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ARCHIVE: US LCC & AMR / AA Takeover / merger Rumors and Discussion (consolidated)

Old Feb 14, 2013, 9:50 am
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The AA - US merger was approved by AMR creditors and the boards of directors of both airlines on 13 Feb 2013, and announced the 14th.

There is no further speculation about whether the merger will occur; all that is pending is approval from the bankruptcy court and the regulatory authorities.

American Airlines and US Airways approve merger: just the facts, please outlines the facts we know;

AA - US Merger Agreement / Announcement Discussion (consolidated) is the thread for discussion of the announced merger.
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ARCHIVE: US LCC & AMR / AA Takeover / merger Rumors and Discussion (consolidated)

 
Old Jan 27, 2013, 9:57 am
  #2986  
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Originally Posted by diver858
believing they would be the only legacy airline that could change its structure without a trip through BK7.
This can still turn out pretty well. Waiting till the last one has some advantages as well as you know where your competitors went wrong and what course they decided to take. So I hope that AA has learned a lot from United and Delta.

Originally Posted by diver858
maintains more of its premium service culture - unlike its mega-merger competitors.
I for sure hope that AA & US will decide on creating a product that differentiates them from United & Delta. It was clear that this was what AA intended to do and I hope it survives the merger.
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Old Jan 27, 2013, 10:42 am
  #2987  
 
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Originally Posted by kcaluwae
This can still turn out pretty well. Waiting till the last one has some advantages as well as you know where your competitors went wrong and what course they decided to take. So I hope that AA has learned a lot from United and Delta.



I for sure hope that AA & US will decide on creating a product that differentiates them from United & Delta. It was clear that this was what AA intended to do and I hope it survives the merger.
AA already has a product that is differentiated, in a positive way from DL and UA. If Dogie Parker gets his hands on AA, that is likely to change is a very negative way, as most thinks connected with Parker do.

The best way for AA to survive and for this to turn out pretty well is for AA to avoid getting stuck with US' debt load and Parker's bribes to the unions, which would reverse everything Horton has accomplished in bankruptcy. AA needs to remain independent. When Parker finishes destroying US, then AA can pick up the pieces it wants on the cheap.
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Old Jan 27, 2013, 10:57 am
  #2988  
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Originally Posted by chongcao
Found in Chinese news source as well. But mainstream English news sources are somewhat quiet. Might be the false alarm. Until either Reuters, WSJ or Bloomberg report the similar story, I would say it is armchair politics.
There was a Reuters article two days ago. I didn't find it very persuasive.
Reuters - Exclusive: US Air, AMR deal could come in next two weeks - sources

(Reuters) - US Airways Group Inc and American Airlines parent AMR Corp are in the final stages of negotiating a merger, with the final price and management structure still to be resolved, four people familiar with the matter said.

The two airlines, as well as AMR's creditors and its bondholders, have focused their efforts in recent weeks on reaching a merger agreement, and a deal could come in the next two weeks, the people said on Friday.

<snip>

Negotiations have now largely come down to how the equity of the combined company would be split between shareholders of US Airways and creditors of AMR, and who will run the merged airline, according to the people familiar with the matter.

<snip>
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Old Jan 27, 2013, 12:20 pm
  #2989  
 
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Originally Posted by Carolinian
If Dogie Parker gets his hands on AA, that is likely to change is a very negative way, as most thinks connected with Parker do.
While I am not a big fan of Parker, he has to get some credit for making lemonade out of lemons after being delt a pretty lousy hand (America West and US Air). LCC learned a painful lesson, has undone much of the extreme service reductions when customers rebelled, but their severe economic constraints leave little room to move.

I find it highly unlikely that the AMR board would allow any new leader to follow the very different, current path of DL, UA when the current strategy appears to be working: attracting long term, loyal, frequent business travelers.
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Old Jan 27, 2013, 12:33 pm
  #2990  
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Originally Posted by elitetraveler
Wow - $637 million is horrible
As the GAAP profit of $637 million included $142 million of gain on the slot swap, the more accurate profit figure would be the one that excludes such special items, and that would be $537 million. In either case, my post was in response to one that claimed that US earned $800 million in 2012, and that overstated the net earnings by 49%.

There's no need to resort to name calling when someone points out an exaggeration.

