisition of AMR. Moreover, the company finally completed a labor agreement with its flight attendants, suggesting that it is in a hurry to square away its own house. Delta (DAL) and TPG Capital are also apparently considering making offers for American, and Delta is even weighing a potential bid for US Airways, according to recent reports.
Delta, being the second largest carrier in the world (and only slightly behind United Continental (UAL)), would have a hard time convincing regulators to sign off on either deal. Delta and US Airways compete heavily throughout the East Coast, and dominate the Southeast in particular. Delta and American compete at JFK and LAX, the two most important international gateways in the U.S. Given the amount of route overlap and the size of a combined entity, any merger attempt would risk being bogged down in antitrust review for years.
US Airways therefore seems like the logical partner, if there is to be one. (TPG would take AA private and run it as a standalone carrier.) The major benefit to both carriers would be an expansion of their route networks (though some cuts on overlapping routes would be likely). American would gain access to the US Airways hubs in Charlotte and Philadelphia, which are much better able to serve domestic traffic than American's hubs at New York's JFK and Miami. Furthermore, whereas Delta's JFK operation and United's Newark hub are both signigicantly larger than American's transatlantic gateway at JFK, US Airways dominates the Philadelphia market.
Some might argue that the JFK and Philadelphia hubs are incompatible, but this is not necessarily true. Due to slot constraints, American has basically limited its JFK flying to international markets and major domestic routes. US Airways, by contrast, serves a vast number of small-medium size East Coast and Midwest markets from Philadelphia. A combined carrier could route passengers from small markets through Philadelphia, while focusing on more lucrative large market origin-destination passengers at JFK. Alternatively, a combined carrier could downsize at JFK and sell off some of its very valuable slots there.
US Airways would particularly benefit from a combination by gaining American's global reach. American has a much stronger position in the transatlantic market, and is the market leader to Latin America. While American is relatively weak on transpacific routes, US Airways currently has zero exposure there, so it would still stand to gain. A combined carrier could reorganize the route structure to focus on the markets it would dominate (Philadelphia, Charlotte, Miami, Dallas/Fort Worth, and Phoenix), while cutting back somewhat in the ultra-competitive New York, Chicago, and LA markets.
The biggest downside of a potential merger is that the two companies could have trouble executing as they attempt to combine the two carriers and the various work groups. This is a recurrent worry with major airline mergers. Perhaps for this reason, US Airways management has stated that the company can survive as a standalone entity and does not necessarily need a merger.
Another potential issue is coordination with American's OneWorld partners. American's biggest problems are that it competes from the #2 or #3 slot in the major markets of New York, Chicago, and Los Angeles. However, its partners, such as BA, Iberia, and JAL want to serve those major international gateways for obvious reasons. In terms of providing connections to international Oneworld carriers, US Airways is at a disadvantage due to its focus on primarily second-tier cities.
On balance, I think a merger would probably be good for both carriers, and it would also be a positive for the industry as consolidation generally leads to lower capacity and higher fares. Both AMR and US Airways suffer from lower RASM than Delta and United. Combining to increase passenger options and cut down on management overhead would improve matters dramatically. But it is still an open question whether such a move is worth the risks inherent in a major merger. The biggest beneficiaries of an AMR-US Airways merger might actually be their competitors.
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USA320Pilot
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BoeingBoy
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Well, a student with an interest in the stock market said it so that means it will happen....
As if the obvious wasn't enough - the highest cost carrier merging with a carrier in bankruptcy because it's costs are too high offering raises to over 100,000 employees. Does anyone see a problem with that. Then there's the "hurry up and get it done - the investors are impatient" angle. Horton has so far shown no interest in a merger. AA management has the exclusive right to file a POR for about a year. With TPG sniffing around and BA waiting in the wings, investment money may not be a problem for AA, when added to the $4 billion they entered bankruptcy with.
Jim
As if the obvious wasn't enough - the highest cost carrier merging with a carrier in bankruptcy because it's costs are too high offering raises to over 100,000 employees. Does anyone see a problem with that. Then there's the "hurry up and get it done - the investors are impatient" angle. Horton has so far shown no interest in a merger. AA management has the exclusive right to file a POR for about a year. With TPG sniffing around and BA waiting in the wings, investment money may not be a problem for AA, when added to the $4 billion they entered bankruptcy with.
Jim
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USA320Pilot
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AMR Posts $904M Loss in First Bankruptcy Report
Click here to read the story.
