US Air moves towards AA takeover

[Gil Bang]

(MoneyWatch) US Airways (LCC) has filed an 8K with the SEC to begin the process of a takeover of American Airlines, which is currently in Chapter 11 bankruptcy.

According to the SEC, Form 8-K is the 'current report' companies file with the SEC to announce major events that must be disclosed to shareholders.

American Airlines has said it wants to emerge from bankruptcy as a standalone carrier. American Airlines parent AMR, which filed for bankruptcy protection on Nov. 29, 2011, is trying to slash its annual labor costs by $1.25 billion and emerge from court supervision. Next week, the struggling airline will try to convince a bankruptcy judge to let it void existing union contracts and impose new ones to secure those spending cuts.

A letter to employees by US Airways CEO Doug Parker reads in part:

Today, we filed a statement (a form called an 8-K) with the Securities and Exchange Commission disclosing that we have signed agreements with the three unions that represent nearly 55,000 American Airlines employees. These unions are the Allied Pilots Association (APA), the Association of Professional Flight Attendants (APFA) and the Transport Workers Union (TWU), which represents all of American Airlines' mechanics and fleet service employees. Shortly after our disclosure, these three unions issued a public statement announcing their support of a US Airways-American Airlines merger and that they have agreed to terms that would govern collective bargaining agreements for their members at the merged airline. I want to explain to you why we have done this and what it means.

First of all, today's news does not mean we have agreed to merge with American Airlines. It only means we have reached agreements with these three unions on what their collective bargaining agreements would look like after a merger, and that they would like to work with us to make a merger a reality. To get to an actual merger, many more things must happen including gaining the support of AMR's creditors, its management team and its Board of Directors. But this is obviously an important first step along that path and we are hopeful we can all work together to make this happen.
The agreement with American's three labor unions and the 8K filing with the SEC are the first major steps in a potential hostile takeover bid. It is hostile in the sense that if the merger were to happen -- and that's still a big if -- it would happen without the agreement of American's leadership.

Thus far, American CEO Tom Horton has resisted merger overtures and so going directly to unions is an end-run around AMR management, which would be forced out if the effort is successful.

What would a US Airways-American merger mean for you?
Rumors flying of US Airways, American Airlines merger
AMR unions plan to back takeover bid by US Airways

A joint statement issued Friday by The Transport Workers Union (TWU), the Association of Professional Flight Attendants (APFA) and the Allied Pilots Association (APA) read in part:

"A merger between American Airlines and US Airways is the best strategy and fastest option to complete the restructuring of American Airlines, enabling it to exit the Chapter 11 bankruptcy process..."

According to the labor group statement, the merger "provides the best path for all constituencies, including employees of both American Airlines and US Airways."

[Degenerate Gardener]

I'm saddened by this. In my dealings with US Airways as a customer and business partner, I am always underwhelmed.

[Hellraiser97]

I'd say the same about AA. I can't tell you how many times I have been stranded somewhere by them, with it having NOTHING to do with weather, and they have zero $#@!s to give.

[Staboned]

two $#@!ty airlines merging. just what the airline industry needs. where is the $#@!ing government. oh, they are printing money and spending all their energy trying to get elected.

but don't worry, they will be right there bail out the AIRLINE COMPANY when it is needed

[bozo_casanova]

we should have let them die in 2002, but the flag was waved and we bailed them out instead.

[Dillo Pad]

These massive mergers have to stop. The United Continental merger has shown what these do to the industry, service goes down and prices go up. If US Air takes over AA that leaves US Air,, United and Delta as the major legacy carriers in the US. Is there a move to one giant National Airline?

Sure there are discount airlines like SWA, Frontier etc, but thee moves are decreasing competition and it is bad for everyone.

[The Dog]

US Airways is the worst airline in the country and second place isn't very close. Take a good look at what UAL has done to Continental and you'll an idea of what you'll be in store for. We'll go from having three major airlines based in Texas (including Southwest) to having one. ALL of Southwest's growth in the southeast/eastern corridor was at the expense of these clowns and now Southwest has run them out of Vegas. They can't compete with anyone on any level.

