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How American Airlines could bail out of the US Airways merger -- and why it might want to
The future of the U.S. commercial aviation system will be decided November 25, the trial date a Washington district court judge set as the beginning of the Justice Department's attempt to squash the $12 billion merger of American Airlines and US Airways. Unless, of course, it's not. (www.bizjournals.com) Más...Sort type: [Top] [Newest]
We should know how this is going on the first day or two when the pre-trial motions are all adjudicated. If the judge dismisses much of the DOJ complaint, they will forge ahead with the trial...if not, this is a well reasoned paper and AA would bail before Dec 13.
I've written as much weeks ago here on FlightAware.
I've even added that Alaska would be a better merger partner for the newly emerged AA, than US could ever hope to be. Alaska's network better matches and complements AA existing network without duplicating hubs in close geographic proximity.
The new AA would be getting lots of new planes anyway, and can build out to the optimum network size and route frequency, rather than contract from a too large combined AA-US monstrosity with too many hubs not sufficiently distributed geographically.
Then in 2014, Alaska becomes a perfect acquisition target to help fill in the northwest. Seattle provides a great launching pad for flights to Asia. Alaska's presence at LAX will help AA get a fuller presence at an important hub city.
US just doesn't fit AA network. It provides a strong presence at DCA and in the southeast. AA could add the necessary addituonal coverage to match US's reach from it's own hubs. They could even add Memphis or some other regional hub. That is if necessary, cidesharing with oneworld partner US would provide the sane reach without any extra effort.
I've even added that Alaska would be a better merger partner for the newly emerged AA, than US could ever hope to be. Alaska's network better matches and complements AA existing network without duplicating hubs in close geographic proximity.
The new AA would be getting lots of new planes anyway, and can build out to the optimum network size and route frequency, rather than contract from a too large combined AA-US monstrosity with too many hubs not sufficiently distributed geographically.
Then in 2014, Alaska becomes a perfect acquisition target to help fill in the northwest. Seattle provides a great launching pad for flights to Asia. Alaska's presence at LAX will help AA get a fuller presence at an important hub city.
US just doesn't fit AA network. It provides a strong presence at DCA and in the southeast. AA could add the necessary addituonal coverage to match US's reach from it's own hubs. They could even add Memphis or some other regional hub. That is if necessary, cidesharing with oneworld partner US would provide the sane reach without any extra effort.
This is all going to be very interesting. I have never been a Doug Parker fan and have always thought that this was a case of the tail trying to wag the dog. US is not big enough as an independent, they need a dance partner but shouldn't be the dominant partner in such a merger. AA, on the other had, had intentions of emerging independent when it file BR in November of 2011. That was until Parker came riding out of the West. As I said, it will all be interesting.
Given the financial turn around in Chapter 11, AA may just use this as an excuse to bail leaving Parker to look for a new date to shack up with. The big question is whether the turn around is sustainable beyond one or two quarters and considering AA has had some USAir driven labor peace. If it does fail, there is not likely to be a lot of goodwill between the unions and the executive suite after what has transpired.
The beauty in this situation is that it'll be all DOJ's fault.
Plus, the option of a merger with US will be ceremoniously crushed (by an external force).
Job self-preservation will all of a sudden be all too real. If they want to send a whole bunch of colleagues on furlough, it'll begin their own hands at that point. But they won't be able to blame management anymore.
But letting AA fail would be out of the question. Especially for folks up in the seniority list. Starting all over is just not a realistic option.
Basically the message is:
"The government killed the merger. Now we have to compete independently. We all have to do our jobs, or the folks from US, Delta and United will be happy to do it for us."
Spite will only work when you have something to gain besides a pink slip for lots of fellow workers (eg. before BK labor renegotiation, or while there was the possibility of a white knight merger).
All management has to do is honor the deal labor worked out with Parker. Or rather, they better not even consider trying to change. If they do, then they deserve what they get.
I reserve the right for AA labor to act irrationally, and do exactly as you say they might. It is entirely possible. But I don't see the point.
Plus, the option of a merger with US will be ceremoniously crushed (by an external force).
Job self-preservation will all of a sudden be all too real. If they want to send a whole bunch of colleagues on furlough, it'll begin their own hands at that point. But they won't be able to blame management anymore.
But letting AA fail would be out of the question. Especially for folks up in the seniority list. Starting all over is just not a realistic option.
Basically the message is:
"The government killed the merger. Now we have to compete independently. We all have to do our jobs, or the folks from US, Delta and United will be happy to do it for us."
Spite will only work when you have something to gain besides a pink slip for lots of fellow workers (eg. before BK labor renegotiation, or while there was the possibility of a white knight merger).
All management has to do is honor the deal labor worked out with Parker. Or rather, they better not even consider trying to change. If they do, then they deserve what they get.
I reserve the right for AA labor to act irrationally, and do exactly as you say they might. It is entirely possible. But I don't see the point.
You indicate that everything will be OK labor wise and all will be interested in self preservation. That could be true, BUT, as your last line says, the union hogs could come to the trough wanting more slop and really be unreasonable on such a deal.
They all still have to contend with the BK judge.
That is true, but I am speaking of after they came out of BR, then as you say, there is no protection. It will all be interesting.