Feb 14, 2013, 9:50 am
Last edit by: JDiver
MODERATOR GUIDEPOST
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.
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.
ARCHIVE: US LCC & AMR / AA Takeover / merger Rumors and Discussion (consolidated)
Dec 11, 2012, 1:31 pm
#2206
Join Date: Jan 2008
Programs: AAdvantage, United MP, Marriott Rewards
Posts: 1,137
Just saw the interview with Delta CEO (regarding the Delta-Virgin deal).
If there is 1 person who is 100% sure that US & American will merge it is him.
If there is 1 person who is 100% sure that US & American will merge it is him.
Dec 11, 2012, 1:39 pm
#2207
Join Date: Jul 2004
Location: Seat 1A
Programs: DL; AA; UA; CO; LHLX; NZ; QR; EK; BA
Posts: 7,404
Richard Anderson left Northwest in 2004 for United Health. Northwest filed for Chapter 11 on Sep 15 2005, same day as Delta. Doug Steenland, not Anderson, was CEO of Northwest at the time of the BK filing.
Dec 11, 2012, 1:46 pm
#2208
Join Date: Oct 2012
Programs: AA: EXP/5.2mm
Posts: 251
+1
This should be required reading for the creditors' committee, though I suspect many of them may have a longer time horizon than you suggest. Bondholders will be looking to maximize their recovery. If it's higher IRR to invest longer term, they will. But that doesn't change the (IMO correct) conclusion, which is that a merger is extremely unlikely to create value for anybody except for US shareholders.
This should be required reading for the creditors' committee, though I suspect many of them may have a longer time horizon than you suggest. Bondholders will be looking to maximize their recovery. If it's higher IRR to invest longer term, they will. But that doesn't change the (IMO correct) conclusion, which is that a merger is extremely unlikely to create value for anybody except for US shareholders.
This is exactly the right way to think about it. American's big mistake was not filing for bankruptcy reorganization at the same time post-9/11 as the other airlines. Had it done so, it would have been able to acquire NW, which would have given it an Asian route structure that would have had significant strategic value. By holding out until two of the three merger partners had already paired off, it is left with the ugly girl at the dance. US has little strategic value for AA, and the benefits of a merger are nearly all in the form of industry rationalization, which flow almost as much to DL and UA as to AA. This is all water under the bridge for AA from a strategic standpoint. It has made its bed, and must now lie in it, irrespective of who runs the combined company and when the merger occurs.
As a bondholder of AA, who will convert into a stockholder post-reorganization, I think I might do better if AA waited until US filed for bankruptcy again, at which point I could cherrypick the pieces I wanted (like the Shuttle, perhaps CLT) and simply allow the remainder to liquidate. I expect this is the aimed-for endpoint of the NewAASA plan, and we will see whether the unsecured creditors in aggregate are going to insist on the bird in the hand (merger with US in the near term) or whether they are willing to give it more time to see whether AA can get a more financially advantageous deal later.
Dec 11, 2012, 2:39 pm
#2209
Join Date: Aug 2006
Location: DCA / WAS
Programs: DL 2+ million/PM, YX, Marriott Plt, *wood gold, HHonors, CO Plt, UA, AA EXP, WN, AGR
Posts: 9,388
I believe that deal increased the likelihood of a US/AA deal. Now as to whether DL did it to FORCE a US/AA deal that he knows will cost money and be distracting is anyone's guess. I wouldn't put it past DL (and VA) to do that sort of thing, especially considering that AA (and BA) represents the greatest threat to both DL and VA in the London market...
Dec 11, 2012, 2:58 pm
#2210
Join Date: Oct 2010
Location: San Diego, Ca
Programs: AA 2MM LT PLT; AS MVP Gold75k; HHonors Diamond; IHG PLT
Posts: 3,502
As a bondholder of AA, who will convert into a stockholder post-reorganization, I think I might do better if AA waited until US filed for bankruptcy again, at which point I could cherrypick the pieces I wanted (like the Shuttle, perhaps CLT) and simply allow the remainder to liquidate.
The LAST thing AMR needs is to saddle themselves with more labor headaches, an unprofitable domestic network, redundant hubs (PHL, PHX in particular). The focus now appears to be on higher value, longer haul service, leaving more feeder service to partners (AE, AS, B6) and the results to date are quite positive.
LCC also has some interesting routes to Europe, Mexico and the Carribean, TLV, better to pick them up during LCC's Chapt 7 liquidation.
Dec 11, 2012, 5:07 pm
#2212
Join Date: Aug 2009
Location: SLC
Programs: AA EXP, Marriott Plat
Posts: 616
After studying Spirit's network, I would think Spirit acquiring LCC would be a match for Spirit. LCC has very little of what the legacy carriers want, but matches well for Spirit. Spirit acquiring LCC would give LUV some competition, and with LUV's higher pricing, Spirit could continue their business model of picking the low hanging fruit on a much bigger scale.
Dec 11, 2012, 5:27 pm
#2213
Suspended
Join Date: Dec 2005
Posts: 9,916
@:-)
Dec 11, 2012, 5:38 pm
#2214
FlyerTalk Evangelist
Join Date: Jul 2000
Location: in the vicinity of SFO
Programs: AA 2MM (LT-PLT, PPro for this year)
Posts: 19,781
After studying Spirit's network, I would think Spirit acquiring LCC would be a match for Spirit. LCC has very little of what the legacy carriers want, but matches well for Spirit. Spirit acquiring LCC would give LUV some competition, and with LUV's higher pricing, Spirit could continue their business model of picking the low hanging fruit on a much bigger scale.