This would be a complete disaster.

[tantric superman]

US Airways is horrible. American is Super Target but US Airways is the dollar store next to La Michoacan.

[Staboned]

These massive mergers have to stop. The United Continental merger has shown what these do to the industry, service goes down and prices go up. If US Air takes over AA that leaves US Air,, United and Delta as the major legacy carriers in the US. Is there a move to one giant National Airline?

Sure there are discount airlines like SWA, Frontier etc, but thee moves are decreasing competition and it is bad for everyone.

where is the federal government? hopefully they show up for consumer rights. its part of their $#@!ing duty.

[Staboned]

US Airways is horrible. American is Super Target but US Airways is the dollar store next to La Michoacan.

worst airline i have flown. even worse than $#@!ign aeroflot

[carrera]

US Airways is horrible. American is Super Target but US Airways is the dollar store next to La Michoacan.

This. I'm betting the deal is approved.

[texasdago]

US Airways is the worst airline in the country and second place isn't very close. Take a good look at what UAL has done to Continental and you'll an idea of what you'll be in store for. We'll go from having three major airlines based in Texas (including Southwest) to having one. ALL of Southwest's growth in the southeast/eastern corridor was at the expense of these clowns and now Southwest has run them out of Vegas. They can't compete with anyone on any level.

This would be a complete disaster.

I have to disagree... having been a loyal CO flyer since 1993, I'm really saddened by how badly UA has destroyed most goodwill with CO flyers. I've started flying US Air more and actually find the experience better... that's saying a lot. US Air maybe was last but UA has taken the banner from them.

[The Dog]

I have to disagree... having been a loyal CO flyer since 1993, I'm really saddened by how badly UA has destroyed most goodwill with CO flyers. I've started flying US Air more and actually find the experience better... that's saying a lot. US Air maybe was last but UA has taken the banner from them.

Don't worry they will assume their rightful place in last if they buy AA.

[texasdago]

Don't worry they will assume their rightful place in last if they buy AA.

What's that saying about shuffling deck chairs?

[Ghost of LL]

US Airways is the worst airline in the country and second place isn't very close. Take a good look at what UAL has done to Continental and you'll an idea of what you'll be in store for. We'll go from having three major airlines based in Texas (including Southwest) to having one. ALL of Southwest's growth in the southeast/eastern corridor was at the expense of these clowns and now Southwest has run them out of Vegas. They can't compete with anyone on any level.

This would be a complete disaster.

According to the pilots' union, the successor airline would retain the "American Airlines" brand and would be based in Fort Worth.

[Longhornmaniac8]

Anyone who thinks the new airline won't A) be named AA and B) be based in DFW is crazy. AA's brand recognition is light years ahead of US'. In fact, it may be the most recognizable airline brand in the world. And as far as the headquarters are concerned, the state of Texas is ideal for a multitude of reasons, not the least of which is AA's fortress compound south of DFW.

As far as prices, yes, they'll continue to go up. They had to. It sucks for the consumer, but it has needed to happen for a long while now. The dirt cheap pricing of yesteryear made flying easily affordable for everyone, at the cost of any attempts most airlines had at profitability. It's simply not sustainable to charge $99 between LAX-JFK. Consolidation will turn out to be a good thing for the industry in the long term.

[Ghost of LL]

In fact, it may be the most recognizable airline brand in the world.

You say that like it's a good thing.

[dbecks]

US Airways doesn't give you free booze on Trans-Atlantic flights. That's all I have to say.

[Longhornmaniac8]

You say that like it's a good thing.

When it comes to marketing, there's no such thing as bad publicity, or so the saying goes.

But yes, that's what I'm saying. The very fact that more people around the world are aware of AA means there's a larger potential pool of customers. Furthermore, in markets where AA and US currently compete, the longevity of AA is often considerably greater, adding to its "prestige" factor.

I'd also argue that to the average person (read: potential customer), AA is no better or worse than its competitors. It's a means from point A to point B.

