Amr - Takeover Target

[lowecur]

Rumours abounded yesterday as future contracts for the airline's stock gyrated, sending out signals of a possible private equity buyout. A Goldman analyst also upped his estimates for future earnings, but certainly not enough to bump the stock 7%.

If the speculation pans out and AMR is a buyout target, I see it being sold off in pieces to various bidders. The 777's and other widebodies would command a nice premium in addition to the various hubs around the US. There is definitely money to be made in a deal like this in addition to the nice premium present stockholders would receive.

imp:​

http://money.cnn.com/2007/07/23/news/companies/amr.reut/

 

[BoilerUP]

If the speculation pans out and AMR is a buyout target, I see it being sold off in pieces to various bidders.

Piecing out the biggest, and one of the best-known airlines in the world....I think that's the dumbest thing I've ever read on Flightinfo.

Who would buy it?

 

[AA717driver]

Piecing out the biggest, and one of the best-known airlines in the world....I think that's the dumbest thing I've ever read on Flightinfo.

Who would buy it?

Why, Delta, of course... TC

 

[CitationLover]

If the speculation pans out and AMR is a buyout target, I see it being sold off in pieces to various bidders. The 777's and other widebodies would command a nice premium in addition to the various hubs around the US. There is definitely money to be made in a deal like this in addition to the nice premium present stockholders would receive.

yes i am sure the congressional contingents in Texas, Illinois, New York, Florida, and California will simply say "ok".

 

[B-atch]

Oh I wouldn't discard anything these days. When asked if American was for sale, Bob Crandal (AMRs EX,EX,CEO) replied, " everything is for sale when the price is right"!!

 

[Schiphol]

I disagree with your assessment of a piecemeal sell-off of AMR. Routes, hubs etc are worth too much and would create an untenable vacuum in capacity.

The likeliest scenario is a private equity purchase by someone like blackstone. PE is seeing an opportunity to buy and consolidate across the oceans right now w/ the advent of open skies treaties.

The move would be to integrate two carriers under US P.E. ownership.....i.e.: Qantas, AMR etc.

hypothetically.

my$.02

 

[luckytohaveajob]

Piecing AMR would solve the antitrust issues, solve the MD 80 replacement issue, solve the code share alliance issues, solve the frequent flyer program issue, solve the pilot seniority integration issue by pitting the different fleet pilot groups against one another.

Piecing AMR out makes a lot of sense.

 

[lowecur]

yes i am sure the congressional contingents in Texas, Illinois, New York, Florida, and California will simply say "ok".

Really? You think all those AG's would sue the private equity owner if they wanted to carve up AMR and sell it off? I know AG's can sue if they feel there are individual anti-trust issues involved that would create a hardship for their State, but I have my doubts they could prevent a carve up, particulary when those hub/gates/slots would be picked up by other carriers....including probably WN, FL, B6, as well as the other legacys.

Anti-trust in DC would like the fact that many carriers would participate in the breakup, thus mitigating any monopoly affect created by a merger. It's doable, but it's still highly speculative at this point and probably just wishful thinking.

imp: ​

 

[lowecur]

Piecing AMR would solve the antitrust issues, solve the MD 80 replacement issue, solve the code share alliance issues, solve the frequent flyer program issue, solve the pilot seniority integration issue by pitting the different fleet pilot groups against one another.

Piecing AMR out makes a lot of sense.

Is your name Carl Ichan?

imp:

 

[Frank Lorenzo]

Is your name Carl Ichan?

I don't care what his name is....

I like the way he thinks!

Carl told me he is the one behind the buyout. He is going to have a new ticketing agreement with AA and call it "Elk."

 

[AA717driver]

If UAL didn't get pieced out, I'm not worried about AA. TC

 

[luckytohaveajob]

If UAL didn't get pieced out, I'm not worried about AA. TC

How do you know UAL isn't going to get pieced out?

UAL's bankruptcy/business plan has yet to be finalized. What is UAL five year plan? Where is UAL headed? You don't know because UAL's Glenn Tilton hasn't told anyone yet.

