Will AA sit this one out?

[Barfbag]

Coincidental ? Maybe.

AA all but trashes it's original China Bid, at the same time NWA raises it's defense shields. NWA rushes to close it's back door. Will the Empire strike AAgain?

*************

Northwest gets ready for merger dealing
12:14 p.m. 12/09/2006 Provided by


Dec 09, 2006 (Star Tribune - McClatchy-Tribune Business News via COMTEX) -- Northwest Airlines is preparing to be a player in the merger game that many believe will define the U.S. commercial aviation industry in the next several years.

Late Thursday, Northwest asked its bankruptcy judge for permission to hire an influential investment banking firm whose financial experts have a track record for arranging airline deals.

The decision to bring in Evercore Group as a strategic adviser comes a little more than three weeks after US Airways made a hostile takeover offer for Delta Air Lines. That bid was seen by many industry observers as the opening move in a chess match that could involve most of the largest U.S. carriers -- Delta, Northwest, United, American and Continental -- and end with at least one losing its independence.

"There is a definite sense on Wall Street, and among people in the airline industry, that the time is right to consolidate," Helane Becker, an airline analyst for the Benchmark Co., said Friday.

By tapping New York-based Evercore for financial advice on possible deals, Northwest is saying: "Let's see what is out there for us," Becker said.

Northwest spokesman Bill Mellon declined to elaborate on the airline's intentions in hiring Evercore.

Darryl Jenkins, a veteran aviation consultant who has done work for Eagan-based Northwest, said the carrier made a "prudent move" in getting Evercore in its corner.

He said it allows Northwest to be ready to move on any type of deal, because Evercore and Northwest management will develop a variety of scenarios that the carrier could face.

Most simply, Northwest management could be looking for ways to fend off an unwanted offer from a rival.

The merger landscape could become even more complicated next week. United Airlines executives are hosting analysts Monday and Tuesday to discuss the carrier's plans, and Becker said she would "not at all be surprised" if United announces that it will attempt to acquire another airline.

So far, Northwest executives have been "very cagey" about their intentions, Becker said.

Northwest Chairman Gary Wilson, CEO Doug Steenland and Chief Financial Officer Neal Cohen have not granted interview requests or made any recent public comments about the merger speculation in the industry.........

 

[NewHampshire Black Bears]

For AA, there are ONLY 3 possibility's !!

1. Play $$ games, by intentionally forcing the purchase price, of a potential M/A of other carriers UP, with NO intention of AA ultimately making a purchase.
(this scenario is THE least likely)

2. Stay COMPLETELY on the "sidelines", and "hope" that over time, UA/CO/DL/NW and US "disintergrate" .
(wishfull thinking, in the long run)

3. Make a "move" on NW BEFORE they emerge from BK.

(This may not be AA's favorite "thing to do", but.........)

This is REALLY NOT rocket science, because there are ONLY 3 ways to get into CHINA,(Which is an ABSOLUTE "MUST") for US legacy's, AND not ALL will be successful)

1. Be awarded a RARE CHINA route.(Which AA just Scuttled" a few days ago)

2. Somehow get some of UAL's China routes.

("Hitting" the "POWER BALL" $$$ Lottery $$$, would be easier)

3. Obtaining at least a piece of NW's Asian routes.

After re-reading what I wrote, it could be possible that AA would chose a combination of #'s 1+2, at the top of the post, as it(hypothetically) applies to NW,.....BUT....there is a HUGE difference this time.
NW is "coming" OUT of BK, In healthy shape. For AA to "apply" #'s 1+2(above) could take a LONG time.


Pardon me, but I think the "hand writing" is on the wall !


????????

NH/BB's

 

[Barfbag]

NWACQ stock up a big 45% on Friday's close.

Things are a shaking here in the Big Apple.

 

[Oneflyer]

NWACQ stock up a big 45% on Friday's close.

Things are a shaking here in the Big Apple.

Stock in bankrupt companies is worthless. That is not an indicator of anything.

 

[NewHampshire Black Bears]

Stock in bankrupt companies is worthless. That is not an indicator of anything.

//////////////////////////////////////////////////////////

It's a $$ "Indicator" if you buy it a $.50 a share, and sell it at $4.50, would'nt you say ??

NH/BB's

 

[Oneflyer]

//////////////////////////////////////////////////////////

It's a $$ "Indicator" if you buy it a $.50 a share, and sell it at $4.50, would'nt you say ??

NH/BB's

Fine, it sure isn't an idicator that AMR is about to buy NWA.

 

[Barfbag]

Fine, it sure isn't an idicator that AMR is about to buy NWA.

Make your money on the run. NWACQ up 20% this morning. Wall Street's buying, there must be some side money, just sitting around, collecting dust in DFW.

