You may be giving US a bit too much credit. Domestic carriers have cut back on capacity, demand is up, so loads and prices are up. Combined with the drop in fuel costs in the last quarter, much of the profits are due to factors well beyond management's influence and control, any airline that did not generate a profit in the past quarter should liquidate tomorrow.

Fighting to a draw with SWA at secondary hubs is not a sign of strength, basis of a viable enterprise. Should AA eventually decide to acquire US, most of the more profitable PHX and PHL services will likely move to international gateways at LAX and LGA / JFK.

DL lost half a billion (hedging) and I suspect UA announcement tomorrow (Thursday) won't be Rainbows and Unicorns.

Apologies; DL and UA are non-operations related:
DL buying a refinery - REALLY?
UA - indegestion from CO merger
Believe the operations-related numbers will be quite strong.

If you can't make money serving top-15 USA metropolitan areas with airline service, I say you don't know how to run an airline. One of those places is geographically isolated- nobody's going to want to drive to LAX from PHX, or even TUS, to fly somewhere. Alaska makes money with a grand total of ONE top-15 major metro area in their network, and about ~50% market share in that hub to boot (they don't even dominate it, it's sure no DTW/ATL). So I think the idea that you can't make money flying lots of service out of a region with 4-6 million people is just silly.

US's network isn't great, and obviously you'd need to optimize things, but if AA does the ol' SJC/STL routine of dumping PHL/PHX on the floor so that an LCC can pick up the pieces and expand their market share serving those cities, that's just dumb. People want and need to fly to those cities; if you don't want to accept money for that because you can't figure out a cost structure that works, someone else will be happy to make money instead of you. Isn't that the entire point of this Chapter 11- get AA's costs down so they don't have to hunker down and watch everyone else nibble away at market share?

(The reason why US dumped PIT and LAS is in that link up there too- smaller metro areas than the places they kept, plus LAS was the old HP night hub, which didn't work when fuel prices went crazy.)

I disagree with you about UA. They are going to be somewhat weak. Yesterday, UA announced that its unit revenue growth for the quarter turned out to be a mere 3.0% (and the June number was just 3.5%) after telling everyone just two weeks ago that the June number was between 5% and 6%:

http://finance.yahoo.com/news/united...152816460.html

Those operations numbers are horrid compared to AA, DL and US, all of whom turned in much better unit revenue improvements in the second quarter.

To be fair, many are blaming that operations failure on the March 3 computer integration fiasco, so it is kinda merger related.

One can only hope that Jamie Baker and the other analysts take off the kid gloves tomorrow when questioning Smisek on this massive let-down. UA stock has shed over a billion dollars of market cap since July 10 when it released its tepid June numbers, including huge losses on Tuesday when this latest bad news revision was released.

As the industry is presently constituted, this will never get to 1st base with regulators even with major givebacks especially at LGA, BOS (shuttle routes) and taking an ax to either CLT or ATL. In both cases, I don't see what DL gains?

AA did acquire another legacy carrier -- they acquired TW. AA/TW was then the excuse to get DL/NW by regulators, which was then the excuse to get CO/UA by regulators...

The result, the US has only three significant carriers (excepting WN which has only nominal international routes and is otherwise unique). All have significant financial problems.

[QUOTE=eponymous_coward;19002215]Alaska makes money with a grand total of ONE top-15 major metro area in their network, and about ~50% market share in that hub to boot (they don't even dominate it, it's sure no DTW/ATL). [QUOTE]

Not sure how you figure this... AS flies to each of the top 15 excepting DTW and MIA.

[QUOTE=Indelaware;19003600][QUOTE=eponymous_coward;19002215]Alaska makes money with a grand total of ONE top-15 major metro area in their network, and about ~50% market share in that hub to boot (they don't even dominate it, it's sure no DTW/ATL). AS still serves Miami via FLL.

After Tom Horton's comments I do think that it is down to less than a 50/50 chance one will happen during Bankruptcy. With that being said I DO THINK that in the next 5-7 years we will see an AA/US or B6 merger however it will be on AA's terms.

I am starting to believe that Doug Parker's desperation (If he believed that it was a likely scenario he wouldn't be yapping about it so much to the media instead he'd be sitting quietly waiting for the cards to fall) and AA's strong revenue growth I don't believe at this time a AA/US merger would work.

As a hub, they have one top-15 major metro area in their network, SEA (their focus city in LAX is weaker than it was earlier this decade, incidentally).

US has three: PHX, PHL, WAS (via DCA).

Horton Should be Taken to Woodshed
 

Common reporting is that eventually AA and US will merge either in bankruptcy or the future.

Horton is responsible for AA, but he seems to be putting his ego in front of what is best for the airline. He is in bankruptcy for a reason and should use the tools available to him for the benefit of creditors. It is widely reported that AA has not ruled out a merger with US, but prefers that to wait until after they exit bankruptcy. That is plain stupid and is clearly a setup for bankruptcy number two as US went through when it did not do enough in bankruptcy number one.

Let's say at an airport US has three gate leases and AA has five gate leases, but a combined airline needs only 6. If you wait until after the bankruptcy the combined airline two years from now is left with paying for 8 gate leases. In bankruptcy AA can reject two of their leases and be right sized without a fiscal penalty. Synergies are maximized. Times that by 50 or 75 common airports and the fiscal number raises drastically. US not being in bankruptcy does not have the ability to reject leases for gates, equipment, or facilities. AA does, but if Horton's ego stays in the way the savings for the creditors and future shareholders is lost and you end up with a more expensive airline ala US after its first bankruptcy.

I have not liked many of the policies and practices that Parker has put into place, although I have gotten so used to being on time, in clean planes and my luggage arriving on time, that I have found when flying other airlines that it has shocked me that I missed US. That includes UA, DL and AA. They have been lacking. This time his idea of merger in bankrutpcy makes sense for creditors and shareholders. When you look at US's performance, it essentially turned profits this last quarter equal to UA, which is three times it size. Clearly he knows how to maximize numbers.

It's not personal. It's business.

Horton would have learned that if he didn't have the AA philsophy that they are the largest and the best. That time was many years ago. He should stop trashing the competition and welcome talks.

Thanks for sharing

abeflyer - Parker loves you!

I can see that US flyers would be hoping, perhaps even desperate for a merger. AA flyers, not so much.