Originally Posted by elitetraveler
<redacted>
I don't think there are many people nominating Dougie for CEO of the decade or even year, but he has taken two distressed airlines with weak networks and cobbled them into an entity that has survived and is still at the table.

Aside from maybe Anderson and DL management, I can't see any other legacy carrier where one can show that their management team is streets ahead of Team Dougie.

AApologist Warning: This post is not to award Dougie - it is simply a statement of fact that he has done as good a job as anyone could conceive of with the cards he was given. If you want to hold the fact that he started from the weakest point of any existing legacy against him - feel free - but that doesn't reflect on his management ability.
There's no need to resort to name-calling.

Doug Parker has done alright with the poor hand he was dealt. No argument there. The unanswered question is how he plans to raise the pay of more than 30,000 US employees plus give improvements to AA employees and still earn any net profit.

Most of the record-setting $537 million net profit at US will be consumed bringing the US employees up to AA's payrates. Parker has promised improvements to the AA pilots and FAs and presumably will buy the other workgroups' approval as well, threatening the cost-cutting that current AA management fought so hard to accomplish over the past year.

The bottom line is that the combined entity is unlikely to be profitable given the large payraises promised by US management. Perhaps AA's creditors (which include AA employees) would be better served by emerging independently?
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Old Jan 27, 2013, 12:59 pm
  #2991  
 
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Originally Posted by diver858
maintains more of its premium service culture - unlike its mega-merger competitors.
I'd argue that AA lost a more premium service culture years ago. I don't fly United, but I do fly DL and I find their service much better, especially internationally. Looks like AA has made some improvements lately (I wouldn't know -- I stopped flying them a couple years ago in favor of DL's far better service, although I am liquidating a bunch of miles on F to Tokyo soon, so maybe things have improved lately), but I would definitely give DL the service edge these days based on my experiences with AA back in 2011.

I too hope that a merger doesn't go through (especially if it's run by Parker). AA service is still probably way better than US'. But at the same time, my few recent (within last 18 months) flights on US have actually gone very well and been perfectly pleasant. They felt a little "sloppier" than my AA flights (and much sloppier than DL), but with better uniforms and a slightly better feeling product and not quite so many ads everywhere, they wouldn't be all that horrible.
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Old Jan 27, 2013, 1:08 pm
  #2992  
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Originally Posted by TWA884
There was a Reuters article two days ago. I didn't find it very persuasive.
Thanks!!!

Maybe this is the source of other reports...
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Old Jan 27, 2013, 1:12 pm
  #2993  
 
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Next two weeks is too soon!
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Old Jan 27, 2013, 1:37 pm
  #2994  
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Originally Posted by FWAAA


There's no need to resort to name-calling.

Doug Parker has done alright with the poor hand he was dealt. No argument there.
There's is no name calling - it is the same as being a liberal or a conservative. You and others have staked a specific position and use that lens to analyze every new bit of information to support your position.

You and others post AA blah blah blah AA can do no wrong, and there are other posters who believe the world ends with DL and they put their spin on it.

As you know there are posters here who continuously post that DP is the second coming of the devil. There are others who liken Tom Horton to a superstar. I don't see either of them as having a track record that gives one something to be excited about.

In terms of the merger, clearly BA's CEO thinks its a good thing - and if he thought the merger would result in a collapse of the combined entity it is doubtful he would support it. From a consumer standpoint, I don't think UA/CO or DL/NW particularly with a combined US/AA is a good thing. From a frequent traveler perspective I think it will shake out in hindsight as a bad thing. Are these mergers the only way we can have a stable domestic industry. Hard to say.

But please get over yourself - if you want to take a position, at least own up to it instead of trying deflect the point that you have strong feelings about keeping AA independent and happily regurgitate the AA PR line.
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Old Jan 27, 2013, 1:43 pm
  #2995  
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Originally Posted by FWAAA

Most of the record-setting $537 million net profit at US will be consumed bringing the US employees up to AA's payrates. Parker has promised improvements to the AA pilots and FAs and presumably will buy the other workgroups' approval as well, threatening the cost-cutting that current AA management fought so hard to accomplish over the past year.

The bottom line is that the combined entity is unlikely to be profitable given the large payraises promised by US management. Perhaps AA's creditors (which include AA employees) would be better served by emerging independently?
If your arm chair analysis was so cut and dried it unlikely there would still be an ongoing merger discussion.

