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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 Sep 11, 13, 1:21 pm
  #1726  
 
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Well, obviously switching alliances without a merger first can be done. It happens all over the world, and most recently with CO here at home. Of course, the new alliance must accept you or you're in alliance limbo.

Jim
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Old Sep 11, 13, 2:48 pm
  #1727  
 
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Originally Posted by BoeingBoy View Post
Well, obviously switching alliances without a merger first can be done. It happens all over the world, and most recently with CO here at home. Of course, the new alliance must accept you or you're in alliance limbo.

Jim
CO's move to *A after rejecting UA's original merger offer seemed to work out pretty well for all parties (at least until the recent merger!), so I'm not sure why it wouldn't make sense for US to move to 1W whether or not the merger goes through right now.

Parker has already burned his bridges with UA to a large extent, who will trust him as a partner even less than before. AA/1W should welcome the added routes to fill in some big network gaps and, if they have doubts about the guy's intentions, will be less threatened by Parker as a minority partner than as head of the world's largest airline.

Out of curiosity, where was Parker the last time US & AA were allied?
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Old Sep 11, 13, 3:08 pm
  #1728  
 
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Parker started with AA in the early 90's then HP from the late 90's. Until he became President/CEO of HP in 2001 shortly before 911 he was in a variety of finance roles.

You're right about CO's move to *A. Without being privy to inside info I assumed the it was a prelude to the merger.

Jim
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Old Sep 11, 13, 4:01 pm
  #1729  
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Originally Posted by Superguy View Post
filing suits for the sake of "bullying" is a waste of time and resources and that can be easily used elsewhere.
So they never waste time and resources on other things that could be used elsewhere?
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Old Sep 11, 13, 4:40 pm
  #1730  
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Originally Posted by remedy View Post
Any chance US would switch from *A to OW without/before a merger with AA?
Of course there's a possibility that US could switch from Star Alliance to Oneworld before a merger or if the merger is blocked.

Is it likely? I don't believe it is.

Here's why: Parker has said that Star Alliance has been good for US. If he wanted US in Oneworld, then why did US join Star in 2004? And why hasn't US joined Oneworld in the intervening years?

Answer: Either Parker values being in Star more than being in Oneworld or because Oneworld turned him down sometime in the previous 12 years since he took over as US CEO.

We don't know the answers.

One thing we do know is that Parker engineered a hostile takeover of AA last February. We know that Horton was not in favor of the merger, but that AA creditors were sold on the merger and overruled Horton.

Another almost indisputable fact is that there was no chance that a combined US-AA would be permitted to join Star, especially not the immunized alliances that AA has with BA/IB and JAL. European regulators have hinted that they aren't happy that many of the world's airlines have paired off into just three big alliances. No way would they approve the world's two largest airlines (AA and UA) to be in the same antitrust immunized alliance. Not a chance at all.

My guess (gut feeling - no evidence) is that US was planning to join Oneworld solely because that was the only possible result following the merger with AA. IMO, if there is no merger, then there is no push by US to join Oneworld and there is no push by other Oneworld members (not even AA) to invite US to join.

Bottom line: US joins OW if the merger happens, and stays where it is if the merger does not happen.
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Old Sep 11, 13, 5:30 pm
  #1731  
 
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Originally Posted by FWAAA View Post
Bottom line: US joins OW if the merger happens, and stays where it is if the merger does not happen.
I certainly can't argue with that. The only other possibility I can see is *A kicking US out and OW being the only alliance with any interest - a small possibility would be my guess.

A stand-alone US needs a lot of international partners to feed it since it lacks a sizable international operation of it's own. *A has filled that role nicely.

Jim
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Old Sep 11, 13, 5:33 pm
  #1732  
 
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Originally Posted by FWAAA View Post
Of course there's a possibility that US could switch from Star Alliance to Oneworld before a merger or if the merger is blocked.

Is it likely? I don't believe it is.

Here's why: Parker has said that Star Alliance has been good for US. If he wanted US in Oneworld, then why did US join Star in 2004? And why hasn't US joined Oneworld in the intervening years?

Answer: Either Parker values being in Star more than being in Oneworld or because Oneworld turned him down sometime in the previous 12 years since he took over as US CEO.

We don't know the answers.

One thing we do know is that Parker engineered a hostile takeover of AA last February. We know that Horton was not in favor of the merger, but that AA creditors were sold on the merger and overruled Horton.

Another almost indisputable fact is that there was no chance that a combined US-AA would be permitted to join Star, especially not the immunized alliances that AA has with BA/IB and JAL. European regulators have hinted that they aren't happy that many of the world's airlines have paired off into just three big alliances. No way would they approve the world's two largest airlines (AA and UA) to be in the same antitrust immunized alliance. Not a chance at all.

My guess (gut feeling - no evidence) is that US was planning to join Oneworld solely because that was the only possible result following the merger with AA. IMO, if there is no merger, then there is no push by US to join Oneworld and there is no push by other Oneworld members (not even AA) to invite US to join.

