American, US Airways may merge to form largest U.S. airline [ as soon as January 2013 ]

Discussion in 'American Airlines | AAdvantage' started by uggboy, Dec 14, 2012.  |  Print Topic

  1. uggboy
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    uggboy Gold Member

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    || American, US Airways may merge to form largest U.S. airline ||

    I guess, we will have to wait and see, how and when it happens! :)
     
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  2. AUSsie

    AUSsie Silver Member

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    Ugh. I avoid US like the plague normally, now I may have no choice.
     
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  3. Mike Reed

    Mike Reed Gold Member

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    Why not add this to the existing thread?
     
  4. maromero02

    maromero02 Active Member

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    Like American said before us airways doesn't really have any money making routes.. Besides the steps AA is taking lately to change the whole company structure as far as focusing more on customer satisfaction doesn't have space for a faded old boring airline like us airways..
     
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  5. jbcarioca
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    jbcarioca Gold Member

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    That one is maybe asserted, but not true. US does have a number of very lucrative routes. They may not suit everyone, but some of their services and their A330 business class are certainly NOT
    I'm CP on US, EXP on AA and Diamond on DL. All three have pluses and minuses. I have an emotional preference for AA but US is, on a rational basis, playing a bit above it's weight, and managing to make money while doing it. This , anyway, is my opinion.
     
  6. Stephan

    Stephan Silver Member

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    US wants AA badly. The big question is whether or not all the positive changes coming from AA these days can be integrated into the US philosophy or is it all a waste of effort - will it all be undone or can US be "pulled up" so to speak to make an airline that is not just a giant bus line of the skies, but a quality product.
     
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  7. HaveMilesWillTravel
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    HaveMilesWillTravel Gold Member

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    ... says the airline that's in bankruptcy... because of all their money-making routes? :D
     
  8. Mike Reed

    Mike Reed Gold Member

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    Someone hasn't been following the bankruptcy very closely.
     
  9. JetsettingEric
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    JetsettingEric Silver Member

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    I would guess that US receives the highest margins from DCA. Slot restricted, and very few beyond perimeter slots. Plenty of government travel that hasn't been affected by the downturn. Plus, getting to dulles is a pain.

    PHL and CLT have very high margins. In a merged company, they will likely be less flow and likely one less bank of flights, but both hubs have very captive audiences and strong corporate demand.

    US holds its own in PHX, and provides much better connection opportunities for the large populations in socal at BUR, SNA, ONT, etc. One of the biggest complaints from AA supporters is the lack of west coast flights and the America West PHX hub is quite strong.

    On the AA side - DFW and MIA apperar to have the most captive audiences.

    NYC and LAX are very fragmented markets. For NYC, the shuttle makes the combined company more attractive to corporates in the NY area. As does a large amount of flights to CLT for the two major banks that have large operations in NYC and CLT. For LAX, having reasonable connections out of BUR/SNA/ONT for their flights will likely make them choose AA/US for their LHR trip vs. UA.

    ORD has very strong competition from both UA and Southwest. If I were running the combined company, reducing the number of flights and turning chicago into a focus city maybe an interesting idea. DFW is 802 miles away. PHL is 678 miles away. DCA is 612 miles away. CLT is 599 miles away. There isn't much to the North. MSP and DTW are nearby, but also DL hubs. STL to the south which already is an AA focus city. Kansas City traffic can just as easily use DFW. IND, CLE, CMH, PIT are all short flights from CLT, DCA, PHL. I would serve all the hubs + all the profitable spokes from ORD, and cut out many of the flights that are heavily reliant on connections and flights with the lowest yields in ORD.
     
  10. jbcarioca
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    jbcarioca Gold Member

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    This seems to be sound reasoning to me. I'd add that AA has high yield and dominance in Caribbean and South America which has been possibly the largest consistent profit maker for AA. So far they've had the most success in MIA, despite decent performance in DFW and JFK. US has had very high load factors and yields on it's only LA flight GIG-CLT, though adding GRU just now. Shifting US efficient A330 to replace B767 and B757 on some of those routes would further improve yields and capacity, while also reducing US dependency on price competitive seasonal European routes.

    It seems probable that there would be good opportunity for route optimization in the combination, especially with Open Skies.
     
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  11. jbcarioca
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    As an aside it is interesting that the combined airline will, if it happens be by far the largest A20 series operator worldwide, larger than the LH group. US is the largest single A320 series operating airline fleet already. Further all of them will have IAE engines since AA has already chosen them for it's new fleet. Here is what it will look like:

    In service (US) on order (AA and US)
    A319-100 93 11
    A320-200 72
    A321-200 71 169 (includes the transcon 3 class AA airplanes)
    A320NEO 130

    That adds up to 546 A320 series aircraft!

    When also considering the B777-300ER, A350's, B787's and it is safe to say the combined airline will be able to strike some magnificent bargains with both airframers. With a A320 series fleet of that size, all with the same engine, some in-service economies should be forthcoming too.

    Can any of us imagine they're not Sleepless in Seattle and Terrified in Toulouse over the prospects of this merger? On both sides there is a huge opportunity and huge risk.
     