Supposedly a merger would yield cost savings and enhanced revenue that would make your back of the napkin analysis irrelevant.

Of course Horton said they could boost revenue significantly as a stand alone despite limited industry wide growth.

Everyone presents numbers that back there case, duh.
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Old Jan 27, 2013, 2:06 pm
  #2996  
 
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I agree DP and the LCC management team has done a decent job given a poor hand.

The question is what LCC brings to the table in a merger. From a business perspective, I see a few more cities served, particularly small cities in the Northeast and Southeast. Also, there will be some DM loyalists who will transfer their business to the merged entity. On the negative side, I think there will be tremendous merger costs, disruptive labor relations, incompatible fleets, a very different culture, and the cost savings will largely be the cost savings from closing US hubs. I realize there is some value in having a loyal customer base in places like Winston Salem but this is nothing like the value NW or CO brought to DL and UA.

Any merger is one that only those making money off the merger itself will value.
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Old Jan 27, 2013, 4:48 pm
  #2997  
 
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DL's decent TATL service came from its takeover of NW, which had far superior service to DL. DL has downgraded that somewhat. Before picking up those NW birds, DL's TATL service was nothing to write home about.

If NW were still independent, I would still be flying them, but I want no part of DL and its crap ff program.


Originally Posted by aa4ever
I'd argue that AA lost a more premium service culture years ago. I don't fly United, but I do fly DL and I find their service much better, especially internationally. Looks like AA has made some improvements lately (I wouldn't know -- I stopped flying them a couple years ago in favor of DL's far better service, although I am liquidating a bunch of miles on F to Tokyo soon, so maybe things have improved lately), but I would definitely give DL the service edge these days based on my experiences with AA back in 2011.

I too hope that a merger doesn't go through (especially if it's run by Parker). AA service is still probably way better than US'. But at the same time, my few recent (within last 18 months) flights on US have actually gone very well and been perfectly pleasant. They felt a little "sloppier" than my AA flights (and much sloppier than DL), but with better uniforms and a slightly better feeling product and not quite so many ads everywhere, they wouldn't be all that horrible.
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Old Jan 27, 2013, 4:51 pm
  #2998  
 
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Do you really believe that Parker could pay out on all those union bribes he has made and still not explode all the cost savings Horton has achieved in bankruptcy? And that is not even considering being saddled with US' debt load.

Originally Posted by elitetraveler
If your arm chair analysis was so cut and dried it unlikely there would still be an ongoing merger discussion.

Supposedly a merger would yield cost savings and enhanced revenue that would make your back of the napkin analysis irrelevant.

Of course Horton said they could boost revenue significantly as a stand alone despite limited industry wide growth.

Everyone presents numbers that back there case, duh.
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Old Jan 27, 2013, 5:37 pm
  #2999  
 
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I've got money on this going through so much so that I'm going to give int. biz class a whirl on AA next week. From what I read I'm expecting to compare it to the US accommodations on the 767 and long haul 757s, but nowhere near biz on a 330...

I'm keeping an open mind, we'll see how I feel after the 11 1/2 hours back from FRA to DFW.
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Old Jan 27, 2013, 8:22 pm
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Originally Posted by Carolinian
DL's decent TATL service came from its takeover of NW, which had far superior service to DL. DL has downgraded that somewhat. Before picking up those NW birds, DL's TATL service was nothing to write home about.

If NW were still independent, I would still be flying them, but I want no part of DL and its crap ff program.
Actually, I disagree on that. Entertainment and J seats (old 763s) were a weak part of DL pre-merger (and still are until the end of this year). But for the service itself, DL was better right before the merger in my mind. I would personally say DL peaked right around 2007-2008, then dipped a bit in the 2009-2011/2012 period and has picked up a bit since then. And in any case, DL is still loads better than my last AA experiences, which were just pitiful. I can't think of any time since maybe 2006 that AA had better international service or food than DL.

That's not saying that SkyMiles is a good program. It isn't. But I can see DL's model of better product/worse FF program as being a viable one.

Also, I'd be willing to bet that AAdvantage is signficantly downgraded post-BK, even if AA stays independent. And if AA improves their onboard product, I'd be willing to bet its downgraded even faster.
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