Value of USAir merger?
12-02-2011, 03:23 PM
#21
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From a purely business perspective, it's a good thing for the industry if AA and USAir merge. Fares are still too low. The reason is that there is still too much capacity in the industry. Today's mergers are all about removing capacity from the industry. Delta/Northwest was a great example of that. You get approval for the merger by promising politicians that there will be HUGE synergistic growth. Then you merge and cut anything that overlaps plus some.
Start ups no longer have a capital market they can access and indebt themselves why they undercut the market in an attempt to gain market share. Without the worry of startups grabbing capacity that majors do away with, this latest merger will pull even more capacity out. This may well allow us to actually price the product in a way that covers costs. All costs...including paying experienced pilots what they're worth.
Carl
Start ups no longer have a capital market they can access and indebt themselves why they undercut the market in an attempt to gain market share. Without the worry of startups grabbing capacity that majors do away with, this latest merger will pull even more capacity out. This may well allow us to actually price the product in a way that covers costs. All costs...including paying experienced pilots what they're worth.
Carl
12-02-2011, 03:42 PM
#22
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As a US guy I see more value for US to merge with AA than AA. The question is can AA stop it like DL(wisely) did?
12-02-2011, 03:43 PM
#23
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+1 there lies the crux of all potential mergers moving forward. No longer is market share the holly grail. Its all about yields!! Eliminating the competition by acquisition seems to be the preferred method. Remove capacity therefore increase demand, increases YIELD!!
12-02-2011, 04:44 PM
#24
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There are bonuses available for "successful mergers." M&A lawyers love these mergers, Wall Street loves these mergers, management usually loves these mergers, unless they are kicked out. If they are, they get a nice severance. Labor sometimes does not like these mergers. If there is little overlap of hubs, it will be considered. DL and US had a couple hubs right next to each other (CLT and ATL, SLC and PHX) that made it uncomfortable for local Congressmen who didn't want to lose more jobs.
12-02-2011, 05:04 PM
#25
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I don't see a potential deal with US announced anytime soon. The APA contract will have to be settled first. Once the signatures are on paper, then we'll see this whole thing unravel. Announcing a merger NOW would give the APA LEVERAGE..This, AMR does not want. If the APA boys are smart, they will negotiate iron clad successor ship and merger clauses to protect their 6's.
Carl
12-02-2011, 05:08 PM
#26
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Which hubs would be threatened by this (hypothetical) merger?
Seems to me that CLT is safe... AA doesn't really have a southeast presence. DCA is a valuable hub. PHL and PHX don't seem as clear.
Seems to me that CLT is safe... AA doesn't really have a southeast presence. DCA is a valuable hub. PHL and PHX don't seem as clear.
12-02-2011, 05:13 PM
#27
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Well, for what it's worth. PHL and JFK could be balanced with connecting vs. OD traffic. PHX, pretty much worthless...............
12-02-2011, 07:16 PM
#28
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PHX and PHL, both being very large cities, are valuable as hubs due to a large amount of originating traffic. Plus, AA lacks a convenient western hub. For example, if you live on the west coast somewhere, and you wanted to fly to, say, Denver, Tucson, etc., you'd have to fly to Dallas first (passing by your destination half the way there) then hop another plane. That adds a lot of time.
12-02-2011, 09:18 PM
#29
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Enough talk about this what bases this merger will keep. Let's start offering end results of seniority integration and discuss who is entitled to what. That will be more fun.
This merger is sombody's wet dream and that is all I will ever be.
This merger is sombody's wet dream and that is all I will ever be.
12-02-2011, 10:13 PM
#30
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