MedFlyer said:I think many of these mega-mergers are more fantasy than reality...particularly with fuel prices this high. If fuel stays this high, I think eventually the creditors and investors are going to realize that they have to let one (or two) carriers liquidate. The only question is who gets liquidated???
Med,
Small carriers, e.g. US, ATA, might be liquidated but forget about the larger carriers, e.g. NW, DL, UA. Historically, if a strike merited a PEB to halt then the carrier was (and is) considered too vital to shut down. Even without the historical precedent the liquidation of a large carrier would decimate local economies and the politicians can't have that. Oh yes, and then there's GECAS - got to keep paying those leases, you know.
Job losses via furloughs will fly under the radar. A "few" jobs lost beats the whole show packing up and leaving town. Plus, it maintains the current state of unreasonable over-competition ensuring that airlines have no pricing power and that the traveling public maintains the privilege to complain about service while paying unsustainably low fares.
The question to ask is: who's making money off this disaster and how? Obviously, someone is - why would anyone throw good money after bad? Find these folks (GECAS, airline managements, bankruptcy lawyers, consultants, flight school owners who crank out pilots like sausages, clueless and detached economists [Kahn] who are only concerned with building their academic reputation - screw everyone else, the federal government with their laughable pilot licensing standards and Republican free market horsesh!t completely unsuited for a safety-critical industry) and you've found the enemy.
TWA Dude said:The 1200 stapled ex-TWA'ers provided a nice cushion.
If you look at the AA pilot contracts of the past you'll notice they resemble Detroit auto worker contracts more than major airline pilot contracts. In other words, they were all about the number of jobs - not the quality of those jobs. As a result, AA was grossly overmanned. Add in 9/11, a recession, transparency of pricing via the Internet, the backlash from the gouged business traveler, the rapid growth of LCC's as an outgrowth of this, and you can see that there was a giant glob of adipose tissue hanging over the Texas-sized belt buckle of American Airlines. When it came time for Big Cletus to get himself up off the couch, pick the lint out of his navel and shape up, the bulk of the bulk that needed burning off happened to be the TWA folks.
On a related note, AA's management was smart enough to know that too much competition is a bad thing (howls of protest from the bus riding public heard in the background). AA bought up competition (TWA, Reno, Air Cal, etc.) and integrated the workforce to make the deal pass muster with the politicos.