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AA - US Merger Agreement / Announcement / DOJ Action Discussion (consolidated)

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View Poll Results: My opinion of the announced AA - US merger is:
This is the best of all possible worlds; great idea!
33
3.93%
This portends a stronger airline, with some changes for all
192
22.88%
I am neutral - pros and cons for all
199
23.72%
I think this is a somewhat bad idea with some real challenges
226
26.94%
I am completely opposed to this merger; terrible idea!
189
22.53%
Voters: 839. You may not vote on this poll

AA - US Merger Agreement / Announcement / DOJ Action Discussion (consolidated)

 
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Old Aug 13, 2013, 9:31 am
  #1471  
 
Join Date: Jul 2004
Location: (near) Cambridge, MA
Programs: US GP (used to be *G, now,what)
Posts: 1,777
Originally Posted by rrgg
Could you elaborate? Do you mean they have more overlapping routes than DL/NW UA/CO?
By eliminating competition through consolidation, they are forming a limited monopoly... Basically you went from 6 players to 4 and this merger would make 3.
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Old Aug 13, 2013, 9:31 am
  #1472  
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Join Date: May 2001
Location: LAX; AA EXP, MM; HH Gold
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Originally Posted by ellinj
Why do people keep saying this? LCC was in the black this year.
Ever since Parker began beating the "I'm going to take over AA" drum, we've been subjected to a constant drumbeat of "AA is too small to successfully compete against much larger UA and DL and thus a merger with US is absolutely essential or else AA goes back to Chapter 11." Even though AA has a plan to leverage its bankruptcy-induced lower costs and grow substantially. Organic growth, which is usually preferred by airline rank and file.

Even those with a mere rudimentary background in logic have to admit that if AA is far too small to succeed against UA and DL, then US, being just slightly larger than half of AA's size, is far to small to succeed.
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Old Aug 13, 2013, 9:33 am
  #1473  
uxb
 
Join Date: Jan 2008
Location: JFK, DCA, BUR, YVR
Programs: AC, AS, BA, DL, HH (D), MR (T/LTP), UA (*S), UScAAre (PLT/1,87MM), WN
Posts: 5,207
Originally Posted by halls120
Politics is always a factor.

The problem with saying "no" at this point is that the government has stacked the deck in favor of DL/NW and UA/CO, leaving US and AA in much weaker condition.
Correction: It leaves US in a much weaker condition. AA had little vested in this process as they had/have a standalone plan. AA doesn't operate as "East" and "West." AA didn't give up their terminal at LGA. AA didn't increase their presence at DCA. Those were all US blunders. Time for DP to pay the piper.
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Old Aug 13, 2013, 9:36 am
  #1474  
 
Join Date: Mar 2012
Location: Southern California
Programs: AA: EXP, SPG: Gold
Posts: 201
I am excited at the prospect of AA remaining a stand alone company. I think the competition will help keep fares lower than with one less airline.
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Old Aug 13, 2013, 9:37 am
  #1475  
 
Join Date: Oct 2006
Location: ANP
Programs: UA 1k, Marriott Plat, HH gold, Avis/Hertz Pres
Posts: 1,408
bye bye stock....down 50% and still dropping faster than a dude without a parachute
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Old Aug 13, 2013, 9:38 am
  #1476  
 
Join Date: Apr 2006
Location: SJC/SFO & ORD
Programs: LT Gold/BA Executive Club/AS MP/Marriott
Posts: 1,646
Looking at LCC's stock and some of the comments on CNBC, it seems that the anti-trust lawsuit is more than "just giving up a few slots". This potential merger might go way of the T-Mobile/AT&T deal. Ostensibly, this seems like it might a long "drawn-out" merger process.

Coincidentally, Tom Horton before coming back to AA was instrumental in turning AT&T into the current behemoth it currently is.
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Old Aug 13, 2013, 9:38 am
  #1477  
 
