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Squawks & HeadlinesHow American Airlines could bail out of the US Airways merger -- and why it might want to

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How American Airlines could bail out of the US Airways merger -- and why it might want to

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The future of the U.S. commercial aviation system will be decided November 25, the trial date a Washington district court judge set as the beginning of the Justice Department's attempt to squash the $12 billion merger of American Airlines and US Airways. Unless, of course, it's not. (www.bizjournals.com) More...

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canuck44
John Donaldson 3
We should know how this is going on the first day or two when the pre-trial motions are all adjudicated. If the judge dismisses much of the DOJ complaint, they will forge ahead with the trial...if not, this is a well reasoned paper and AA would bail before Dec 13.
PhotoFinish
PhotoFinish 2
I've written as much weeks ago here on FlightAware.

I've even added that Alaska would be a better merger partner for the newly emerged AA, than US could ever hope to be. Alaska's network better matches and complements AA existing network without duplicating hubs in close geographic proximity.

The new AA would be getting lots of new planes anyway, and can build out to the optimum network size and route frequency, rather than contract from a too large combined AA-US monstrosity with too many hubs not sufficiently distributed geographically.

Then in 2014, Alaska becomes a perfect acquisition target to help fill in the northwest. Seattle provides a great launching pad for flights to Asia. Alaska's presence at LAX will help AA get a fuller presence at an important hub city.

US just doesn't fit AA network. It provides a strong presence at DCA and in the southeast. AA could add the necessary addituonal coverage to match US's reach from it's own hubs. They could even add Memphis or some other regional hub. That is if necessary, cidesharing with oneworld partner US would provide the sane reach without any extra effort.
preacher1
preacher1 2
This is all going to be very interesting. I have never been a Doug Parker fan and have always thought that this was a case of the tail trying to wag the dog. US is not big enough as an independent, they need a dance partner but shouldn't be the dominant partner in such a merger. AA, on the other had, had intentions of emerging independent when it file BR in November of 2011. That was until Parker came riding out of the West. As I said, it will all be interesting.
canuck44
John Donaldson 1
Given the financial turn around in Chapter 11, AA may just use this as an excuse to bail leaving Parker to look for a new date to shack up with. The big question is whether the turn around is sustainable beyond one or two quarters and considering AA has had some USAir driven labor peace. If it does fail, there is not likely to be a lot of goodwill between the unions and the executive suite after what has transpired.
PhotoFinish
PhotoFinish 2
The beauty in this situation is that it'll be all DOJ's fault.

Plus, the option of a merger with US will be ceremoniously crushed (by an external force).

Job self-preservation will all of a sudden be all too real. If they want to send a whole bunch of colleagues on furlough, it'll begin their own hands at that point. But they won't be able to blame management anymore.

But letting AA fail would be out of the question. Especially for folks up in the seniority list. Starting all over is just not a realistic option.

Basically the message is:
"The government killed the merger. Now we have to compete independently. We all have to do our jobs, or the folks from US, Delta and United will be happy to do it for us."

Spite will only work when you have something to gain besides a pink slip for lots of fellow workers (eg. before BK labor renegotiation, or while there was the possibility of a white knight merger).

All management has to do is honor the deal labor worked out with Parker. Or rather, they better not even consider trying to change. If they do, then they deserve what they get.

I reserve the right for AA labor to act irrationally, and do exactly as you say they might. It is entirely possible. But I don't see the point.
preacher1
preacher1 2
You indicate that everything will be OK labor wise and all will be interested in self preservation. That could be true, BUT, as your last line says, the union hogs could come to the trough wanting more slop and really be unreasonable on such a deal.
PhotoFinish
PhotoFinish 1
They all still have to contend with the BK judge.
preacher1
preacher1 2
That is true, but I am speaking of after they came out of BR, then as you say, there is no protection. It will all be interesting.
yr2012
matt jensen 0
I've never been a fan of AA. IMHO - AA is a predator. It poached Eastern's lucrative SA routes, leaving only a few for DL. Once AA got marketshare it raised the prices across the board - never retreating. AW saved USAir, who would then save AA. I hope they disallow the merger.
pilot62
Scott Campbell 2
Alas , I wish Parker would ride into the sunset... Just liek everyone who has delt with him, including the well run and liked folks of American West. It's the ugly side of all of us wanting more, more , more and to be considered a top dog somewhere. Even US crews when allowed to be honest have nothing but disdain for this guy, but yea he needs more....
Have a nice trip to DC Doug, somehow you'll push thru, and then look for another ego boosting somnething to compensate for ... uh well, for whatever you dont have!
pilot62
Scott Campbell 2
next yearr i promis , i'm proof reding for sure
pjjblouin
Peter Blouin 1
Perhaps Bob Crandall would consider retaking the AA helm once again!
LenSmetona
Len Smetona 1
"American is prospering in bankruptcy". Got to love the new business model. I wonder why other companies don't do it. That was a joke- bankruptcy seems to be the business plan for most big business in the US now.
PhotoFinish
PhotoFinish 1
Yes, if you're talking about big airlines. Most other large companies actually turn a profit. For too long, airlines were taking a pass on profitability. It's about time airlines realize they're a business.

Too many workers have learned the hard way that defined benefit retirement payments and unprofitable airlines do not go together very well. At least not for the worker counting on the airline to always be there and/or to always be profitable.

Whenever possible try to get your retirement funds paid directly to you into your own retirement fund, with your own name on it, as close as possible to the year in which you earned it. Also don't let any union or wall street middlemen collect high fees on your retirement funds. Just pick the lowest fee market index fund. For most people just following the market over several decades will work best. For the few who can do better than the market, go ahead. But remember most money managers don't beat the market. So don't pay for their "service" either. Just folliw the market with an index, you're more likely to do better. And pay little or no fee. These fees really eat into the return realized, and greatly reduce the available cash at retirement.

But anything is better than your airline going bankrupt and disappearing, and taking your pension with it. An airline going bankrupt and sticking around and continuing to provide a job for many, is only marginally better, as many pensions are greatly reduced
richsmit
Richard Smith -1
And get rid of that crummy new paint scheme while you are at it !!
preacher1
preacher1 3
I got a feelin' that paint scheme ain't going away, regardless of the merger outcome