formeraa

No, AA did NOT assume TWA's debts. Some countries tried to make that case, but it's simply not true. TWA was in bankruptcy and its debts were decided by the US bankruptcy judge.

ELY001

Without getting into complicated legal semantics, some legal systems view AA acquiring TWA's assets as a de facto assumption of it's debt. Apparently, the Israeli legal system does which was evident in the article TWA 884 copied and pasted in his post. Hence, while AA never affirmed or assumed the debt TWA owed to its TLV based employees, the law (in Israel) imputed it upon AA through its affirmative act of acquiring substantially all TWA assets.

NYC2TLV

Same as the previous relationship with CO that LY had, once they became competitors, they stopped working with them. In retrospect, they probably should have continued to work with DL and keep CO from growing their market share. It would be no different than AA/BA and AA/IB on the transatlantic routes except that LY offers no feed to TLV.

Maybe so, but I thought it was crazy that the menu on 4X-ECE still has information about GRU and EL AL Spontany! They should get rid of that by now.

The reduction in ATL-TLV frequencies was not a result of over-saturation, but more a direct result of DL focusing on creating a hub in JFK. They continued to build up the domestic traffic into JFK and passengers chose to use JFK-TLV in addition to ATL. Then they switched to a B747 and ATL-MOW/TLV were killed off in favor of the growing Brazil market that they didn't want to lose to US and AA who at the time were expanding their footprint there and wanted the slots being given out by the DOT.

By LY or AA?

When LY flew this route, it was unpopular with many due to the aircraft itself. The reason though that it wasn't commercially viable, was also in part due to the low yield fares that LY would flood the market with as revenue management panicked with every flight's booking pattern instead of dictating the market. There was also a small amount of FLL/PBI traffic that preferred to fly to ATL instead of driving down to MIA to fly with LY.

But for the most part, this traffic was all VFR. Not very high yielding. Pre-9/11, it got affluent travelers from MEX and CCS but that ended as transiting the US became a nightmare.

ELY001

So, are you saying that DL abandoned ATL-TLV because they lacked enough a/c for both ATL-TLV and ATL-Brazil flights?

NYC2TLV

No, I am not saying that. Airlines do not stop routes for any one particular reason. They stop them for many reasons.

As I mentioned, the JFK-TLV route began March 2008 with a Boeing 767. Previously, DL was using a B777 from ATL which was carrying some very nice cargo loads as well as some high yield traffic from across the United States. But during this same time, DL had increased operations at JFK and post-NW merger, was shifting its focus to the emerging markets by signing a strategic partnership with G3.

When the B747 became available for the JFK-TLV service, the cargo and yields shifted from ATL to JFK and the addition of US flights from PHL meant that low season for TLV flights would drive yields even lower for TLV (especially on connecting domestic traffic). So they decided to let JFK continue their steady build and use the aircraft to develop Asia and South America. Don't take offense, they did massive reshuffling with ATL and JFK shifting services in Africa between the two etc.

DL had only intended to keep ATL-TLV seasonal, but quickly found better ways to make money and decided that JFK-TLV was sufficient enough. After all, why make 5%-20% on a ticket to TLV when you can make 8% more on BSB, GIG, GRU and LOS?

If AA decide that post merger, they shift PHL-TLV to JFK and open MIA-TLV, then it would mean that AA/US has declared war on LY. As there already is an open skies agreement between the United States and Israel, LY would have no recourse but to continue to try and expand their agreements with AS/B6, try to get an agreement with WN and would be best to take the offensive going into markets like BOS (for B6 connecting traffic) and SFO to take some high yield traffic from UA/DL. Otherwise, LY should shift their focus to the Far East and consider the US as good as gone in terms of growth.

ELY001

Why would DL massively reshuffling with ATL and JFK offend me? I don't even fly DL anywhere!

