American and US Air - why???????

[skywdriver]

Other than just merging because everyone else has, I don't understand why anyone thinks this merger is going to be good for American. They still are going to have an old fleet, they are going to pick up a ton of domestic stuff, the old America West stuff but nothing significant internationally that they don't already have, and they still aren't going to be a big player in the Asian markets. This seems like a merger that will benefit the rest of the industry more than it does the two companies.

I do wish the employees all the best if it happens, hopefully the contracts will be very good. At least Parker seems to recognize the one thing that our CEO (Jeff Smisek) doesn't seem to grasp - you have to have labor on board if you want to put together a successful merger.

Best of luck to all involved.

 

[B-atch]

In simple terms. Consolidation reduces seats=higher yields from higher ticket prices.More $$ This merger is good for AA/US and the whole industry. Less players=more balls!!

 

[reepicheep]

Because some guys in back rooms on Wall St. you never heard of who control Billions of $ are going to make a quick $ out of the deal, get out, and leave the employees to deal with the resultant mess.

Doesn't matter a lick whether it makes sense in terms of routes, fleets, hubs, unions, contracts, the Nic., USAPA, APA, etc....

 

[BrickTop]

Less players=more balls!!

Pretty sure that last element has long been lost.

 

[B-atch]

Because some guys in back rooms on Wall St. you never heard of who control Billions of $ are going to make a quick $ out of the deal, get out, and leave the employees to deal with the resultant mess.

Doesn't matter a lick whether it makes sense in terms of routes, fleets, hubs, unions, contracts, the Nic., USAPA, APA, etc....

I'm not sure this deal, or the last two, are based on making a "quick $$". I believe this is an interim step towards globalization. The next round of mergers will include players from both sides of the Atlantic, and maybe the Pacific.

 

[Turtle21]

Because some guys in back rooms on Wall St. you never heard of who control Billions of $ are going to make a quick $ out of the deal, get out, and leave the employees to deal with the resultant mess.

Doesn't matter a lick whether it makes sense in terms of routes, fleets, hubs, unions, contracts, the Nic., USAPA, APA, etc....

Bingo. Give the man a cigar. It's all about the perception of value that can be extracted from maneuvering the stock.

 

[IBNAV8R]

Because they can.

 

[Flyby1206]

In simple terms. Consolidation reduces seats=higher yields from higher ticket prices.More $$ This merger is good for AA/US and the whole industry. Less players=more balls!!

Yea great for those second tier routes like MHT-PHL-GSO! Thats gonna bring in some serious cash for AA! There wont be much gain in pricing power for AA/US because there isnt much overlap. AA will gain some domestic east coast secondary cities, but thats about it.

UAL/CAL and NWA/DAL both made sense in terms of creating more pricing power for international routes, which bring in the real $$$ and corporate contracts, through consolidation. If AA really wants to gain revenue and grow they need more international destinations instead of just serving the oneworld hubs.

 

[johnsonrod]

Why? Because DUI Parker wants to replace the aged and dilapidated AA MD80s with "younger" USAirways 737-400s. He has to find homes for the decrepid USAirways 737 fleet. At least that is my theory...

 

[ackattacker]

Lots of cynicism on this board, not entirely unwarranted.

However there are legitimate business reasons for wanted to merge the two companies. Mangers love to talk about synergies, and the resultant savings, which may very well be swallowed up my merger costs in the short term. In the long term American is suffering from a weak domestic structure particularly in the southeast, a crippling load of debt, and a wholly owned regional carrier with the highest costs in the industry. Their go it alone bankruptcy plan is basically shrink into irrelevancy and compete with ultra low cost carriers. A merger brings a short term infusion of cash, a much stronger domestic network and some new international routes. Doing it in bankruptcy still allows the shedding of some bad debt and old plane leases, and the ability to whipsaw the regional feed in such a way as to reduce costs (bad for AE, sorry guys). It puts their network on parity with the other two big players, Delta and United. Alone they have no chance to compete except by shrinking and retreating to their core markets, a losing strategy in the long run when the other two are raking in large profits with large networks and eventually would be able to muscle in.