Dec 11, 2012, 6:29 pm
#2215
FlyerTalk Evangelist
Join Date: Aug 2007
Location: SEA, but up and down the coast a lot
Programs: Oceanic Airlines Gold Elite
Posts: 20,381
After studying Spirit's network, I would think Spirit acquiring LCC would be a match for Spirit. LCC has very little of what the legacy carriers want, but matches well for Spirit. Spirit acquiring LCC would give LUV some competition, and with LUV's higher pricing, Spirit could continue their business model of picking the low hanging fruit on a much bigger scale.
Dec 11, 2012, 6:34 pm
#2216
Suspended
Join Date: Dec 2005
Posts: 9,916
After studying Spirit's network, I would think Spirit acquiring LCC would be a match for Spirit. LCC has very little of what the legacy carriers want, but matches well for Spirit. Spirit acquiring LCC would give LUV some competition, and with LUV's higher pricing, Spirit could continue their business model of picking the low hanging fruit on a much bigger scale.
Dec 11, 2012, 7:57 pm
#2217
Join Date: Apr 2012
Location: LA
Programs: AAdvantage, CK, 4 MM; Marriott Lifetime PLT
Posts: 308
Another +1
This is exactly the right way to think about it. American's big mistake was not filing for bankruptcy reorganization at the same time post-9/11 as the other airlines. Had it done so, it would have been able to acquire NW, which would have given it an Asian route structure that would have had significant strategic value. By holding out until two of the three merger partners had already paired off, it is left with the ugly girl at the dance. US has little strategic value for AA, and the benefits of a merger are nearly all in the form of industry rationalization, which flow almost as much to DL and UA as to AA. This is all water under the bridge for AA from a strategic standpoint. It has made its bed, and must now lie in it, irrespective of who runs the combined company and when the merger occurs.
As a bondholder of AA, who will convert into a stockholder post-reorganization, I think I might do better if AA waited until US filed for bankruptcy again, at which point I could cherrypick the pieces I wanted (like the Shuttle, perhaps CLT) and simply allow the remainder to liquidate. I expect this is the aimed-for endpoint of the NewAASA plan, and we will see whether the unsecured creditors in aggregate are going to insist on the bird in the hand (merger with US in the near term) or whether they are willing to give it more time to see whether AA can get a more financially advantageous deal later.
This is exactly the right way to think about it. American's big mistake was not filing for bankruptcy reorganization at the same time post-9/11 as the other airlines. Had it done so, it would have been able to acquire NW, which would have given it an Asian route structure that would have had significant strategic value. By holding out until two of the three merger partners had already paired off, it is left with the ugly girl at the dance. US has little strategic value for AA, and the benefits of a merger are nearly all in the form of industry rationalization, which flow almost as much to DL and UA as to AA. This is all water under the bridge for AA from a strategic standpoint. It has made its bed, and must now lie in it, irrespective of who runs the combined company and when the merger occurs.
As a bondholder of AA, who will convert into a stockholder post-reorganization, I think I might do better if AA waited until US filed for bankruptcy again, at which point I could cherrypick the pieces I wanted (like the Shuttle, perhaps CLT) and simply allow the remainder to liquidate. I expect this is the aimed-for endpoint of the NewAASA plan, and we will see whether the unsecured creditors in aggregate are going to insist on the bird in the hand (merger with US in the near term) or whether they are willing to give it more time to see whether AA can get a more financially advantageous deal later.
I agree 100% with your second paragraph.
Dec 11, 2012, 8:10 pm
#2218
Suspended
Join Date: Dec 2005
Posts: 9,916
So what? Glen Tilton was hawking the need for consolidation and mergers before Doug Parker and UA was practically begging for a buyer. The only reason there wasn't a US/UA merger is CO decided it was better to merge with UA than let them merge with US.
Dec 12, 2012, 6:07 am
#2219
Join Date: Apr 2012
Location: LA
Programs: AAdvantage, CK, 4 MM; Marriott Lifetime PLT
Posts: 308
If I recall correctly, United was the driving force in those merger discussions. United wanted CO all along not US.
Dec 12, 2012, 6:14 am
#2220
Join Date: Apr 2012
Location: LA
Programs: AAdvantage, CK, 4 MM; Marriott Lifetime PLT
Posts: 308
For those who praise Delta's Anderson as the industry's top manager, I heard an interesting fact on CNBC yesterday. For all the praise in the media and among Wall Street analysts regarding Delta, the stock price has not moved since the carrier exited BK 5 years ago. Yesterday, in midafternoon trading, the stock was up 7%, the largest gain in a while, and had a share price around $10.87. When DL exited BK and merged, the share price was $10.86.
To be fair, I don't think Anderson, or any manager, should be measured only by stock performance. I am so down on the greed of Wall Street and these analysts/traders, etc. who almost brought down our economy. But I did find this stat interesting given some of the discussion here.
To be fair, I don't think Anderson, or any manager, should be measured only by stock performance. I am so down on the greed of Wall Street and these analysts/traders, etc. who almost brought down our economy. But I did find this stat interesting given some of the discussion here.