America West FlightFund (Pre-2005 US Airways merger) - HP/US in talks with AC

Looks like Air Canada is talking to HP and US about some type of merger?? Here is the article: http://www.thestar.com/NASApp/cs/ContentServer?pagename=thestar/Layout/Article_Type1&c=Article&cid=1114465810614&call_pageid=968350072197&col=969048863851&DPL=IvsNDS%2f7ChAX&tacodalogin=yes

What will we hear next??

A Wall Street source said yesterday that Air Canada may be in talks with both U.S. Airways and America West in a deal that may see Air Canada take on international traffic with the U.S. Airways-America West concern handling domestic U.S. traffic.


Something like this would make sense, though I'm surprised discussions are with a Canadian carrier, as it would seem that the value of the existing routes to AC would not be as high as they would be to a high profile US carrier. Meaning, I question whether a lot of Americans would be that interested in flying form the US to Europe on AC vs. a more famililar American carrier or a larger and more familiar international one like BA or LH.

Either way, I've been having a hard time seeing Parker interested in a lot of the international routes, the European ones in particular.

But the value they'd bring in a 3-way deal could net some much-needed cash for a combined HP/US domestic carrier and it would allow the new US/HP to focus more on Parker's proven low-cost carrier model, which would be a stretch with far-flung international routes.

As AC is a Star Alliance member, it bodes well for the new US/HP to remain in the alliance, with the combined domestic carrier feeding the international flights of AC and other alliance parteners. My concern is that without major international routes the temptation for a new US/HP might be to stick with a more pure LCC model and not join ANY alliance. That would be an unfortunate outcome.

Aren't there laws out there which would prevent this sort of a possible merger? I mean Branson has had a helluva time trying to get Virgin America started, how would AC be able to merge with HP/US? :confused:

Aren't there laws out there which would prevent this sort of a possible merger? I mean Branson has had a helluva time trying to get Virgin America started, how would AC be able to merge with HP/US? :confused:

I think as long as AC is willing to limit its stake to 25% (the current limit on foreign investors in US-based airlines) or less, I think it's feasible in legal terms. I guess this is not a bad way for AC to get its hands on the US domestic market it long soughts (not allowed due to current aviation laws). However, I am not sure a combined HP/US route network can benefit AC's existing route structure, though.

LAX

Correction: I have read somewhere that AC's stake in the new entity can be as high as 49% because of NAFTA.

If AC is involved, I definitely don't want this deal to go through. I have nothing against the airline, but the deal does no good for HP.

I know that recently many reports have focused on foreign ownership of american air carriers. While the US considers this issue a non starter, there has been some movement to liberalize this between the US and Canada. The EU agreement would be seperate, but the Canadian government has broached the subject with the president and the word is that he was supportive. It would require congressional action but it is more acceptable to them with NAFTA, then an EU agreement. Labor could be a problem but hasn't Canada been a labor supportive country? I will try to find an article on the subject it has been a few months.

AC is a great airline - I love to fly AC (despite the grouchy flight attendants) - they still serve huge fresh muffins in the morning on short flights like ORD - YYZ - in coach!!

AC flies from Honolulu to Sydney nonstop. I like a carrier that flies to Australia.

AC flies from Honolulu to Sydney nonstop. I like a carrier that flies to Australia.

LOL! So does HA.

If AC is involved, I definitely don't want this deal
to go through. I have nothing against the airline,
but the deal does no good for HP.

AC is losing money hand-over-fist in the domestic
Canadian market. It is definitely not a LCC, like
Westjet - - which is kind of like a cross between
Southwest and JetBlue - - and is taking over the
domestic Canadian market.

A deal with AC could allow AC to concentrate on
international business, while HP/US could take on
Westjet on Cdn routes and Cdn-US routes.

HP/US has First Class cabins, and WN, WJ, JetBlue
do not. However, FC seems to be a mere shadow
of its former self...


Now to the important question - - HP/US probably
should be called "US America", and a new airline
after a merger with AC would be called:
"Air US America Canada"?