 

[luckytohaveajob]

AMR currently has a market cap of $7B.

The parts of AMR are worth much more than $7B.

Eagle has got to be work more than $1B. The 100+ wide bodies have go be worth $4-5B plus. Heathrow has go to be worth $3B plus. ORD, MIA, BOS, SJU and DFW have go to be worth at least $1B plus. The training center has go to be worth at least $500 million. And the maintenance centers have go be worth at least $500 million.

I am already up to $10B and I haven't even mentioned the $5B in cash that could be used to finance the deal.

The very fact that AMR is the largest airline in the world is the very reason it should be broken up in the minds of the investment bankers, management, politicians, and competing players.

The entire thing could be financed with AMR's cash on hand.

Plus don't forget foreign ownership in US airlines has just increased from 25% to 49%. BA who has been profitable for the last five years, could come to Dallas buy the 49%. BA could breakup its strongest Heathrow competitor AMR. BA could keep the the US domestic market flying under BA colors, flying the MD80's until a future replacement becomes available promising the BA investors an ability to beat Virgin USA with a newer design. And throughout it all BA could beat the government antitrust issues on both sides of the Atlantic while BA creates a large US domestic presents immediately giving it market share advantages over Virgin and continues it rivalry with Virgin on this side. Plus, the current CEO of BA is from the LCC business and could successfully transform American's domestic market into a highly competitive LCC player with the name and strategy changes he has already lived without the baggage of the AMR legacy sabotaging his plans.

AMR is a major breakup candidate.

And breakup's don't need to be friendly. Hostile break ups work even better splitting the work groups against one another. Plus everyone at AMR hates everyone else at AMR. Finding a wedge of division is as easy as saying hello to the wrong person at AMR.

 

[Draginass]

Garage saleing AA conjures up some interesting and salient imagery.

Shutting down "America" and selling pieces. Sort of what US corporate executive are doing to the rest of the country. Unfortunately, most of these thieves and con artists see themselves as above having any loyalty to a nation state, political system or fellow citizens. Money is their new god and what they ascribe their allegiance to.

 

[CitationLover]

Really? You think all those AG's would sue the private equity owner if they wanted to carve up AMR and sell it off? I know AG's can sue if they feel there are individual anti-trust issues involved that would create a hardship for their State, but I have my doubts they could prevent a carve up, particulary when those hub/gates/slots would be picked up by other carriers....including probably WN, FL, B6, as well as the other legacys.

Anti-trust in DC would like the fact that many carriers would participate in the breakup, thus mitigating any monopoly affect created by a merger. It's doable, but it's still highly speculative at this point and probably just wishful thinking.

imp: ​

The Texas congressional contingent will not want the job loss affiliated in Dallas (at HQ/Flight Academy/DFW).

The current and former NY AG has shown they will sue when they don't like what they see.

Besides the rumor has always been British Airways and American merging, if foreign caps are raised. This has been wanted on both sides for awhile.

 

[luckytohaveajob]

The Texas congressional contingent will not want the job loss affiliated in Dallas (at HQ/Flight Academy/DFW).

Texas would not lose a job. The training center will remain in Texas and remain open.

The current and former NY AG has shown they will sue when they don't like what they see.

Whats not to like. Breaking up a big business. That is just what a socialist NY loves. Wealth distribution.

Besides the rumor has always been British Airways and American merging, if foreign caps are raised. This has been wanted on both sides for awhile.

And breaking up AMR is one way this BA/AMR deal can happen.

 

[NuGuy]

Garage saleing AA conjures up some interesting and salient imagery.

Shutting down "America" and selling pieces. Sort of what US corporate executive are doing to the rest of the country. Unfortunately, most of these thieves and con artists see themselves as above having any loyalty to a nation state, political system or fellow citizens. Money is their new god and what they ascribe their allegiance to.

Word.

Nu

 

[castle bravo]

The current and former NY AG has shown they will sue when they don't like what they see.