 

[eolesen]

If Steelin' & friends consider it a friendly takeover, AMR wouldn't need to purchase a single share of stock to purchase NWA. They'd just need to line up financing for the POR.

One of the reasons that the stock has been skyrocketing is that a hedge fund bought over $4M in shares right after Thanksgiving, and had to file with the SEC. That in turn made a lot of other people get interested in the stock, even though everyone who has been asked about it is still convinced that the stock will be worthless if/when NWA emerges from bankruptcy.

The only way that existing NWA stock will be worth anything is if all of the creditors (including unsecured) are repaid in full. That's about as likely to occur as it will be for NWA to agree to insource all overhaul and cabin cleaning.

 

[Barfbag]

If UAL or CAL blinks, AMR will return the salvo. It's a chicken game right now.

I've already got my presents under the tree, thanks NWACQ.

 

[Bob Owens]

Too bad 78% of the NWA guys opted for the buyout,they would have been able to help get AMFA in place at AA.

Perhaps AMR has been the plan all along.

 

[chillers]

If UAL or CAL blinks, AMR will return the salvo. It's a chicken game right now.

I've already got my presents under the tree, thanks NWACQ.

Up 17% over $5.00 per share on Mondays closing bell. B)

 

[Barfbag]

Up 17% over $5.00 per share on Mondays closing bell. B)

Back in at 4.10 dumping at 6.10. CAL is ready.

Many more presents under my tree.

 

[Barfbag]

Back in at 4.10 dumping at 6.10. CAL is ready.

Many more presents under my tree.

UAL, Continental Discuss Merger As AirTran Presses Bid for Midwest
By Susan Carey, Melanie Trottman and Dennis K. Berman
Word Count: 1,719 | Companies Featured in This Article: UAL, Continental Airlines, US Airways Group, AirTran Holdings, Midwest Air Group , Qantas Airways, Macquarie Bank , Southwest Airlines
The long-awaited consolidation of the airline industry is heating up, with UAL Corp. and Continental Airlines Inc. holding talks on a possible merger and another carrier emerging as the target of an unsolicited takeover offer.

UAL, parent of United Airlines, and Continental have been engaged in exploratory talks on a business combination for several months, but the discussions have taken on new urgency since US Airways Group Inc. made a hostile bid for Delta Air Lines Inc. four weeks ago, according to people familiar with the matter.

Among the industry's smaller players, AirTran Holdings Inc. is poised to launch an ...

 

[Barfbag]

Fine, it sure isn't an idicator that AMR is about to buy NWA.

All airline stocks soar, AMR up over 5% in the AM, on news about CAL amd UAUA

AMR has to keep that 800 lbs gorilla shape, or be second banana.

 

[eolesen]

Go buy a lottery ticket. Quick. I'm actually in agreement with Mike Boyd on something, which almost never happens. It's a little more comforting to see the same opinion also coming from Daryll Jenkins (which happens more often than not).

For those who don't know, Terry Maxon covered airlines at the Dallas Morning News for many years, being replaced by Eric Torbeson about five or six years ago. It looks like he's back on the airline beat again, and right on the money. And no, he's not in AMR's pocket. Most of his writing tends to slant anti-AMR and pro-LUV (not surprising given that it is a Dallas newspaper and LUV is the hometown hero).

Hands Off? Merger Talk Flying, AA Sitting This One Out
By TERRY MAXON / The Dallas Morning News
Sunday, December 10, 2006


When US Airways Inc. and Delta Air Lines Inc. bought West Coast airlines in the 1980s, American Airlines Inc. was right there with them, acquiring regional carrier AirCal Inc.

When United Airlines Inc. and US Airways announced they were going to merge in 2000, American quickly responded with its own purchase of Trans World Airlines Inc. in early 2001.

When the new US Airways last month made an offer to merge with Delta, American ... well, American kept its head down.

There's still a long way to go before the current fever of merger talk and deal-making speculation runs its course. American and parent AMR Corp. may feel compelled to respond to the creation of a new, massive competitor.

But this may be one industry consolidation that Fort Worth-based American, now the world's largest airline, will not feel the need to jump into the middle of.

For the record, American is playing it cool, making few comments about its own possible interest in finding a merger partner. In the past, that reflected a desire to hide its cards. This time around, nonaction may be its preferred response.

Roger Frizzell, vice president of corporate communications at American, said the carrier's focus right now is fixing its own problems and trying to reach "sustained profitability." American posted profits in the second and third quarters, its first consecutive quarterly profits since 2000.

"We're going to be mindful of what's happening in the industry," Mr. Frizzell said. "We're going to watch carefully. But right now, we've got enough to do to take care of the improvements that have been under way at our own airline."