Bottom line: US joins OW if the merger happens, and stays where it is if the merger does not happen.
IIRC USAir had close relationships with both British Airways and American at different times back in the 90s, but was never satisfied being the weak one in that threesome. When they joined Star Alliance, UA was in bankruptcy and Continental was not yet a member, so US may have felt it was going to be in a stronger position.

Once Parker acquired US, he was looking for another merger partner, which would have dictated choice of alliance, and his top choice (UA) was already in the same alliance. His relative position weakened once CO/UA merged, but why switch until he had the right merger partner? Looking at it today, though, AA seems like his only viable option (even if he has to wait a few years until the Republicans are back in power), so why not get cozy with AA again and move to the alliance that needs US the most?
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Old Sep 11, 13, 5:42 pm
  #1733  
 
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The relationship was almost surely closer with BA - they took over routes using wet-leased US planes. AA at the time was little more than a code-share partner. Of course, both relationships basically ceased when AA & BA joined in OW.

Personally, I have no doubt that US needs an alliance more than an alliance needs US. The same goes for a merger with a major carrier. However, opinions vary as to which alliance is the most desirable - *A claims the number of carriers/destinations, OW claims the "class" carriers, and ST claims something I'm sure. Whose claims ring most true probably depends on the traveler as much or more than the alliance.

Jim
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Old Sep 11, 13, 5:43 pm
  #1734  
 
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Originally Posted by NiceLanding View Post
Looking at it today, though, AA seems like his only viable option (even if he has to wait a few years until the Republicans are back in power), so why not get cozy with AA again and move to the alliance that needs US the most?
If the merger doesn't happen, it will be due to antitrust issues. It's very helpful to get antitrust clearance for alliance participation. The odds the DOJ will approve a full alliance between AA and US after having blocked a merger don't seem very high, but you never know.
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Old Sep 11, 13, 6:48 pm
  #1735  
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Originally Posted by richarddd View Post
If the merger doesn't happen, it will be due to antitrust issues. It's very helpful to get antitrust clearance for alliance participation. The odds the DOJ will approve a full alliance between AA and US after having blocked a merger don't seem very high, but you never know.
Based on what? Right now US is in the same alliance with UA (which is a larger carrier than AA). So what would be the reason to block it? And more importantly, does the DOJ even get involved with which alliance an airline belongs to? The only reason they would have concern right now is because of the merger aspect of it. But I didn't hear any concern by them regarding a merged AA/US being in the OW alliance.

And US can function in OW just as well as it functions in Star. In fact, being in OW would give them better access at LHR. Which is something I think they would appreciate. BA and IB fly into BOS, BA flies to PHL and PHX. So US can provide them feed on those ends. And BA can make use of the US FF base in DCA for its service out of IAD.
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Old Sep 11, 13, 7:35 pm
  #1736  
 
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Based on what? By supposition, the merger having been blocked on antitrust grounds.
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Old Sep 11, 13, 8:14 pm
  #1737  
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Originally Posted by richarddd View Post
Based on what? By supposition, the merger having been blocked on antitrust grounds.
Two airlines merging into one airline is not the same as two airlines being in the same global alliance. Particularly if no JV/ATI venture is being pursued. US would be operating as a separate carrier at least 1.5-2 years while being in the OW alliance even if there were merger approval. So Parker & Co. need to decide soon if they want US to be in OW regardless of the merger. And if they do, then they may as well start working on that crossover now instead of later. And I don't think any OW member would be against them joining.

Last edited by Fanjet; Sep 11, 13 at 9:19 pm
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Old Sep 11, 13, 10:56 pm
  #1738  
 
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Originally Posted by DCann
Two important bits of news just in...

American, US Airways to Seek Extension for Merger Deadline, Defend Plans in Court Filings
Originally Posted by Kootur View Post
Aa/us are taking this to the bitter end. I don't think the doj had planned on that. They had hoped they could bully away this merger.
Nothing the airlines have said implies that they are taking this to the "bitter end." This is one extension and it makes sense given the trial date and the fiduciary responsibility to shareholders and creditors.

Last edited by jspira; Sep 11, 13 at 11:01 pm
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Old Sep 12, 13, 3:55 am
  #1739  
 
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Originally Posted by Fanjet View Post
Two airlines merging into one airline is not the same as two airlines being in the same global alliance. Particularly if no JV/ATI venture is being pursued.
That's not very controversial - if they don't want to pursue ATI (i.e. antitrust immunity), it is unlikely they would pursue immunity from antitrust laws from the DOJ.

And of course an alliance is not a merger, but many alliance members prefer to cooperate to the degree that requires ATI.
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Old Sep 12, 13, 11:27 am
  #1740  
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Bankruptcy court approves AA's plan of reorganization and merger with US:

http://aviationblog.dallasnews.com/2...ion-plan.html/

If the antitrust suit is resolved in the airlines' favor, then the POR becomes effective and AA emerges from bankruptcy, merged with US.

If the airlines make material changes to the plan (like large concessions), then the plan has to go back for creditor and court approval.

If the merger is blocked, then obviously the POR is void and AA starts again by preparing an alternate POR.
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