With the current political environment in NY, Gov Spitzer (Former AG) and current AG Cuomo seemingly at war with each other and with state senate majority leader Bruno, there are too many distractions for any of them to notice.

 

[lowecur]

The Texas congressional contingent will not want the job loss affiliated in Dallas (at HQ/Flight Academy/DFW).

The current and former NY AG has shown they will sue when they don't like what they see.

I'm curious, just what would be their basis for a law suit? When all those large mfg companies decided to pull up stakes and bolt for cheaper labor overseas and Mexico, did the AG's in those various states sue them? There certainly is no anti-trust odor in any of this, so unless there is something I'm missing....I just can't see a cause for any actions.

imp:​

 

[G4G5]

Really? You think all those AG's would sue the private equity owner if they wanted to carve up AMR and sell it off? I know AG's can sue if they feel there are individual anti-trust issues involved that would create a hardship for their State, but I have my doubts they could prevent a carve up, particulary when those hub/gates/slots would be picked up by other carriers....including probably WN, FL, B6, as well as the other legacys.

Anti-trust in DC would like the fact that many carriers would participate in the breakup, thus mitigating any monopoly affect created by a merger. It's doable, but it's still highly speculative at this point and probably just wishful thinking.

imp: ​

Does it create jobs or cost jobs? If it costs jobs then it costs votes............

 

[lowecur]

Does it create jobs or cost jobs? If it costs jobs then it costs votes............

Funny, I don't see any constituants voting people into power to bring back mfg jobs to the US, do you?

imp:​

 

[sqwkvfr]

A lot of this is vey interesting, but I think that it may be an over-simplification to paint British Airways' situation as rosy by saying that they've made money the last five years.

 

[G4G5]

Funny, I don't see any constituants voting people into power to bring back mfg jobs to the US, do you?

imp:​

What part of the Senator Bond saga did you miss when AMR purchased TWA? If gov officials feel that they wil lose jobs (aka votes), history has proven that they will oppose it.

 

[G4G5]

AMR currently has a market cap of $7B.

The parts of AMR are worth much more than $7B.

Eagle has got to be work more than $1B. The 100+ wide bodies have go be worth $4-5B plus. Heathrow has go to be worth $3B plus. ORD, MIA, BOS, SJU and DFW have go to be worth at least $1B plus. The training center has go to be worth at least $500 million. And the maintenance centers have go be worth at least $500 million.

I am already up to $10B and I haven't even mentioned the $5B in cash that could be used to finance the deal.

The very fact that AMR is the largest airline in the world is the very reason it should be broken up in the minds of the investment bankers, management, politicians, and competing players.

The entire thing could be financed with AMR's cash on hand.

Plus don't forget foreign ownership in US airlines has just increased from 25% to 49%. BA who has been profitable for the last five years, could come to Dallas buy the 49%. BA could breakup its strongest Heathrow competitor AMR. BA could keep the the US domestic market flying under BA colors, flying the MD80's until a future replacement becomes available promising the BA investors an ability to beat Virgin USA with a newer design. And throughout it all BA could beat the government antitrust issues on both sides of the Atlantic while BA creates a large US domestic presents immediately giving it market share advantages over Virgin and continues it rivalry with Virgin on this side. Plus, the current CEO of BA is from the LCC business and could successfully transform American's domestic market into a highly competitive LCC player with the name and strategy changes he has already lived without the baggage of the AMR legacy sabotaging his plans.

AMR is a major breakup candidate.

And breakup's don't need to be friendly. Hostile break ups work even better splitting the work groups against one another. Plus everyone at AMR hates everyone else at AMR. Finding a wedge of division is as easy as saying hello to the wrong person at AMR.

You conveniently left out the fact that AMR still has close to $11 BILLION DOLLLARS in long term debt on the books. That negates anything that you seem to think that AMR brings to the table. Anyone trying to purchase AMR would also be taking on the $11 billion in debt.