.

Now to the important question - - HP/US probably
should be called "US America", and a new airline
after a merger with AC would be called:
"Air US America Canada"?


You really love using that name (http://www.flyertalk.com/forum/showpost.php?p=4093162&postcount=7) don't you? Sorry but it sounds like cr@p. :td: It doesn't flow off the tonge phonetically.

You really love using that name (http://www.flyertalk.com/forum/showpost.php?p=4093162&postcount=7) don't you? Sorry but it sounds like cr@p. :td: It doesn't flow off the tonge phonetically.

How about North America One :)

You really love using that name (http://www.flyertalk.com/forum/showpost.php?p=4093162&postcount=7) don't you? Sorry but it sounds
like cr@p. :td: It doesn't flow off the tonge phonetically.

Yes, I know. Sorry, I didn't 'wink'. ;)

But I think the point remains, shacking up with
- - count them, not one, but two 'losers' - -
does not sound like the best idea. But if you
can leverage the equipment and routes, with
an infusion of business methods and practices,
then they might be a reasonable fit...

.

It makes a lot of sense for AC to buy into the US market. AC will expand it's hubs in Toronto, Vancouver and Montreal as both America West and US Airways will feed international passengers. Let's face it I know many American's who would rather fly Air Canada to Tel Aviv than an American carrier for security reasons. Also Air Canada offer's the only non-stop direct North America to India service.

Plus AC also locks in a multi-million dollar aircraft maintenance contract.

I say way to go AC!!

AC is losing money hand-over-fist in the domestic
Canadian market. It is definitely not a LCC, like
Westjet - - which is kind of like a cross between
Southwest and JetBlue - - and is taking over the
domestic Canadian market.

A deal with AC could allow AC to concentrate on
international business, while HP/US could take on
Westjet on Cdn routes and Cdn-US routes....

Who-a-a...wait until the AC apologists see this thread!

Although no fan of AC, it is apparent to me you have limited knowledge about Canada and before you post you ought to check some facts.

Firstly, AC is not losing all that much $$ anymore since they emerged from protection under the Canadian Companies' Creditors Arrangement Act (somewhat aking to part of the US Bankruptcy Code).

Secondly, WestJet, which I will fly way before AC, is still not the dominant Canadian domestic carrier - AC still is by far and away.

Finally, and this is really incredible to me that you don't know this, cabotage is not permitted in Canada nor is it permitted in the US so there is a snow ball's chance in hell that HP/AS could take on WestJet in the Canadian domestic market.

So this makes me wonder if AC will move over to the intl concourse in T4.

So this makes me wonder if AC will move over to the intl concourse in T4.

I could see them moving to T4, but not the international concourse. Arriving passengers will have already cleared customs prior to departure, so it would make more sense to deplane the pax closer to their connecting domestic gates.

Well, as long as it doen't interfere with HP's ops. Next thing you know UA will want to come over to T4 citing Star alliance membership. ;)

Who-a-a...wait until the AC apologists see this thread!

Although no fan of AC, it is apparent to me you have
limited knowledge about Canada and before you post
you ought to check some facts.

Firstly, AC is not losing all that much $$ anymore since
they emerged from protection under the Canadian
Companies' Creditors Arrangement Act (somewhat aking
to part of the US Bankruptcy Code).


I was referring to AC losing money in the domestic
market - - if you'll notice what I wrote...

AC is still doing reasonably well in the international
market. I understand it is 2/3rd's of their revenue.
I hesitate to say 'profit' - - because AC rarely has
any 'profit'.

I quote from above: "....AC is not losing all that much
$$ anymore...."


- - -



Secondly, WestJet, which I will fly way before AC, is still
not the dominant Canadian domestic carrier - AC still is
by far and away.


I didn't say anything about "dominant" - - I said Westjet
is an LCC (and AC is not).

WJ may *become* dominant in Canada because of this
(as well as its legendary, empowered workforce).


