wms
billSquared
- Joined
- Sep 4, 2003
- Posts
- 2,052
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How much value does LCC bring to the combination, especially after their labor costs rise as a result of the deal? Considering there is no offer of cash to the creditors are they better off with 70% of the combined airline or 100% of American as an independent company? It looks like it would be another ugly, long, drawn-out merger where any synergies and inefficiencies will take years to realize. In this industry mergers always seem to be far harder and more expensive to carry out than promised and deliver less value in the end. LCC hasn't even gotten it's last merger straightened out and they want to merge again? Where is the real "fit" here? What about system overlap on the east coast and potential divestment issues? Do you need hubs in CLT, PHL and MIA? What about the fleet?
I think we may see other parties get involved with this situation yet, I don't see LCC management being the ones to remain in control of this combination if this happens. If LCC had a boatload of cash to put in the deal that would be one thing but I think if this gets done it will be the American side that calls the shots. This will be interesting as it unfolds.....drama.
What other parties would get involved? Unless there are some top secret discussions going on, LCC and AMR are the only ones at the party. And as far as American management remaining in control the creditors have already said they want Horton out. This sounds like its gonna happen . If Parker didn't think it was gonna happen i don't think he would have even made an official offer and would have just said they couldn't come to agreeable terms and have decided not to pursue a merger at this time. It's gonna be a big long messy merger. Bigger office for Doogie and more money to pay off his drunk driving tickets.
Private equity possibly, TPG....they can bring in cash where LCC can't.