People crack me up, what percentage of AMR's 700+ aircraft do you think that they actually own? Anyone in finance can tell you that once an aircraft has been fully depreciated it's hardly worth owning. Most of all the valuable AMR aircraft are leased NOT owned.

 

[lowecur]

What part of the Senator Bond saga did you miss when AMR purchased TWA? If gov officials feel that they wil lose jobs (aka votes), history has proven that they will oppose it.

Bond, James Bond?

Let's see, Ichan buys TWA in 1991 and sells off many of it's important assets? Where was Kit Bond?

Kit Bond appears when TWA is back in financial crisis in 2001 and AMR makes it's offer. AMR promises to retain many of employees in appearances before Congress, but 9/11 gives them a pass. Bond tries to persuade John Ashcroft and Senate Judiciary and Commerce heads to intercede to protect Missouri jobs....no luck.

Your point is something can always be done, but my point is it ain't going to be through anti-trust. Hearings would definitely be held and I'm sure any potential buyers would have to jump through hoops on how they intend to protect jobs by selling off the major assets of the company. Potential buyers of parceled assets would also be brought before the Commerce Committee where they would have to explain just how they would hire AMR employees and protect their seniority.....no easy task.

Would pilots lose their jobs and seniority? I don't see anyway around that if the Congress and Senate want to reduce capacity throughout a system that is an inch from disaster. It would be a tradeoff with the proliferation and expansion of low cost carriers into the former strongholds once controled by AMR, but it would free up a dysfunctional system until such time as the FAA could implement new IT systems and changes.

Is it ever going to happen?...I doubt it.

imp:​

 

[Vne]

Is it ever going to happen?...I doubt it.

One can dream.........

 

[80drvr]

AMR currently has a market cap of $7B.

The parts of AMR are worth much more than $7B.

Eagle has got to be work more than $1B. The 100+ wide bodies have go be worth $4-5B plus. Heathrow has go to be worth $3B plus. ORD, MIA, BOS, SJU and DFW have go to be worth at least $1B plus. The training center has go to be worth at least $500 million. And the maintenance centers have go be worth at least $500 million.

I am already up to $10B and I haven't even mentioned the $5B in cash that could be used to finance the deal.

The very fact that AMR is the largest airline in the world is the very reason it should be broken up in the minds of the investment bankers, management, politicians, and competing players.

The entire thing could be financed with AMR's cash on hand.

Plus don't forget foreign ownership in US airlines has just increased from 25% to 49%. BA who has been profitable for the last five years, could come to Dallas buy the 49%. BA could breakup its strongest Heathrow competitor AMR. BA could keep the the US domestic market flying under BA colors, flying the MD80's until a future replacement becomes available promising the BA investors an ability to beat Virgin USA with a newer design. And throughout it all BA could beat the government antitrust issues on both sides of the Atlantic while BA creates a large US domestic presents immediately giving it market share advantages over Virgin and continues it rivalry with Virgin on this side. Plus, the current CEO of BA is from the LCC business and could successfully transform American's domestic market into a highly competitive LCC player with the name and strategy changes he has already lived without the baggage of the AMR legacy sabotaging his plans.

AMR is a major breakup candidate.

And breakup's don't need to be friendly. Hostile break ups work even better splitting the work groups against one another. Plus everyone at AMR hates everyone else at AMR. Finding a wedge of division is as easy as saying hello to the wrong person at AMR.

You also haven't mentioned the ~$17B in debt. You don't get the house without the mortgage.

 

[luckytohaveajob]

yea but if the fed rapidly raises interest rates. 10-17B in debt at todays low interest rates is much easier to accept.

what i also did not mention was the pension money or all of AMR other financial assests.

the maintenance might be worth a few billion since it is a profit center now not just an expense.

Plus what is going to pay the biggest management bonus? M and A. And that my friend is why this is all possible. A short term management will do whatever it takes to make the biggest bonus period.

 

[G4G5]

$11 billion is easy to except, LMAO. For a compay with a market cap of that?

Then have to deal with all of the legal proceeding and fee's.

 

[AA717driver]

Sec. 6 fear grenade. TC