formeraa

I pretty much agree with this analysis, if US takes over AA. The name will likely be AA with the main offices in Tempe/Phoenix metro area. The hubs will likely stay intact with CLT, PHX, and PHL together with DFW, ORD, and MIA with focus cities in LAX and JFK. My only concern would be that DFW and PHX are somewhat redundant, although PHX has better weather (very few mid-afternoon severe thunderstorms).

FWAAA

There's a frequent assumption (unfounded, IMO) that Doug Parker at US is a superior executive and that the US management team is superior to AA's management and thus, the creditors would magically prefer that US be in charge and running the show following the hypothetical merger.

Of course, the DL management and creditors disagreed that Parker was superior when he tried the same nonsense a few years ago and when he was rebuffed, he reacted by tying one on at a PHX-area country club and was arrested for yet another DUI (his third)? Yeah, he sounds like the superior executive. He started at AA (like Arpey and Horton), but there may be some valid reasons why he didn't continue at AA.

PaulInTheSky

AA making either switch to Star Alliance or SkyTeam will change the entire face of the alliance competition. Imagine all the OW traffic cannot go deep into the continent of NA, where UA, AC, and US are dominating. SkyTeam will be as good as Star if AA joins, but I believe all the OW partners will not want to hear that.

If DL really acquires AA, I will really not touch any of DL/AA unless the merger keeps the merits of AAdvantage program.

If US merges with AA, then I don't see how AA is much better in terms of international market. US only flies TATL to Europe. US doesn't even have a single 777 to hit the ULH markets.

mkt

Already ahead of you. I bought a few IB and LA trips, and still have have 15k left, with no idea how to spend it, and no paid trips on any Oneworld carrier in the near future.

PUCCI GALORE

My thoughts are about what will happen to fares if all the competition goes.

bernardd

The problem is there's a limit on what they can do. Collectively they can't own more than 25% and they can't control the business, so if DL, US or any other US controlled corporation makes an attractive enough offer to the courts & creditors there's basically nothing the OW members can do about it.

bernardd

I think it's inevitable that fares have to rise, just as they'll have to rise at your own employer, at least to the point where the airlines begin to make a reasonable return on the capital employed. If they go too far beyond that all the theories suggest we'll see more startups which will drive prices down again, though it may obviously take a while for the pendulum to swing over.

I think what I'm arguing is the current lack of financial health in the industry is not realistically sustainable and there isn't much more that can be done on the cost side of the equation because people have to have a viable income and I can't imagine the cost of fuel dropping radically, so the only conclusion is prices must rise by some means or other.

FWAAA

And ultimately, JAL refused all financial aid (equity or loans) offered by AA and other members of OW. The end result was that JAL stayed with OW and the OW members committed to increasing JAL's revenues from codeshares and joint business agreements.

KtownTraveler

You gotta love the illogic of FT!

My two cents on the issue: I left ST when DL did a NW take-under. Having to buy an M+ fare and then hope to get lucky for a TATL upgrade remains a major reason I prefer AA over DL.

MiamiAirport Formerly NY George

It sounds like USAir and TPG intend on making a compelling bid to creditors' committee once AA has finished most of the needed restructuring activity and is ready to file its own plan of reorganization.

It sounds like to me DL is trying to bid the price up and maybe make any deal become unattractive. Again, I can't see DL giving up what it would need to give up to get AA (assuming even that would satisfy DOJ). If AA had a huge prescence where DL had nearly none, yes than I could see it. The only region that comes close is South America and its not like DL is completely absent from that area.

george 3

I read a similar suggestion this morning that DL may be merely stirring the pot to slow down a TPG investment or TPG/US merger. Can't see a DL/AA merger approved by this administration. Also can't see an HQ move to Tempe due to favorable tax structure and business climate in Texas if AA/US merge.

Ambraciot

DFW, MIA, ORD, LHR, and South America are a huge share of AA's portfolio and DL is very weak in those markets. Most of AA's other flights touch a city DL has been adding flights to and trying to build up in the last couple years: JFK, LGA, LAX and BOS. AA would be a huge acquisition, perhaps too huge... but the routes and hubs are almost a perfect fit for DL.

Cityhawk

Probably the most likely explanation. They can't expect a DL takeover to get approved.

MiamiAirport Formerly NY George

But DL has ATL (although MIA has more South America O&D traffic) and DTW and MSP. While DTW and MSP certainly do not have the O&D traffic of ORD there is not a major competitor in either airport. I'm not sure that all of these expensive hubs could be supported.

Yes, this deal would give DL a much bigger footprint into South America. But what DL would have to give up might not be worth it. And again its not like DL has a really small presence in South America.

Carolinian

As a refugee from the DL takeover of NW, I can tell you that one of the worst things for members of an ff program is for their airline and its program to be assimilated by the DL Borg.

And mergers generally have meant a major downgrade of ff programs in recent years - AF/KL, DL/NW, and now UA/CO. All have sucked big time for ff members.