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  12. Slow_Mustang
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    Slow_Mustang Silver Member

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    The only thing that scares me about the merger is that the billions (or trillions ?) of miles that US Air has been selling through different promotions and giving away through annual mileathons, will be chasing the routes that AA flies for award tickets.
     
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  13. jbcarioca
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    jbcarioca Gold Member

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    That is a factor, but I'd be surprised were there enough to make a major issue. OTOH, I have been surprised several times recently.
     
  14. Art234
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    Art234 Milepoint Guide

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    I have been hearing all sorts of stories of late indicating that either this merger will not happen, or AA will be the acquiring carrier. There are many reasons to be concerned, especially if US is the acquirer, and Doug Parker is left in charge. That would almost guarantee that US policies and programs would survive, and they are for the most part NOT customer friendly.

    What I fail to understand is how AA unions are believing anything Parker tells them. He has a dysfunctional labor relationship at US right now, unable to effect a full merger of labor 7 plus years after the original merger. He has apparently sold AA unions a bill of goods, which I bet he renegs on as soon as he takes over.

    I am also alarmed by his apparent disdain for premium customers, an area with which I have had personal experience. I have dealt with Parker and his team extensively as chairman of FFOCUS, and after the 2007 meltdown, when the executive team failed to make good on promises made to us and other advocates, I had no choice but to find another airline for US premium customers.

    At the end of the day, some sort of transaction will probably happen, but I just hope for all involved, customers and employees, that Parker and Kirby are not left in charge. They are over their heads with what they have.
     
  15. LETTERBOY
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    LETTERBOY Gold Member

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    They're blinded by their hatred of Horton and current AA management. In their rage, they're ignoring the labor situation at US. I'm sure there's a reason that US's unions aren't being more vocal about this, but for the life of me, I can't figure out what it is.

    I'd be fine with a merger, as long as Horton & the current AA management were in charge. Ever since AA filed for bankruptcy, Dougie's been gloating, bragging, and whining about the inevitability of a merger, why won't AA merge with me, why won't everyone agree with me. He's generally been behaving like a spoiled brat who's been told he can't have an ice cream cone. I've really lost any admiration/respect I may have had for him because of the childish, immature way he conducted himself before the non-disclosure agreement.
     
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  16. LETTERBOY
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    Also, I bet Dougie would walk away from a deal that didn't leave him in charge.
     
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  17. jbcarioca
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    jbcarioca Gold Member

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    While we debate what might happen I thought some statistics could be useful.
    Below are listed the US-Western Europe market shares by seat capacity scheduled for April 2013. I have ignored individual airports to deal with simply the Western Europe region and the USA.
    Airline Market Share seat capacity %
    DL 15.9
    UA 15.0
    AA/US 15.0
    BA 12.4
    AA 9.1
    LH 9.0
    VS 6.9
    AF 6.1
    US 5.9
    LX 2.2
    EI, IB, KL, SK, AZ, AB are all 2.0 or less

    This is interesting IMHO because viewed nationally/regionally, rather than airport by airport the competitive landscape looks quite different, as do the alliances, codeshares and route sharing.

    If we include the alliances as they're shaping out, here are very rough ideas:
    OW (include US) 33
    ST (incl VS) 31
    *A 26

    Because US is not in the pooling for *A the impact might be greater were they to be accepted with OW
    If VS were to be accepted with DL and ST, and why not, teh impact will probably be far greater than just London, because more ST resources could be be devoted to other issues.
    This will be exciting...
    and it does not even mention the huge issue of Middle East carriers, and Qatar joining OW.
     
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  18. Slow_Mustang
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    Slow_Mustang Silver Member

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    Doug has been carrying an engagement ring in his pocket for a long time. Finally he may have found someone who would say yes. But I hope that after the wedding, he does not get to wear pants in the family.
     
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  19. jbcarioca
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  20. LETTERBOY
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  21. LETTERBOY
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  22. chz2215

    chz2215 Silver Member

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    Anyone expect something to happen with a merger before the end of January?
     
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  23. LETTERBOY
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    God, I hope not. But anyone who's in a position to know for certain is probably covered by the NDA, and will get in a load of trouble if they talk.

    But I'm starting to think they may not merge. There have been recent comments by the APA to the effect that if there's no agreement on seniority with the US pilots' union "in the very near future," there will be no merger while AA is in bankruptcy (http://www.dallasnews.com/business/...-group-says-discord-could-derail-a-merger.ece). I don't think they'd be saying that unless they had a reason. Maybe they're trying to let their members know that there may be a negative (from their perspective) outcome, so don't be surprised. And then you have the faction of AA pilots opposed to a merger. There probably aren't that many of them, but they're getting vocal lately.

    If a merger happens and leads to Dougie being in charge, it will have to happen in bankruptcy, I think. If AA emerges from bankruptcy as a stand-alone carrier, current AA management will be in a much stronger position, both financially and otherwise. If there's a merger after bankruptcy, I think current management will run the combined carrier. In that case, Dougie will walk away, as he wants to be in charge, so a merger wouldn't happen for a few years, until US's labor situation gets them in trouble again.

    However, to quote Dennis Miller, "But that's just my opinion, I may be wrong." :)
     
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  24. LETTERBOY
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  25. Mike Reed

    Mike Reed Gold Member

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