[CutTheCrackJack]

When it comes to marketing, there's no such thing as bad publicity, or so the saying goes.

But yes, that's what I'm saying. The very fact that more people around the world are aware of AA means there's a larger potential pool of customers. Furthermore, in markets where AA and US currently compete, the longevity of AA is often considerably greater, adding to its "prestige" factor.

I'd also argue that to the average person (read: potential customer), AA is no better or worse than its competitors. It's a means from point A to point B.

Is it just me or does US Air have considerably less leg room than anyone else?

[Longhornmaniac8]

Is it just me or does US Air have considerably less leg room than anyone else?

I haven't flown US Airways since they were America West, but their pitch is 31-32'', which is pretty much industry standard.

[texasdago]

US Airways doesn't give you free booze on Trans-Atlantic flights. That's all I have to say.

I don't think UA does anymore.

I wonder what will happen to the UA partnership for US Air. Probably gone - Star Alliance, that is.

[random horn]

According to the pilots' union, the successor airline would retain the "American Airlines" brand and would be based in Fort Worth.

too bad they'll still be owned by usair

[244335]

US Airways doesn't give you free booze on Trans-Atlantic flights. That's all I have to say.

I only fly internationally when on vacation, not business (except for the rare trip to Canada that I haven't even done yet in 2 years) and then I always fly business or first (where you get free drinks).

I'm a loyal AA flyer (will likely make Executive Platinum this year) and I'me really excited by this for very selfish reasons.

Does US Air completely suck ass? Yes. They are by far the worst airline I've ever flown.

Still, merging with AA will likely change them for the better. AA doesn't just have the best brand recognition, they also have the best FF program (AAdvantage). I can see them making some minor changes to it, but not wholesale changes.

Finally, I work for a company HQ in the NE. They have the best contracts for flights negotiated with US Air. This merger would allow me to fly a merged AA/USA airline without having to constantly try to book flights weeks if not months in advance just to be able to get an AA fare within a reasonable amount of the USA fair.

[TOR]

Good. AA deserves to be consumed by another $#@! airline, and I hope they fire every $#@!ty counter agent and stew that 'works' for that $#@!ing airline.

[EuroHorn]

As a lifetime platinum on AA, I hope they survive in some form

[stunns38]

Is it just me or does US Air have considerably less leg room than anyone else?

Primarily the old America West fleet, the original US Air flight on the East Coast was OK with leg room. No doubt the $#@!test airline.

[maninblack]

Nothing is worse than Spirit but that's a different discussion. US Air sucks balls the worst of the big airlines imo.

[SizzleChest]

Is it just me or does US Air have considerably less leg room than anyone else?

No, that would be UA.

[Longhornmaniac8]

Nothing is worse than Spirit but that's a different discussion. US Air sucks balls the worst of the big airlines imo.

At least Spirit is funny. Their promotions going on right now are hysterical.



Or their GSA sale: "You don't have to spend lavishly to travel in style. Check out our GSA (Great Savings Always) Sale with scandal-free fares starting from just $19.80* one way. Book now, even your interns can afford it! Please note that all fares listed below include any applicable taxes, fees, and surcharges. Additional terms apply. Baggage charges may apply."

[TOR]

Yeah, that's because they don't spend any money on maintenance or safety.

[Ghost of LL]

I can't believe US would want anything to do with AA after AA's unions have basically attempted a coup d'etat (and may very well succeed at it). For one thing, that is going to prevent US from getting the most favorable contract terms with the unions in the bankruptcy court. So the successor airline is going to have higher labor costs than it otherwise should.

But more importantly, this is just the continuation of the open warfare that has been going on at AA between its unions and management for more than 20 years. The unions think they're about to inflict the coup d'grace on management. They'll get the very senior management, that's true. But there are going to be a lot of upper managers and middle managers who aren't fired and who stay with the successor airline. And they're not going to forget that the unions tried to kill their jobs.