- - -



Finally, and this is really incredible to me that you don't
know this, cabotage is not permitted in Canada
nor is it permitted in the US so there is a snow ball's
chance in hell that HP/AS could take on WestJet in
the Canadian domestic market.

If HP/US merge with AC, then why is the combined
company not allowed to use its business model and
low cost methods in the Canadian market?


The root question is: Would the combined airline be
a 'Canadian' ailine (able to operate wholly in Canada),
or an 'American' airline (not being able to do so)? Or
both?...

I don't think the lawmakers anticipated this situation...

.

. . .If HP/US merge with AC, then why is the combined
company not allowed to use its business model and
low cost methods in the Canadian market?

The root question is: Would the combined airline be
a 'Canadian' ailine (able to operate wholly in Canada),
or an 'American' airline (not being able to do so)? Or
both?...

I don't think the lawmakers anticipated this situation...

Is this purely a hypothetical question? It's not an issue in the current deal, as AC is not being merged into anything.

HP is effectively taking over US (though retaining the US brand), in what they are calling a "merger." The parent company of AC is one of several companies providing money to help re-capitalize the new US, in exchange for a contract to provide aircraft maintenance services.

This will make AC's parent an investor in, and supplier to, the new US, not part of the new airline.

Is this purely a hypothetical question? It's not an issue in
the current deal, as AC is not being merged into anything.

HP is effectively taking over US (though retaining the US
brand), in what they are calling a "merger." The parent
company of AC is one of several companies providing money
to help re-capitalize the new US, in exchange for a contract
to provide aircraft maintenance services.

This will make AC's parent an investor in, and supplier to, the
new US, not part of the new airline.

Well, the "current" deal is one thing, but the talks about the
'other' merger or deal w/ AC may be yet something else again...

The "new" arline (HP / US) may have some investment from
the parent of AC - - but any further involvement, alliance,
or co-operation with AC would be a matter of great interest...

.

Well, the "current" deal is one thing, but the talks about the
'other' merger or deal w/ AC may be yet something else again...

The "new" arline (HP / US) may have some investment from
the parent of AC - - but any further involvement, alliance,
or co-operation with AC would be a matter of great interest...

That would definitely be something else again. What "'other' merger or deal w/ AC" are you referring to? It seems I've missed something.

That would definitely be something else again.
What "'other' merger or deal w/ AC" are you
referring to? It seems I've missed something.

Did you read the article in the priginal post?

"He also didn't dismiss speculation brewing on Wall Street
that Air Canada may be involved in coming months in a
merger, possibly with regional airline America West Airlines,
which has confirmed merger talks with U.S. Airways."

.

Well, a 'merger' per se is unlikely to happen due to anti-cabotage laws. What's more likely is that each carrier makes an investment in the other up to the maximum legally permitted, and they agree to 'appear' to be one airline while really being two (merging marketing, FFPs, websites, customer service, etc.).

So for marketing purposes you would have an airline called 'Star North America' (or something similar) but each flight would be operated by either 'Star US' or 'Star Canada'.

The part that intrigues me is the concept of AC operating HP/US's intercontinental routes. Somebody's going to have to educate me about what fifth freedom really means and whether they can pull this off.

Up to this point we've seen 'two airlines in one' often enough (AA-TW recently, and of course HP-US itself to come) but it's always been a transitional state under a single corporate parentage. Whether keeping two airlines in one on a long-term basis, with the difference that they actually have separate shareholder groups to report to, really works will be an issue for the future -- but it has worked (if a little clumsily) in other industries (Shell oil being the most obvious example) so maybe it can work here.

Did you read the article in the priginal post?

"He also didn't dismiss speculation brewing on Wall Street
that Air Canada may be involved in coming months in a
merger, possibly with regional airline America West Airlines,
which has confirmed merger talks with U.S. Airways."

.

Yes, I did read the original article -- which was written and posted prior to the HP/US merger announcement.

Since the subsequent announcement clarified AC's involvement, I thought that addressed the "speculation brewing on Wall Street." In other words, I thought this was new info or speculation. It's not. Sorry for the confusion.