And Now BA’s Also in the Mix

Discussion in 'American Airlines | AAdvantage' started by From NYC, Mar 25, 2012.  |  Print Topic

  1. From NYC
    Original Member

    From NYC Gold Member

    Messages:
    5,820
    Likes Received:
    10,891
    Status Points:
    11,070
    From today’s The Times (UK), noting the issue of foreign ownership stakes allowed for US air carriers:
    BA eyes rescue deal for troubled American Airlines

    THE company that owns British Airways is examining plans to buy a stake in American Airlines in a desperate effort to stop the carrier falling into the hands of a rival.

    International Airlines Group is close to appointing an adviser following a round of meetings with investment banks about the future of American Airlines, which collapsed into bankruptcy protection last November.

    Willie Walsh, the group chief executive, has been forced to consider the move after US Airways and Delta began circling the troubled carrier.

    IAG operates a cost-sharing joint venture on transatlantic routes with American Airlines that it is anxious to protect. A successful bid by either rival would jeopardise that relationship, threatening the frequency of BA flights to and from America.

    Walsh is thought to be studying several options, including buying a stake in American Airlines. Current rules on foreign ownership prevent overseas airlines buying more than a 49% economic stake and a 25% voting stake in an American carrier.

    Walsh could also become a minority partner in a joint venture with an American company, such as Texas Pacific Group, the private equity company, to bid for American Airlines outright.

    Walsh has said in the past that he considers the existing partnership with American Airlines as a precursor to a formal merger, which would create one of the world’s biggest airline groups, flying more than 140m passengers a year.

    If American Airlines were to fall into the hands of one of IAG’s rivals it could be forced to quit the Oneworld alliance it shares with IAG.

    Oneworld is a grouping of carriers that agree to co-operate by sharing a range of services, including back-office support and maintenance facilities.

    It competes against rival alliances Star, which includes US Airways, and SkyTeam, based around Delta.

    US Airways has hired Barclays Capital, one of IAG’s main corporate advisers, to study a bid for American Airlines, while Delta has appointed Blackstone.

    US Airways is said to have held talks last week with some members of the bankrupt carrier’s unsecured creditors’ committee to seek their support for a merger.

    The aim would be to secure a deal before AMR Corporation, the parent of American Airlines, emerges from Chapter 11 later this year.

    Talks with creditors could prove key. AMR is trying to enforce drastic cost-cutting measures to ease the financial burden on the group.

    IAG declined to comment.“

    http://www.thesundaytimes.co.uk/sto/business/Companies/article1001761.ece
    You may need a subscription to view the article.
     
  2. rwoman
    Original Member

    rwoman Gold Member

    Messages:
    5,617
    Likes Received:
    13,489
    Status Points:
    11,070
    If it helped keep AA a standalone airline, I think that's good. If a merger were inevitable, I'd prefer DL over US, but, as I've said before, I diversified for a reason!

    :)
     
  3. jace

    jace Member

    Messages:
    9
    Likes Received:
    13
    Status Points:
    45
    This could be a very good path forward for AA fending off what inevitably be a painful merger with US.
     
  4. perryplatypus

    perryplatypus Gold Member

    Messages:
    2,948
    Likes Received:
    9,455
    Status Points:
    7,525
    This would be a better alternative to us merger.
     
  5. wrxmom

    wrxmom Gold Member

    Messages:
    1,161
    Likes Received:
    3,558
    Status Points:
    1,945
    Sounds like some good posturing going on. Will be interesting to see what develops.
     
    jbcarioca, TheBeerHunter and rwoman like this.
  6. autolycus

    autolycus Gold Member

    Messages:
    2,136
    Likes Received:
    7,321
    Status Points:
    5,000
    There have got to be a lot of private phone calls happening right now. And we still haven't heard much about Delta since it became public that they hired Blackstone. I wonder if their analysis is that a deal would be bad for them, or if they're just playing it closer to the vest for now. US Airways has been almost too public with their interests, IMO. Perhaps their play was to act like a merger with them was inevitable and hope that enough people just gave up on anything else and stopped resisting.
     
  7. wrxmom

    wrxmom Gold Member

    Messages:
    1,161
    Likes Received:
    3,558
    Status Points:
    1,945
    Exactly. I wonder how all this affects stock prices for the "inquiring" airlines. I neglected to check when a possible merger/buyout with US was first announced.
     
  8. nova

    nova Silver Member

    Messages:
    78
    Likes Received:
    126
    Status Points:
    320
    It would suit me just fine if BA kept US out. IMO if US merges with American the final animal will be in OneWorld and honestly, living in the SE, I like having the option of flying US and getting United Miles.
     
    rwoman, wrxmom, jbcarioca and 2 others like this.
  9. newbluesea
    Original Member

    newbluesea Gold Member

    Messages:
    2,683
    Likes Received:
    4,736
    Status Points:
    2,570
    One thing is pretty obvious here is that all those clamouring for a BA buyout have liitle or no familarity with the BA frequent flyer program.:rolleyes:
     
