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.

 

[xjhawk]

US Airways cannot get its own house in order, how can it think to take on the divided house of AA? Oh.....the union leaders and the positions they hold will most likely be getting huge payoffs....I mean contractual pay raises. "From this Seniority number and up (just by chance it is the most Jr of the senior union reps) will keep this much of their defined pension and everyone gets a pay raise......psssst, and we furlough those junior 20% (but they don't matter).

Another merger to ruin future hiring.....................more layoffs

 

[shon7]

reminds me of TWA deal where the unions "preferred" Icahn over Lorenzo. Presumably they are hoping for things to turn out as well as they did that time. Oh wait. Nevermind.

 

[Daddy]

You guys need to stop thinking from a labor perspective and start thinking from a business perspective. Merging these two is good for everyone in this business. Primarily it reduces competition and gives pricing power to EVERYONE. Not so good for the airline consumer. It also prevents further collapse of wages for us laborers. This is a good deal...let's hope it happens.

 

[aa73]

Simple... AA cannot survive on its own. USAir cannot survive on its own. The two airlines combined will not only survive but be a formidable competitor to DAL/UAL.

 

[Muskycat]

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!!
There are a bunch of lorenzo's standing behind DP licking their chops.
AA pilot group is crazy for going along with this. Maybe they're trying to piss off their management but playing with fire is not a good idea. Never make a decision based on spite.

 

[Scoot 11]

US Airways cannot get its own house in order, how can it think to take on the divided house of AA? Oh.....the union leaders and the positions they hold will most likely be getting huge payoffs....I mean contractual pay raises. "From this Seniority number and up (just by chance it is the most Jr of the senior union reps) will keep this much of their defined pension and everyone gets a pay raise......psssst, and we furlough those junior 20% (but they don't matter).

Another merger to ruin future hiring.....................more layoffs

You make a very good point here. It's easy to try to work on another merger to take the spotlight off the current disaster known as US Airways. Parker is an amateur, trying to get into the spotlight, no matter what it takes.

JMHO...YMMV...

 

[Turtle21]

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...

USAir only has 7 300s left that will be gone by the end of the year and about 40 400s that will be gone by the end of next year, all being replaced one for one with new A321s, just adding to what is already the largest (and youngest) Airbus fleet in the world.

 

[ackattacker]

You make a very good point here. It's easy to try to work on another merger to take the spotlight off the current disaster known as US Airways. Parker is an amateur, trying to get into the spotlight, no matter what it takes.

JMHO...YMMV...

US Airways is a labor disaster but as an airline it's doing pretty well. The USAPA mess is hardly Duggie's fault, that mess lies squarely at the feet of the pilots involved. All he's doing is taking advantage of the resulting cheap labor for as long as he can, which is exactly what a CEO is supposed to do.

Of course the labor problem is now actually a problem since he wants the merger to happen. Now that he wants the issue gone he'll just throw some money at it, as he could have done all along but had no incentive to do so. It looks like he has the unions and most of the creditors lined up behind him, an nobody has any faith in Horton at all. Prediction, this merger will go through and it will be overall good for most people involved.

 

[HalinTexas]

You guys need to stop thinking from a labor perspective and start thinking from a business perspective. Merging these two is good for everyone in this business. Primarily it reduces competition and gives pricing power to EVERYONE. Not so good for the airline consumer. It also prevents further collapse of wages for us laborers. This is a good deal...let's hope it happens.

LOL:laugh:

Impossible. Inconceivable.

As to the rest of the posts...

Of course, the millionaire, fat-cat union bosses are on board with this, but they only have the regular guy's best interest at heart, right?

Simple reason: Business. Grow or die. Market share. Pricing power.

Would you rather AMR furlough 13000 employees vs. 6000 as USAir is offering? Both numbers could go higher and probably will in either case.

Congress, BO, and Wall St. would love for this to happen. Have been urging consolidation for years.


Put away the class envy. It's doing nothing but destroying civilization.

 

[Flyby1206]

US Airways is a labor disaster but as an airline it's doing pretty well. The USAPA mess is hardly Duggie's fault, that mess lies squarely at the feet of the pilots involved. All he's doing is taking advantage of the resulting cheap labor for as long as he can, which is exactly what a CEO is supposed to do.

US Airways is doing well because of the labor disaster! If it werent for the ridiculously low payscales thanks to all the union in-fighting then US would be in serious trouble (arguably still in serious trouble even with the lowest labor CASM of any legacy). US Airways is basically a high cost regional LCC airline. The international presence is negligible and the network is east coast heavy. I would put jetblue and US Airways in the same category in terms of similar operations.