Welcome to Flightinfo.com

  • Register now and join the discussion
  • Friendliest aviation Ccmmunity on the web
  • Modern site for PC's, Phones, Tablets - no 3rd party apps required
  • Ask questions, help others, promote aviation
  • Share the passion for aviation
  • Invite everyone to Flightinfo.com and let's have fun

Rumors Running Again on AA Pilots About JetBlue Merger

Welcome to Flightinfo.com

  • Register now and join the discussion
  • Modern secure site, no 3rd party apps required
  • Invite your friends
  • Share the passion of aviation
  • Friendliest aviation community on the web
And you don't think combining AA and B6 would be a mistake. It would be a TITANIC mistake and therefore extremely likely.
 
No one here has heard about Mckaskle Bond? If we merge so be it, but b6 pilots will not be stapled. It will go to an arbitrator, and that person or persons will decide where the b6 pilots are placed in the master seniority list. Since 2001 the general rule has been to place all furloughed pilots below ANY active pilot. The reality of a merged list would likely be b6 captains being merged relative seniority with Americans 737/md 80 captains, and b6 fos being merged relative seniority with Americans md80/ 737 first officers. Unfortunately, much like the am west LCC merger, and the what is likely to come from the ual merger, is that amr/ twa pilots furloughed at time of closing of the deal would be placed at the bottom of the merged list.

If AMR buys Jetblue, JB pilots will be offered a choice:

1) staple at the bottom of AA seniority list.

2) PEA severance package.

Our PEA language does not require an intergration. It's up to the aquiring carrier to decide if they want to merge operations or employee groups. AMR can sign a side letter with APA allowing AMR to operate Jetblue as a wholly-owned subsidiary for 1-2 years. During that time B6 aircraft would be transfered to the AA without the B6 pilots.

Think Bond/McCaskill will save us? Think again. The NMB must rule that AA and B6 are a single carrier to trigger Bond-McCaskilll. AMR/APA lawyers will frame the deal to avoid single carrier status. AA and Eagle are not considered a single carrier by the NMB. JB pilots can't petition the NMB becasue we have no recognized bargaining representative outside of JB management. Bond/McCaskill will not save us.
 
If AMR buys Jetblue, JB pilots will be offered a choice:

1) staple at the bottom of AA seniority list.

2) PEA severance package.

Our PEA language does not require an intergration. It's up to the aquiring carrier to decide if they want to merge operations or employee groups. AMR can sign a side letter with APA allowing AMR to operate Jetblue as a wholly-owned subsidiary for 1-2 years. During that time B6 aircraft would be transfered to the AA without the B6 pilots.

Think Bond/McCaskill will save us? Think again. The NMB must rule that AA and B6 are a single carrier to trigger Bond-McCaskilll. AMR/APA lawyers will frame the deal to avoid single carrier status. AA and Eagle are not considered a single carrier by the NMB. JB pilots can't petition the NMB becasue we have no recognized bargaining representative outside of JB management. Bond/McCaskill will not save us.

Uh huh. Amr would love to lay us all off so they could spend 100 million dollars to train a bunch of furloughed pilots who are all at the top of their pay scales when they have a group of pilots trained, proficient, and ready to go. Oh, and heck, if republic was ruled a single air carrier with frontier then what can they possibly argue to say we are not a single carrier? By then Alpa will be on property, to hopefully fight for our jobs.
 
I think AM and BM sort of stipulate that no furloughed pilot can bump an active pilot.

As the previous poster pointed out, that only comes into play IF the NMB determines they are a single carrier.
 
Uh huh. Amr would love to lay us all off so they could spend 100 million dollars to train a bunch of furloughed pilots who are all at the top of their pay scales when they have a group of pilots trained, proficient, and ready to go. Oh, and heck, if republic was ruled a single air carrier with frontier then what can they possibly argue to say we are not a single carrier? By then Alpa will be on property, to hopefully fight for our jobs.

Republic was single carrier because, among other things, they had the same VP staff on CEO, COO, CFO, HR department, recruiting mechanisms, etc. Many of the management functions were handled by the exact same people. Then you factor in flight schedules, city pairs, etc. and you have a good case for single carrier status. That was how Republic got SCS. If AMR engineered it remain mostly separate and duplicated, B6 would not get SCS.
 