    Juanefny, rwoman, autolycus and 2 others like this.
  10. autolycus

    autolycus Gold Member

    Messages:
    2,136
    Likes Received:
    7,321
    Status Points:
    5,000
    BA can't actually buy AA in the same sense that US Airways or Delta could. US law forbids foreign ownership of 25% or more of the voting interest in a US-based airline and 50% or more of the total ownership. That means BA cannot ever control AA. If BA invests in AA, it would be a supporting measure that would leave AA as a separate airline that, by law, would operate entirely separately from BA. It would effectively be equivalent to BA lending a bunch of money to AA in order to keep AA from being absorbed in a merger with an airline in a different alliance than oneworld.
     
    stan, rwoman, wrxmom and 2 others like this.
  11. DestinationDavid
    Original Member

    DestinationDavid Milepoint Guide

    Messages:
    6,846
    Likes Received:
    12,715
    Status Points:
    11,770
    I'm sure newbluesea already knows that, he's a very smart cookie. ;)

    I agree with him in part though. The idea that BA's infusion of cash wouldn't come with changes and influence doesn't ring true. Any investment, whether from IAG, DL, US, or TPG would come with some changes. If it's IAG then we could expect to see some changes along the lines of what we see at BA/IB, and if that's the case many loyal AA flyers might not like those changes.
     
    rwoman, autolycus and jbcarioca like this.
  12. eponymous_coward
    Original Member

    eponymous_coward Gold Member

    Messages:
    1,901
    Likes Received:
    2,975
    Status Points:
    1,470
    What makes you think that a merged AA/US would stay in *A after a merger? They're excluded from the UA/LH/LX/AC Atlantic joint venture that lets the participants coordinate TATL schedules, service and pricing without being subject to antitrust. AA is a full participant in the oneworld Atlantic JV; presumably the merged entity would find that pretty valuable, and wouldn't want to give that up just for the privilege of being a second-class citizen in *A.

    Also, BA's participation in a deal doesn't necessarily mean that this would exclude US. Think about it: BA gets a stronger AA/US combo out of the deal (in terms of USA marketshare) and takes a bite out of *A to boot. Oh, and back in the day, guess which airline BA invested in? US...
     
    nova, rwoman, autolycus and 2 others like this.
  13. jbcarioca
    Original Member

    jbcarioca Gold Member

    Messages:
    17,507
    Likes Received:
    57,455
    Status Points:
    20,020
    :eek:
    :eek: Avioa are ill named anyway, really they're more akin to anchors. I have still not managed to unload my .>300,000 points on attractive terms. Hope springs eternal.
     
    tondoleo, rwoman and autolycus like this.
  14. LarryInNYC

    LarryInNYC Gold Member

    Messages:
    1,384
    Likes Received:
    2,797
    Status Points:
    1,445
    Out of the sheer goodness of my heart, I'd be willing to haul them away at absolutely no charge to you. :)
     
  15. autolycus

    autolycus Gold Member

    Messages:
    2,136
    Likes Received:
    7,321
    Status Points:
    5,000
    I actually don't think that the AA/US would be in *A, but if AA/US happens then BA won't have nearly as much say in that as if AA stands alone, which pretty much guarantees that AA stays in oneworld. It's a risk thing. Status quo means AA in oneworld. AA/US puts it up for bidding.
     
    LETTERBOY and rwoman like this.
  16. eponymous_coward
    Original Member

    eponymous_coward Gold Member

    Messages:
    1,901
    Likes Received:
    2,975
    Status Points:
    1,470
    There's no way the DOJ lets a combined AA/US walk into *A (and their ATI deal). You'd have problems in LA, NY, Chicago, three huge markets for TATL/TPAC travel. Combined with either one or the other carrier owning MIA, SFO and DFW... nope. Not gonna happen.

    Similar problems with walking to Skyteam. The only way an AA/US merger works is if the combined entity stays in oneworld. And US's executives are smart enough to realize that.
     
    LETTERBOY and rwoman like this.
  17. From NYC
    Original Member

    From NYC Gold Member

    Messages:
    5,820
    Likes Received:
    10,891
    Status Points:
    11,070
    Isn’t this, infusion of money to keep things as they are, what happened with JAL not too long ago when they were on the brink?
     
    rwoman likes this.
  18. desamo

    desamo Gold Member

    Messages:
    9,320
    Likes Received:
    10,970
    Status Points:
    14,975
    If US wanted to hop over to OW, working with BA to make an AA/US/BA alliance is one way of doing it.
     
    LETTERBOY likes this.
  19. tondoleo
    Original Member

    tondoleo Gold Member

    Messages:
    16,063
    Likes Received:
    100,905
    Status Points:
    20,020
    You are a charitable man. Gift them to Canucklehead for his flights from NYC to Canada.
     
  20. tondoleo
    Original Member

    tondoleo Gold Member

    Messages:
    16,063
    Likes Received:
    100,905
    Status Points:
    20,020
  21. DestinationDavid
    Original Member

    DestinationDavid Milepoint Guide

    Messages:
    6,846
    Likes Received:
    12,715
    Status Points:
    11,770
    LETTERBOY and TheBeerHunter like this.
  22. nova

    nova Silver Member

    Messages:
    78
    Likes Received:
    126
    Status Points:
    320
    I had wondered about that. They can't buy a controlling interested in American but they could certainly provide some working capital to help facilitate US buying AA ending up with a minority stake in the US/AA suasage that comes out the back of the buyout meat grinder.

    Basically BA comes in and buys a big chunk of US at some premium and US then uses the funds to help acquire American. Least that's how it works in my non-business mind...
     

Share This Page