U.S. Pension Agency Pressures American Airlines
PBGC operating with a $23 billion deficit and has said it would bear an additional $9 billion loss if American terminated all four of its employees’ plans
Click here to read the story.
Click here to read the story.
U.S. Pension Agency Pressures American Airlines
PBGC operating with a $23 billion deficit and has said it would bear an additional $9 billion loss if American terminated all four of its employees’ plans
Click here to read the story.
SparrowHawk
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Maybe i'm just not getting it but I fail to see how merging AA and US is a good thing. Right now we have Operation Barbell run by Dumbbells and when was the last time AA made a full year profit? When Clinton was President?
Why does it not make sense to pick off 1 to 3 small carriers with like Aircraft and grow that way?
Lets face it, Frontier is an Economic Lawn Dart. Why allow them to be bought and converted into a ULCC like NK? Or worse a Merger/Aquisition by Spirit. That puts downward pressure on prices.
What about B6? They have a Star Partner as a major investor and it eliminates another LCC in the East.
What about Spirit itself? Good routes from the Northeast to Caribbean and South America.
I think US could get all three over a 12 month period for less then a merger with AA. Of course the Tempe Frat Boys would have to put away the PBR and actually EARN their Bonus's to accomplish that feat.
Why does it not make sense to pick off 1 to 3 small carriers with like Aircraft and grow that way?
Lets face it, Frontier is an Economic Lawn Dart. Why allow them to be bought and converted into a ULCC like NK? Or worse a Merger/Aquisition by Spirit. That puts downward pressure on prices.
What about B6? They have a Star Partner as a major investor and it eliminates another LCC in the East.
What about Spirit itself? Good routes from the Northeast to Caribbean and South America.
I think US could get all three over a 12 month period for less then a merger with AA. Of course the Tempe Frat Boys would have to put away the PBR and actually EARN their Bonus's to accomplish that feat.
http://www.nytimes.com/2012/02/01/business/pension-agency-pressures-american-airlines.html?partner=yahoofinance
If an AA/US merger happens and AA ends up being the surviving entity this could get very interesting. AA "passenger service" employees have a defined pension and no union. There are a number of US employees in the same employee group, with around 30 years service, that didn't have enough time in the old US frozen plan which was taken over by the PBGC ... and their 401k replacement plan has not preformed like promised .... and have no real retirement.
If the merger happens there would have to be a vote on whether the combined C/S group wants a union .... the company will do everything it can to get a NO vote??? The PBGC wants to dig itself out of the hole they are in .... It's possible US employees could fall into a tweaked AA defined pension plan, with a little pressure from the PBGC, DOT, DOJ? We'll find out how bad wall street wants this merger?
Now would a good time for the Government to reverse course and push policy's that will strengthen the industry and keep it's employees from being pushed into PBGC welfare rolls when they retire.
If an AA/US merger happens and AA ends up being the surviving entity this could get very interesting. AA "passenger service" employees have a defined pension and no union. There are a number of US employees in the same employee group, with around 30 years service, that didn't have enough time in the old US frozen plan which was taken over by the PBGC ... and their 401k replacement plan has not preformed like promised .... and have no real retirement.
If the merger happens there would have to be a vote on whether the combined C/S group wants a union .... the company will do everything it can to get a NO vote??? The PBGC wants to dig itself out of the hole they are in .... It's possible US employees could fall into a tweaked AA defined pension plan, with a little pressure from the PBGC, DOT, DOJ? We'll find out how bad wall street wants this merger?
Now would a good time for the Government to reverse course and push policy's that will strengthen the industry and keep it's employees from being pushed into PBGC welfare rolls when they retire.
PullUp
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- May 22, 2010
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In BK, unfortunately, their pension is toast. Either frozen or terminated and handed over to PBGC.
PBGC actually wants the money from failed pension funds. It keeps them in business.
It is the insurance game - take in a lot, pay out as little as possible.
Cheers.
Regardless of whether there's a merger with US, the AA pension plans will not continue and will not be available to any former US employees. AA has not revealed whether they will be frozen or terminated, but it's a given that one of those options will prevail, regardless of the sabre-rattling by the paper tiger PBGC and its idiot director Gotbaum. AA employees would no doubt agree to a freeze if it meant that AA did not seek a distress termination, and if the employees wouldn't agree to a freeze, then it's apparent that AA would seek and get a distress termination. US and UA terminated their plans as to all employees and DL terminated its pilot plan and froze everyone else's plan. There will be no AA defined benefit plans available to new hires or US employees who are merged/acquired/combined/whatever.
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