Republic was single carrier because, among other things, they had the same VP staff on CEO, COO, CFO, HR department, recruiting mechanisms, etc. Many of the management functions were handled by the exact same people. Then you factor in flight schedules, city pairs, etc. and you have a good case for single carrier status. That was how Republic got SCS. If AMR engineered it remain mostly separate and duplicated, B6 would not get SCS.

Ok, I can see what you are saying... don't agree with it, but I see your point.

Can someone tell me a major airline aquisition or merger within the last 15 years where the pilots were not integrated into a single carrier? -The regionals do not count.
 
A Merger between AA and B6 makes absolutely no sense. The slots divestitures at JFK alone would make the deal unpallatable from AA's perspective,

The DOT looks like they are close to allowing the DAL/US Slot swap in LGA to happen, that would give DAL roughly 50% of LGA slots. If AA/B6 happened that would be about the same percentage. Im not saying it will happen, but I wouldnt rely on DOT to shoot it down or require any slots to be given up.
 
Ok, I can see what you are saying... don't agree with it, but I see your point.

Can someone tell me a major airline aquisition or merger within the last 15 years where the pilots were not integrated into a single carrier? -The regionals do not count.

These were integrated, but would you like to be involved in ANY of them?

LCC/AWA
AA/TWA
CAL/PeoplExpress
SWA/Morris

And of course....

Look what Republic did to Midwest Express.

I'm fairly confident APA would figure out a way to keep things separate until the B6 planes were gone and the B6 pilots furloughed.
 
These were integrated, but would you like to be involved in ANY of them?

LCC/AWA
AA/TWA
CAL/PeoplExpress
SWA/Morris

And of course....

Look what Republic did to Midwest Express.

I'm fairly confident APA would figure out a way to keep things separate until the B6 planes were gone and the B6 pilots furloughed.

Only one of these was after McCaskle Bond, and that one was done via arbitrator, which would again be required in a merger between B6 and AMR. Midwest was drawn down before the merger even happened, though I agree they got a screw job. I'll say it again, AMR is not going to spend upwards of 50 to 100 million dollars to retrain all their pilots to fly our aircraft when we are already trained and proficient. Despite what AMR pilots think, they don't run the show, Amr executives do and they report to the shareholders. If it makes financial sense to fire all us b6 pilot and pay us at least a year of severance, then maybe they will consider it. I cant think of a senario where that makes any kind of financial sense.
 
A fellow JB pilot posted this on our board. The article was from last year, but some of the key points are still relevant. In particular, note the section about how anything AA might purchase would immediately lose value - making it a bad investment.

A lot of silly things are being said in the wake of the announced takeover of AirTran by Southwest. For instance, there’s renewed speculation about what American needs to do. Here’s a Reuter’s article as an example.

The article mentions potential merger partners for American: Alaska, JetBlue and US Airways.

This speculation is almost certainly useless. So long as American’s management remains remotely sane and rational, American won’t be merging with anyone anytime soon.

The reasons are simple: (1) American’s stock is too beaten down and (2), American’s costs are too high.

Market Caps
Let’s look at some market capitalizations. A company’s market cap is the value of its outstanding equity (the price of its stock times the number of shares outstanding). It’s the theoretical amount you would need to pay to buy 100% of the company. It’s theoretical because, in fact, to actually acquire the company generally requires paying a takeover premium (otherwise the company’s management is likely to make it hard for its company to be taken over).

The following amounts are in $ billions.

2.1 American (AMR)
1.8 Alaska (ALK)
1.9 JetBlue (JBLU)
1.5 US Airways (LCC)

It’s readily apparent that factoring in a takeover premium on any of Alaska, JetBlue or US Airways would mean that AMR would have to fork over around 50% (or maybe even more) of its equity to any acquire any of these airlines.

American, of course, is vastly larger than any of these three potential partners. So why is American’s market cap only marginally larger?

Good Guys Finish Last
The issue is that American is not making much, if any money. It’s a huge enterprise, but it’s basically breakeven at best at the moment. Ironically, this is because American and Continental were the only two legacy major airlines not to completely screw over their shareholders after 9/11 by going bankrupt. Delta, Northwest, United and US Airways (twice!) went through the bankruptcy carwash after 9/11, which enabled them to crush costs, including labor and aircraft finance costs, at the cost of destroying all shareholder value. American did the right thing by its shareholders and, by the skin of its teeth, avoided bankruptcy. This preserved value for shareholders, but it meant American has had a much tougher time reducing costs. While Continental did not go bankrupt post 9/11, it was the beneficiary of two prior bankruptcies in the 1980s and 1990s. American stands alone as the only legacy major to never screw its shareholders in this fashion, but it has left it in a very poor cost position. Ironically, because the other legacy majors did destroy all shareholder value in the past, they are now in a much better position today. In this regard, at least, good guys finish last.

