The Next Mergers

[ACL65PILOT]

From a Wall Street analysis:

M&A: Often rumored but unlikely in near term ​

ALK is a theoretically attractive acquisition candidate for AMR, LUV, and DAL because of the network footprint, but we believe the likelihood of a takeout is low because of acquisition cost, an uncertain industry outlook, and ALK's current revenue structure. Of the potential acquirers, DAL likely has little near-term interest as the company is digesting its October 2008 acquisition of Northwest, AMR has other cash management priorities, and LUV has set forth stringent criteria for the carrier to pursue an acquisition.​

ALK derives a meaningful portion of its revenues from codeshare and interlining agreements with oneworld and SkyTeam – an acquisition would likely result in the termination of at least one of these agreements and de-value the franchise, in our view. We believe ALK would likely fight off any takeover attempt quite vigorously should the scenario present itself.​

A few points:
1) When AS signed their code share agreement with Skyteam, the agreement capped any additional feed (added) to Oneworld. Eeeergo, if JAL adds a flight to PDX, AS cannot feed it. AMR ads a flight to SEA from DFW, AS cannot feed it. It is capped.
What that means is that going forward Skyteam is where AS's growth will be. It was done that way for a reason. DAL realize the importance in AS's business plan at its current state to code share with Oneworld and AMR. They allowed it to continue.

Going forward, either AS will opted to stay status quo, which may be very attractive to DAL, a company that truly does not have the cash to buy AS. A simple upping of the poison pill to a billion dollars would shore up DAL's feed to its international birds, stifle anyone who really wants AS, and allows AS to do what they really want, which is to remain an independent airline. Or of course the alternative is for the board to start a bidding war on AS and their routes.

 

[Scope out RJ's]

The next mega merger will be between Frontier, United, Continental and Delta, with the resulting carrier to be called FUCD.

I don't care who you are, that's some funny ********************!:laugh:

 

[NuGuy]

I am not busting on Southwest. They have been the best run most consistently profitable airline over the last 30 years. I think the Bags Fly Free campaign is the latest good idea that being proven with good results (see SWA Q4 2009 results).

I am actually a little surprised Kelly isn't using this downturn to grow organically and grab marketshare. Is Kelly keeping SWA stagnant in preparation for a merger to grab additional marketshare?

What has really surprised me about SWA is that they never went the route of exploiting the fact that they do not outsource any of their domestic flights.

Given the recent hub-bub about all that, they could really go to town with advertising "when you buy a SWA, you get a SWA airplane, SWA ticket, SWA training"...yadda yadda yadaa. Really pinch the legacies where it hurts, which has been SWA modus for just about ever.

But the closest I ever saw them get to this was a billboard outside of KTPA when they started flying there in the 90's to the effect of "TPA to FLL, no if's, and's or props"

Of course, the real reason they don't do that is they don't want to "poison the well" for the time when there are SWA colored RJs.

Nu

 

[maxblast72]

Why do SWA colored RJs? The best way to add RJs is to do a revenue sharing codeshare deals with the codeshare partner in their own colors. Let the RJ operators take the risks and costs of starting new routes and possible fuel spikes. The days of fixed fee per departure seem to be ending. If the RJ operators can't make money with their smaller platforms in the current revenue environment and fuel prices, they can park the RJs. No point in the larger airlines subsidizing the regional carriers going forward. There is definitely an oversupply of RJs, particularly the smaller ones.

 

[NuGuy]

My point was that SWA usually LOVES to make a very big deal about what they do differently from the legacy carriers (IE the bag fee).

This would seem to be VERY fertile advertsing ground, for an operation who normally takes full advantage of their quirky marketing.

Just something that makes you go 'hmmm'.

IMHO, it's something that was probably agreed that they "never go there" over steaks and drinks at the annual Conquistadors del Cielo meeting.

Nu

 

[Mea25000]

AS has no poison pill, no capped feed with One World. More and more I have been hearing grumblings of AMR going after AS and HA... I don't know where they are going to get the money but when did that stop anyone before. Our old MEC President just took his new post as Merger Comitee chair along with a fuloughed AMR FO. Look out APA will eat us alive!

 

[BeCareful!]

USAir's DCA and LGA slots are really the only thing with any value. A slot auction would quickly take care of those.

WHAT?!?!

I thought it was the PHX hub!