ELY001

Not sure I completely agree with your sentiment, however it does appear grim unless and until LY gets into one of the three alliances. Perhaps the seminal reason why LY is consistently losing market share, most notably at its one and only hub at TLV, is because it does not belong to an alliance and the Matmid program is unattractive in and of itself when compared with most name brand European and American carriers. The fact remains that passengers, particularly high yielding business ones on both sides, want to be able to accrue miles, status, and perks and combine them with credit card based mileage accrual programs, etc. Barring entry into an alliance, LY should expand code-share/partnership agreements and revamp Matmid to the extent that the benefits it bestows on pax is equivalent to being in an alliance.

Long gone are the days when LY could count on ethnic/religiously based marketing, it's famed security, or its illustrious history to gain passengers and increase yields. Today it's about benefits, convenience, and hard product.

joshwex90

Now you're touching upon the bane of the UA forum

NYC2TLV

As I have said previously though, without a strong network, no alliance needs LY. Look at the recent inclusion of QR to oneworld. It was done because BA needed a response to QF joining with EK. AA had no opinion either way, so QR was admitted. Now, QR has a lot of pull in that alliance and they all have no need for LY.

Next is Star Alliance with UA and LH running things. Do you think they need LY?

Lastly, SkyTeam, the alliance led by DL which told LY to piss off with regards to domestic space. How about them?

LY needs to get itself together and create value. Not by an overhaul of Matmid, but by servicing destinations and carrying passengers to places lacking service. Then they could be of use to competing airlines.

Don't know why we keep coming back to this, but an alliance is not the most pressing issue, nor is Matmid. This company needs to get their act together across the board and take some initiative.

BizFlyin

The article seems to indeed negate what you've said. They said if they continue to operate the line, they could owe high costs to Israel employees, which is in line with how severance pay works here. Severance pay in Israel is not a "debt" in the traditional sense. It's not always owed, and when it is, some companies manage to erase it via the courts for one reason or another.

FlyingELAL

By LY.

NYC2TLV

There were murmurings in the LY offices because of the switch from Category II to I by the FAA, but LY is more concerned with cutting costs than with expansion right now. The inherent costs of entering a new city (slots, hiring a station manager, security positions, handling costs, sales positions in a town office etc.) and of course aircraft availability, seem to be why LY is not looking at any expansion right now.

TWA884

TWA was a U.S. registered corporation which was liquidated in legal proceedings in the United States of America pursuant to U.S. law.

The liquidation was accomplished through an auction of assets under § 363 of the United States Bankruptcy Code. The Third Circuit Court of Appeals, in an opinion authored by Justice Alito before his elevation to the United States Supreme Court, held that the sale was free and clear and extinguished all successor liabilities.

AMR specifically excluded the TLV route from the assets it intended to acquire from the TWA estate for the specific reason that it did not want to become obligated for severance pay to TWA's 100 Israeli employees which would have happened in the event that AMR took over the route and later chose to discontinue it.

The TLV route was abruptly discontinued by TWA several weeks before the sale of its assets to AMR was consummated.

ELY001

EL AL's current situation visa vie the alliances is sort of analogous to the hamster chasing the wheel. On one hand LY needs to create value by adding destinations, improving product, etc., and on the other hand it is significantly more difficult to do so without being in an alliance and all of the benefits therein.

Though you may believe that LY has nothing to offer an alliance (I happen to disagree) does not mean that EL AL will not be able to get into an alliance. What is required is an 'out of the box' multi-prong strategy which utilizes unconventional thinking and tactics. In fact, I have devised such a strategy. I am pretty confident that if I were empowered to do so, I could get LY into an alliance.

ELY001

TWA884,

I understand all of that and reiterate my point that it really does not matter, in this instance, how the US courts viewed TWA's debts. The legal jurisdiction and judgement of US Courts do not transfer to Israel. What matters here is what Israeli law, Courts, and jurisprudence believe and it seems as though they believe AA owes the debt through a legal theory I explained.

I wonder whether TWA stiffed long time employees at other stations or was TLV the only one that got that treatment?