There's more chatter today regarding the prospects of a merger between US Airways and American Airlines, whose parent company AMR is restructuring under Chapter 11 bankruptcy protection. (www.usatoday.com) More...
A very simplistic question keeps gnawing at my mind. If the current American administration could not profitably manage what they had, why on earth are they going out to enlarge the system? And with the same people running it? The same ones who were rewarded for running the system into the ground?
New paint jobs do nothing but spend more money than they have. Paint jobs do not make the changes to the system needed to survive. The old truck out back has no heater, a vacuum leak, and worn brakes. A new paint job will not make it run any better, or safer.
Well, I'm just on the outside looking in, BUT,I have a partiality to the current AA management a/k/a Tom Horton. He really had no alternative other than the the BR route after inheiting the can of worms that he did. Love him or hate him, he has done about as good as anyone could have, given what he had to work with. Had he been in that position earlier as in the days of Crandall/Arpy, etc. either this would have already been done or would have never had to happen in the first place. Regarding the creditors favorability toward the merger, I am like John here below, with that big a debt and no seat at the table, they have to look somewhere
And let us not forget....this new "paint job".......goes all the way down to the napkins your drink gets served on to the cup that drink is poured into......mega bucks
Translation: $1.2 Billion in unsecured debt and no seat at the table. What other choice did they have if they are to get any value out of their "investment"? AMR did not have the cash to pay the interest on their debt that was about 160% of their capital at the time of filing and these guys will be the first to get cut loose on Chapter 11.
Essentially they are gambling the combined entity will return at least some dollars or make interest payments for some time rather than just eating it...without even getting frequent flyer miles.
They had to paint those composite planes they are getting, whenever they are getting them.:) It would be the worlds largest airline with the world's largest amount of duplicate routes!:)
Pace Quickens on American-US Airways Merger Negotiations
Negotiations between American Airlines and US Airways about a merger that would create the world’s largest airline are progressing according to multiple reports.
The talks center around who would run the company should a merger take place and financial terms, specifically what percentage American’s creditors and US Airways shareholders would receive.