Join Date: Jan 2001
Location: Bellevue, WA - AA EXP 3MM
Posts: 2,756
This part rang particularly true to me:
Today, US Airways competes vigorously for price-conscious travelers by offering discounts of up to 40 percent for connecting flights on other airlines’ nonstop routes under its Advantage Fares program. The other legacy airlines – American, Delta and United – routinely match the nonstop fares where they offer connecting service in order to avoid inciting costly fare wars. The Advantage Fares strategy has been successful for US Airways because its network is different from the networks of the larger carriers. If the proposed merger is completed, the combined airline’s network will look more like the existing American, Delta and United networks, and as a result, the Advantage Fares program will likely be eliminated, resulting in higher prices and less services for consumers. An internal analysis at American in October 2012, concluded, “The [Advantage Fares] program would have to be eliminated in a merger with American, as American’s large, nonstop markets would now be susceptible to reactionary pricing from Delta and United.” And, another American executive said that same month, “The industry will force alignment to a single approach–one that aligns with the large legacy carriers as it is revenue maximizing.” By ending the Advantage Fares program, the merger would eliminate lower fares for millions of consumers, the department said.
No doubt many of us have noticed that US systematically offers low fares on connecting markets, where others may offer nonstops. Meanwhile, AA, DL, and UA ordinarily do not offer low fares in these connecting markets. It's hard to see how the withdrawal of these low fares could benefit consumers. This is also an important difference between the proposed AA-US transaction, versus DL-NW and UA-CO -- it's only US that has been, and would stop, providing this consumer benefit.
bedelman is offline  
Old Aug 13, 2013, 9:39 am
  #1478  
 
Join Date: Oct 2012
Programs: AA: EXP/5.2mm
Posts: 251
Originally Posted by kingarthur
I bet AMR's corporate legal dept is freaking out... I'm sure FT's resident lawyers will weigh in, but seems like a big surprise and potential problem... LCC stock is down almost 9% on the news.
AMR's corporate legal department is ecstatic. Without a merger, they all still have jobs.
lhl12 is offline  
Old Aug 13, 2013, 9:39 am
  #1479  
 
Join Date: Jun 2011
Location: DCA
Programs: AA EXP; BoNVoY Tit LTP
Posts: 1,923
Originally Posted by Alphaguy
By eliminating competition through consolidation, they are forming a limited monopoly... Basically you went from 6 players to 4 and this merger would make 3.
And the Antitrust Division thinks that 4 to 3 is a lot worse than 6 to 5 and 5 to 4 (see the accounting industry mergers).
ckendall is offline  
Old Aug 13, 2013, 9:40 am
  #1480  
uxb
 
Join Date: Jan 2008
Location: JFK, DCA, BUR, YVR
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Originally Posted by allenh91801
I am excited at the prospect of AA remaining a stand alone company. I think the competition will help keep fares lower than with one less airline.
Anyone that has had the misfortune of flying TCON this summer will be happy at the prospect of lower fares. This summer, fares between JFK and LAX/SFO have been in the $400 - $650 range. Not good!
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Old Aug 13, 2013, 9:42 am
  #1481  
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Join Date: Aug 2006
Location: SNA
Posts: 18,240
Well I just put all my slush fund money (a designated percentage of our portfolio I dedicate to high risk investments) into AMR. Made a killing back when United stock plummeted then rose again, hoping to do the same here.
VickiSoCal is offline  
Old Aug 13, 2013, 9:43 am
  #1482  
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Join Date: Aug 2006
Location: SNA
Posts: 18,240
Originally Posted by uxb
Anyone that has had the misfortune of flying TCON this summer will be happy at the prospect of lower fares. This summer, fares between JFK and LAX/SFO have been in the $400 - $650 range. Not good!
If that is the true cost of flying those planes, then overall for the health of the industry, that is good.
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Old Aug 13, 2013, 9:43 am
  #1483  
 
Join Date: Jan 2006
Location: Austin,TX (AUS)
Programs: AA, UA
Posts: 767
Originally Posted by ckendall
And the Antitrust Division thinks that 4 to 3 is a lot worse than 6 to 5 and 5 to 4 (see the accounting industry mergers).
I think the DOJ sees going from 4 to 3 as the breaking point.

Anyways, good news for those what want to "Keep American our American".
austin_res is offline  
Old Aug 13, 2013, 9:43 am
  #1484  
uxb
 
Join Date: Jan 2008
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Posts: 5,207
Originally Posted by dcsnowwake
bye bye stock....down 50% and still dropping faster than a dude without a parachute
I'd expect separate LCC shareholder litigation if the merger doesn't go through. Good.
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Old Aug 13, 2013, 9:46 am
  #1485  
uxb
 
Join Date: Jan 2008
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Posts: 5,207
Originally Posted by VickiSoCal
If that is the true cost of flying those planes, then overall for the health of the industry, that is good.
I don't think that $650,- represents the true cost of flying those planes. It's a money grab that will only be made worse post-merger. TATL fares are competitive right now. A combined AA/US-BA JV would send those fares sky high. And, BTW, let's not forget the fact that all of these airlines nickel and dime us to death with ancillary fees. Absent any legislation to kerb those fees, then prices should be much lower.
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