All Your Bases Are Belong To Us *or: JPMorgan Guy Says 3 Airlines to Remain by 2014

[Voice Of Reason]

"Next M&A Hotbed?

Published: Thursday, 9 Sep 2010 | 6:28 PM ET Text Size
By: Drew Sandholm Web Producer

The M&A trend has hit agriculture, technology and pharmaceuticals, so what's the next sector to get caught in the "urge to merge?"

If you ask Jamie Baker of JPMorgan, airlines are primed for consolidation.

"With the potential planned closure of United and Continental [CAL 21.95 -0.19 (-0.86%) ], there's no reason to think that the wheels of consolidation are going to stop turning at that point," said Baker.


With America West/US Airways in 2005 and Delta/Northwest in 2008, it seems that every two to three years there is another merger in the airline industry. That said, Baker wonders what will happen to names like AirTran [AAI 4.24 -0.07 (-1.62%) ], Alaska Air [ALK 46.26 -0.07 (-0.15%) ] and US Air [CAL 21.95 -0.19 (-0.86%) ]. He thinks they'll eventually be rolled into the 'Big Three' and would include: American [AMR 6.10 0.05 (+0.83%) ], Delta [DAL 10.54 -0.09 (-0.85%) ] and United [UAL 131.0 -0.60 (-0.46%) ].

Going forward, he thinks such consolidation would help the airline industry. He said it would allow for future capital to be allocated more efficiently, allowing airlines to cleanup their balance sheets and avoid future bankruptcies.

Baker recommends buying American, Delta and US Airways and expects the next takeover to occur in 2013 or 2014.

Watch the video to see the full interview with Baker."
http://www.cnbc.com/id/39085385




http://en.wikipedia.org/wiki/All_your_base_are_belong_to_us

 

[Voice Of Reason]

I guess this may be why JetBlue wants to go ALPA? What is Alpa's latest policy (can't keep up) on merging (or NOT) non Alpa with Alpa lists ?

Would Delta be able to get Jet Blue & Alaska?

SW to AA?

AirTran?

Soooo....Who gets USAir? :erm:


Let the speculations begin!

 

[nwaf16dude]

Oh, Jamie Baker is a ********************ing genius! How hard is it to figure out that Delta, United and American are going to be the big three? Did he actually get paid for writing that?

 

[NuGuy]

AirTran and JetBlue to AMR to shore up their east coast presence

Delta will add the 49th & 50th state to their union

UAL/CAL will slowly digest

USAir will be split. East going to SWA and west going to Republic

Nu

 

[Z_Pilot]

Close, but not quite.

It is:

All your base are belong to us

http://www.youtube.com/watch?v=qItugh-fFgg

 

[Fubijaakr]

I guess this may be why JetBlue wants to go ALPA? What is Alpa's latest policy (can't keep up) on merging (or NOT) non Alpa with Alpa lists ?

As required by Bond/McCaskill ALPA/non-ALPA mergers are governed by Allegheny/Mohawk.

 

[Flyby1206]

AirTran and JetBlue to AMR to shore up their east coast presence

Delta will add the 49th & 50th state to their union

UAL/CAL will slowly digest

USAir will be split. East going to SWA and west going to Republic

Nu

I like it, may I add:

AA/jetBlue/AirTran/Alaska
DAL/Hawaiian/Virgin America
UAL/USAir West/Republic
SWA/USAir East/Sun Country/Spirit

 

[steveg]

Oh WOW!

Imagine how fun that would be to watch Usair East get bought by SWA! That would provide hours of entertainment watching usapa tell SWA how to do things!

That brings a smile to my face just thinking about it.

 

[AlbieF15]

All these geniuses predicted Alaska would be gone years ago. My F15 bros who went there were told " you'll be (take your pick) Delta, United, American pilots one day..." They took a lower pay rate for Q of life and domicile, and stuck to their guns. Roll the tape to 9/11 and now the only guys on the property at UAL and AAL got there before 1999 or earlier...and my Alaska buddies fly floatplanes in their spare time and enjoy living in Alaska.

I am certainly not saying mergers can't happen, but 95% of the time industry "experts" sure seem to be dead a$$ wrong...