In fact, American’s cost position handicaps its merger prospects twice over. First, its market cap is beaten down, so its stock is a weak currency with which to purchase another company. But secondly, because American is so big relative to any of its potential targets, were American to take over another airline, American’s costs would be more-or-less instantly imposed on the operations of the other airline. So, for instance, if American were to take over US Airways (which has significantly lower costs) American’s labor scales would essentially immediately apply to US Airways employees (this is actually more or less a direct consequence of US government labor law, so essentially just a fact of life). Blam! US Airways’ routes would instantly become less profitable.

In other words, the minute that American took over one of these carriers, its higher costs would instantly destroy a lot of the value for which American just paid. That 50% that American just paid would be buying much less that you might initially think.

(This discussion has implicitly assumed American uses stock to purchase a target. If it used cash, that would be even worse, because American would pay hard dollars for value that would then be destroyed — if it used stock, at least it wouldn’t have increased its net debt uselessly, “only” destroyed shareholder value).

For this reason, unless AMR management completely loses its senses, AMR will not do a merger for the foreseeable future. As far as Mergers and Acquisitions are concerned, American is in a box. It can’t do a merger without throwing away a lot of shareholder value.

This is why you see American doing things like entering into partnership agreements with JetBlue. It’s not necessarily American’s usual mode, but it’s one of the few things they can do these days. They need to make nice because they have few reasonable alternatives.

Stuck In A Box, For Now
So can American get out of this box? In some ways, it’s not up to them. Except in times of distress, airline costs tend to increase, especially at the legacy majors. So, if American can hold the line on costs, the other legacy major airline costs are likely to get relatively worse than those of American. It’s not a real great place to be in, waiting for your competitors to suck more so that you relatively suck less. And there’s a serious snag: American’s employees are furious about their lack of wage increases and desperately want to force American into paying them more. Pilots, flight attendants and mechanics all want a pound of flesh (and then some) from American. They’re each willing to strike American to get what they want — and like other legacy major airlines, American can’t long tolerate a strike without going into bankruptcy.

That’s the other way American could get out of its box — declare bankruptcy. But that would almost certainly completely destroy shareholder value, and since the airline is, at least ostensibly, run in the interests of the shareholders, American can’t do that while reasonable alternatives remain. So American can’t exactly choose bankruptcy either.

So, for now, it’s highly unlikely that American can do anything to get itself out of it’s mergers and acquisitions box, and any speculation about that is, at best, ill-informed.

But Not Dead
Don’t misunderstand — American’s situation is hardly desperate, it’s just not good. It’s not in danger of bankruptcy any time soon (unless its unions do something stupid, and that cannot be ruled out, unfortunately). It’s still a powerful competitor, the third largest airline in the US. It still “owns” Dallas and Miami and has a big chunk of Chicago and New York. It’s finally got approval for anti-trust immunity with British Airways, which will help on the margin. American’s just stuck for now on the M&A front. Moreover, so long as its profits remain largely ephemeral, there’s no good case for organic growth either.

So, for now, unless something big changes in the environment (or American’s management loses its sanity), expect American to be largely stuck for the foreseeable future. For now, all they can do is try to improve their cost position relative to the industry. Tough sledding, but no one said this was an easy business.
 
No one here has heard about Mckaskle Bond? If we merge so be it, but b6 pilots will not be stapled. It will go to an arbitrator, and that person or persons will decide where the b6 pilots are placed in the master seniority list. Since 2001 the general rule has been to place all furloughed pilots below ANY active pilot. The reality of a merged list would likely be b6 captains being merged relative seniority with Americans 737/md 80 captains, and b6 fos being merged relative seniority with Americans md80/ 737 first officers. Unfortunately, much like the am west LCC merger, and the what is likely to come from the ual merger, is that amr/ twa pilots furloughed at time of closing of the deal would be placed at the bottom of the merged list.


I guess B6 better merge with AA soon since AA is expected to be hiring in about 6 months. I say give B6 DOH in a merger. DOH is the only fair way to merge.
 

Latest resources

Back
Top