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US/AA merger- MASTER DISCUSSION THREAD/incl 'when will US leave STAR'

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US/AA merger- MASTER DISCUSSION THREAD/incl 'when will US leave STAR'

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Old Dec 8, 13, 9:45 am   -   Wikipost
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There is an existing thread in the AA forum that may be useful to US and AA Flyertalkers:
US-AA Merger: Just the Facts thread

As facts become posted, that should be the place to look.

Merger discussion, speculation, and other questions can be directed here, or the similar thread in the AA forum:
MERGER: US and AA 9 Dec 2013 and implications for AA flyers (new)

AA - US Merger Agreement / Announcement / DOJ Action Discussion (consolidated, and now closed to new posts)
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Old Aug 22, 13, 1:17 am
  #1501  
 
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Originally Posted by SusanDK View Post
According to AA's general counsel, there is no Plan B:

http://www.usatoday.com/story/todayi...fails/2681345/

But I guess that could be PR rhetoric to try to convince the DOJ that AA would not survive without the merger.
You don't file a Plan B with the court. Hence, from his perspective, there is no Plan B.

AA would have to create a new Plan of Reorganization if the merger doesn't go through.

That is all... no news here really...
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Old Aug 22, 13, 3:57 am
  #1502  
 
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Originally Posted by Jacobin777 View Post
AFAIK, since AA entered BK back in Nov 2011, its cost AA about $150 million in legal fees and with the current daily legal fee at $500,000.
What leads you to this belief?
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Old Aug 22, 13, 4:36 am
  #1503  
 
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Originally Posted by richarddd View Post
What leads you to this belief?
http://www.usatoday.com/story/todayi...fails/2681345/

"Court records show that American Airlines, since it filed for bankruptcy in November 2011, is spending about $500,000 a day in legal expenses and that the airline's total legal expenses have been about $150 million."
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Old Aug 22, 13, 4:53 am
  #1504  
 
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Originally Posted by chrisljo View Post
http://www.usatoday.com/story/todayi...fails/2681345/

"Court records show that American Airlines, since it filed for bankruptcy in November 2011, is spending about $500,000 a day in legal expenses and that the airline's total legal expenses have been about $150 million."
That would do it.

Plan B is obviously to go back to their standalone plan of reorganization. They can't pursue it publicly so long as the merger agreement is in place.
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Old Aug 22, 13, 8:37 am
  #1505  
 
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So can we feel reasonably confident that the rumor from the US Airways employee newsletter a few weeks ago saying US would leave Star on November 1st is no longer valid? I just want to be able to book partner travel for the last few weeks of the year and know that it's going to count towards my PQMs for the year if I book flights on United.
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Old Aug 22, 13, 9:08 am
  #1506  
 
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"Court records show that American Airlines, since it filed for bankruptcy in November 2011, is spending about $500,000 a day in legal expenses and that the airline's total legal expenses have been about $150 million."
I'm HIGHLY skeptical of $500k/day in legal fees. Typical large M&A deals that I've been around are usually on the order of $10M in legal fees through completion (at white-shoe firm rates). Though, I can't really speak to bankruptcy costs.

Even if you assume the average rate is $750/hr for an attorney at a large white-shoe firm (which might be low), that still requires about 66 attorneys all working 10 hours days. I've been around legal teams like this, but these are usually reserved for uber-large scale global litigations, not a typical merger between two major companies.
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Old Aug 22, 13, 9:20 am
  #1507  
 
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$750/hr as an average rate might even be high, unless it's all senior associates and partners working.
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Old Aug 22, 13, 9:30 am
  #1508  
 
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There will be a small army of bankruptcy lawyers and support staff. When I worked for the PBGC we had to expand our legal department for the UA bankruptcy. We got a whole new floor of lawyers and support staff, and our guys were still outnumbered by the UA lawyers. And that's just for the pension plan aspect of the bankruptcy. Granted not all were top-tier staff but it does add up really fast. Those guys were all putting in ridiculous hours too. We even had to cancel a planned IT disaster recovery drill at the last minute because the lawyers needed the network and IT systems up for that specific weekend, and the whole time that plan was going into trusteeship we had to double the helpdesk staffing for the weekends simply because there were so many users working on the weekends.

I remember thinking with the sheer amount of money coming from both sides and devoted to figuring out the pension plans' place in the BK, they probably could have just not hired any lawyers and used that money to fund the pensions.
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Old Aug 22, 13, 10:07 am
  #1509  
 
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Exiting Star Alliance

Sorry if I missed this, but what do people think of US still exiting Star Alliance for One World while this case is outstanding. If it goes to trial, I don't see a decision by the court until well into 2014 and then potential appeals. My brief search indicates that US would merge with AA and enter OW that way rather then entering separately. Would US stay in SA just in case they don't prevail in the DOJ case?
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Old Aug 22, 13, 10:28 am
  #1510  
 
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And here I was thinking that AMR was being pretty frugal with it's bankruptcy expenses...

1Q2013 AMR spent $160 million in reorganization expenses, $124 million in the 2nd quarter. It's said that bankruptcy ain't cheap...

Jim
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Old Aug 22, 13, 3:41 pm
  #1511  
 
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American and US Air said they want a speedy trial....

American and US Airways Seek November Trial Date for Antitrust Suit


American Airlines’ parent AMR Corporation and US Airways said that they had filed a motion to set a trial date for the lawsuit filed earlier this month by the Department of Justice that seeks to block the merger of the two airlines. The DOJ had previously requested a trial date in roughly six months. Today’s filing asks for a trial date on November 12, 2013. The two airlines also filed a brief in support of the expedited date....
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Old Aug 23, 13, 6:24 am
  #1512  
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Originally Posted by MarcusWorth View Post
American and US Air said they want a speedy trial....

American and US Airways Seek November Trial Date for Antitrust Suit
Makes sense. If the drop dead date for the merger is in December, I think they'd want the trial to go forth so the merger can die rather than have one party (more likely AA) walk away from it. Anyone know if there'd be a breakup fee in the event a judge kills the merger?

Dougie's ego would be hurt if AA walked away from the merger. If it loses in the trial, he can blame the big bad government.
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Old Aug 23, 13, 7:24 am
  #1513  
 
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Originally Posted by Superguy View Post
... Anyone know if there'd be a breakup fee in the event a judge kills the merger? ...
No, but there are other breakup fees agreed to in advance, and detailed in an earlier post.
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Old Aug 23, 13, 9:22 am
  #1514  
 
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Originally Posted by DCdeacon View Post
So can we feel reasonably confident that the rumor from the US Airways employee newsletter a few weeks ago saying US would leave Star on November 1st is no longer valid? I just want to be able to book partner travel for the last few weeks of the year and know that it's going to count towards my PQMs for the year if I book flights on United.
Wouldn't place a sure bet either way.
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Old Aug 23, 13, 11:43 am
  #1515  
 
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Originally Posted by Superguy View Post
Makes sense. If the drop dead date for the merger is in December, I think they'd want the trial to go forth so the merger can die rather than have one party (more likely AA) walk away from it. Anyone know if there'd be a breakup fee in the event a judge kills the merger?

Dougie's ego would be hurt if AA walked away from the merger. If it loses in the trial, he can blame the big bad government.
will US stay in *A or move to OW???
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