 

[Pogue Mahone]

Oh, Jamie Baker is a ********************ing genius! How hard is it to figure out that Delta, United and American are going to be the big three? Did he actually get paid for writing that?

Yes. He got paid a lot more than any of us.

 

[ACL65PILOT]

I agree.

I bet DAL has its eyes on three carriers. It is simple to see that DAL will not let AS go to someone else. Their feed out of the NW is just to vital to our PAC RIM ops.

VA? Really? I do not see DAL buying them. We have a AS feed. If anything UCAL would but my guess is that those guys will fold in to AMR or be gone.

In the end it will be the big Four not three. SWA will always be the fourth player.

If LLC wants to be at the table, they will need to get their game in order.

 

[snow-back]

I remember reading a similar article back in the '90s. The author suggested in 25 years, there would only be 4 airlines left...American, United, Delta and the cash-strapped TWA. So who will take TWA's spot on that list?

 

[tomgoodman]

Rich Pickings

Going forward, he thinks such consolidation would help the airline industry. He said it would allow for future capital to be allocated more efficiently, allowing airlines to cleanup their balance sheets and avoid future bankruptcies.

It's not surprising that an investment bank would tout the benefits of consolidation. They stand to make lots of money from fees for setting up these deals. If one of them turns into a disaster, breakup or bankruptcy will provide even more fees. imp:

 

[Voice Of Reason]

In the end it will be the big Four not three. SWA will always be the fourth player.

Never say "always" in this industry...history has proven that time and time again. A vast number of factors can be game changers for them (just as it can be for anyone else). Just one example, one aircraft type may save them plenty in training & maint costs, but where will they be if (forbid) the FAA decides to ground that particular aircraft type? Anything could be probable in this business.

Besides, Kelleher isn't running the show anymore and it is becoming noticeable.

 

[AceOnTheRiver]

I think AA is interested in Alaska, Jetblue and UsAir East.

 

[Ty Webb]

If AirTran is to be merged, I hope to God it's not with LCC . . . . Anyone else.

 

[Mr.B]

When I'm CEO, I'll merge SWA with Alaska, keep Alaskas certificate, buy 777s and have a domestic/international network overnight... (expanding the 777 to Asia/Europe).

Good workforce, good cash balance and lots of feed to the international flights out of OAK/SJC to Asia.

How bout them apples.

 

[MCDU]

If AirTran is to be merged, I hope to God it's not with LCC . . . . Anyone else.

Good point. Why would you want to merge with an airline where almost all pilots are retiring in the next 15 years. There are much better options. LCC is losing money and has no valu. I would be surprised to see LCC around in a few years.

Jetblue and SWA will have a ton of movement when they expand. But the best fit for Airtran would be Repulic airlines. Young, enthusiastic pilot group with quick upgrades thanks to all the jobs they have taken from Midex, LCC, UAL etc.

M

 

[Scope out RJ's]

Good point. Why would you want to merge with an airline where almost all pilots are retiring in the next 15 years. There are much better options. LCC is losing money and has no valu. I would be surprised to see LCC around in a few years.

Jetblue and SWA will have a ton of movement when they expand. But the best fit for Airtran would be Repulic airlines. Young, enthusiastic pilot group with quick upgrades thanks to all the jobs they have taken from Midex, LCC, UAL etc.

M

Doosh:
What's it matter who Us Airways merges with, you don't work there. Remember? You wrote it here:

http://forums.flightinfo.com/showthread.php?p=848465#post848465

http://forums.flightinfo.com/showthread.php?p=1195007]#post1195007

Stick to the Gulfstream threads, it's where you washed out of after paying for training!:laugh:

 

[Flyby1206]

VA? Really? I do not see DAL buying them. We have a AS feed. If anything UCAL would but my guess is that those guys will fold in to AMR or be gone.

Yea, I know VX/DAL doesnt make sense right now, but I was thinking eventually Dickie Branson will get onboard with the whole global alliance thing and join Skyteam with Virgin Atlantic and his bunch of global Virgin Group carriers. I dont think Branson would ever allow Virgin America to join AA in an alliance. I know he only controls 25% of the voting stake, but its still his baby. Maybe DAL will wind up with both VX and AS in their side of the stable, It wouldnt surprise me to see AA running for help on the west coast.