At an investment conference Thursday in New York, American chief financial officer Tom Horton said other industries, such as telecommunications, have gotten healthier through consolidation. But he said he didn't know whether the airline industry would consolidate.

"This is a troubled industry," Mr. Horton said. "It's still a relatively troubled industry despite some recent enthusiasm around the industry. It's an industry that's lost tens of billions of dollars in the last five years. It's destroyed a lot of capital. That is not good for shareholders, customers or employees."

Although American has joined in with its own mergers in the past, some industry experts say the best action for American may be to simply stay on the sidelines, because the costs and pain of mergers rarely outweigh the advantages.

Bad mix

The result of many airline mergers has been incompatible fleets of airplanes, conflicting cultures, unhappy labor and a mishmash of an organization.

"There are no laws written right now that compel American Airlines to find a merger partner," said Darryl Jenkins, industry consultant and former director of the Aviation Institute at George Washington University.

Consultant Michael Boyd, president of The Boyd Group in Evergreen, Colo., said American should avoid any calls to find its own merger partner, but it should be ready to pounce on any opportunities from other mergers.

For example, US Airways executives had said they expect to reduce a combined company's capacity 10 percent from the separate airlines' current capacity, and to spin off one of the two East Coast shuttles – one now flown by US Airways and one by Delta.

Mr. Boyd is among industry analysts who believe a US Airways-Delta combination would be a bad idea. The new company would be "very confused for several years," he said.

"Let's forget this myth that if they merge that American will have an economic imperative to merge as well. This [a Delta-US Airways merger] will make the combined entities weaker, not stronger," Mr. Boyd said.

"Therefore, the first thing American should do is encourage them to merge. It will give them a very confused, disoriented competitor. From that perspective it's good," he said. "From the downside, it will also give these clowns on Wall Street more incentive to try and do merger deals."

Helping the competition

Jamie Baker, airline analyst for JP Morgan Chase & Co., has predicted that a Delta-US Airways merger would be good for other major U.S. carriers because it will take so much capacity out of the system. Fewer seats can mean higher prices for everyone, and fewer seats on Delta-US Airways means a greater likelihood that travelers will buy seats on other airlines' jets.

"We believe that AMR at a minimum will bid for the divested Shuttle assets" if a Delta-US Airways merger succeeds, Mr. Baker wrote in a report shortly after US Airways revealed its offer in mid-November.

The airline most often linked with American as a possible partner is Northwest Airlines Inc., which has a large route system between the United States and Asia that American has long coveted. American's route system to Asia pales by comparison.

"AMR is flush with cash and certainly has the credibility to pursue a transaction. Northwest specifically would fit very nicely into AMR's network," Mr. Baker wrote.

That may seem like a good idea, Mr. Boyd said, until one looks at all the obstacles such a combination would face.

"You can make an argument where American rushes off, buys Northwest, paints the airplanes and does nothing else, and you have an entity with synergy. It makes sense in theory," Mr. Boyd said. "But you get to the 'U' word, unions, and then watch the fur fly."

Mr. Jenkins offers much the same advice as Mr. Boyd.

"If I were American, I would sit on the sidelines and sees what falls out," Mr. Jenkins said. "They have a very bad history of mergers. They also have a very bad history of labor relations. They need to get their own costs under control and make sure their own future is secure before they take on somebody else's problem."

Lessons from AirCal

The AirCal acquisition, announced in November 1986, was designed to give American a major presence up and down the West Coast. But low-cost carrier Southwest Airlines Co.'s rapid expansion in California – starting service to eight cities there between 1982 and 1994 – prevented American from charging the fares it needed to make money and eventually forced American to reduce its service there.

In fact, when Southwest in 1993 announced it was entering the San Jose market, American later the same day announced it would be ending service to a number of cities from San Jose and reducing its daily flight schedule by 38 percent. It later closed down its San Jose hub.

The purchase of Reno Air Inc. in 1999 was designed to restore a West Coast system for American. But that acquisition, as well as the 2001 purchase of TWA, was premised on a booming economy with an appetite for full-priced business travel.

American closed its purchase of TWA in April 2001, just as average fares started to drop and five months before the Sept. 11 terrorist hijackings devastated the industry and its profits. Since then, American has shed many of the TWA airplanes, employees and facilities that it picked up in the merger.

Buying parts

Mr. Frizzell, the American executive, said American has done very well when it has bought portions of other airlines, such as Eastern Air Lines Inc.'s Latin America system in 1990 and TWA's London Heathrow Airport routes in 1991.

"Some of the others [deals] are yet to be determined as we go into our future of American Airlines," Mr. Frizzell said. "There were some important assets we acquired with TWA and Reno, and that's part of the strength of our network today."