And so when it's time to bargain for the next set of union contracts, the unions are going to go to management and say "you owe us--we helped you take over this airline." And while the US managers will agree, the incumbent AA managers are going to say "$#@! you--you killed our airline, now eat $#@! and die."

This is a poisonous situation US is getting itself into. If they knew what was good for them, they'd run far, far away and just pick up some pieces after AA collapsed.

[AnotherUTFan]

I used to work for Northwest Airlines. In about 2001 a buddy left to go work for US Airways, who seemed to be on the verge of collapse at that time. We couldn't believe he's leave "stable" NWA for that situation. I don't know a single soul at NWA / Delta anymore. Funny how fast things change. I left when they closed down maintenance at SAN in 2003.

[Longhornmaniac8]

I can't believe US would want anything to do with AA after AA's unions have basically attempted a coup d'etat (and may very well succeed at it). For one thing, that is going to prevent US from getting the most favorable contract terms with the unions in the bankruptcy court. So the successor airline is going to have higher labor costs than it otherwise should.

But more importantly, this is just the continuation of the open warfare that has been going on at AA between its unions and management for more than 20 years. The unions think they're about to inflict the coup d'grace on management. They'll get the very senior management, that's true. But there are going to be a lot of upper managers and middle managers who aren't fired and who stay with the successor airline. And they're not going to forget that the unions tried to kill their jobs.

And so when it's time to bargain for the next set of union contracts, the unions are going to go to management and say "you owe us--we helped you take over this airline." And while the US managers will agree, the incumbent AA managers are going to say "$#@! you--you killed our airline, now eat $#@! and die."

This is a poisonous situation US is getting itself into. If they knew what was good for them, they'd run far, far away and just pick up some pieces after AA collapsed.

I respect that management at AA hasn't been perfect. I actually think Arpey did a pretty decent job after 9/11 to keep the airline out of bankruptcy, but it's a far from perfect situation. With that said, the AA unions (especially the pilots) $#@!ing suck. $#@! them and their stupid, greedy leaders that seem to have zero grasp on the realities of the aviation industry.

[Gucci_Suit]

I respect that management at AA hasn't been perfect. I actually think Arpey did a pretty decent job after 9/11 to keep the airline out of bankruptcy, but it's a far from perfect situation. With that said, the AA unions (especially the pilots) $#@!ing suck. $#@! them and their stupid, greedy leaders that seem to have zero grasp on the realities of the aviation industry.

Couldn't have said it any better myself. Usually there is nearly equal culpability on the both the parts of management and labor, but in this case its about 95% the fault of the 3 labor unions and their leaders.

What part of "you make way more than everyone else" don't the flight attendants understand? What part of "you laziness rules prevent us from competing on profitable routes" don't the pilots understand? I don't care that you made more money in 2003... you were overpaid then too.

And the funny part is that Parker is selling these morons a bill of goods. Their situation in a combined airline is not going to be any better than it has always been.

As a longtime frequent flier and husband of an even more frequent flier, I know that AA had the best premium products and loyalty programs of domestic carriers. If this deal goes through, I can expect a watered down AAdvantage program, higher fares, and not a single new route to Asia.

God I hate labor unions.

[Ghost of LL]

As a longtime frequent flier and husband of an even more frequent flier, I know that AA had the best premium products and loyalty programs of domestic carriers. If this deal goes through, I can expect a watered down AAdvantage program, higher fares, and not a single new route to Asia.

You hit on a real problem with this takeover.

I haven't done any research on it, but I'm willing to bet that AA has more high-dollar, high-mileage FF's than any other domestic airline. AA's market share in the Northeast Corridor, Los Angeles, Dallas, and Chicago almost guarantee that that's the case.

US does its thing fine. It's not a crappy airline. It's a fine airline for what it is. But its thing does not include catering to ultra-high-mileage FF's in the way AA's business requires. If they try to impose the US way of doing things on AA, they're going to piss off all of AA's ExecPlats. And that's really much of the value left in the AA business. If you can't keep the ExecPlats happy, then AA isn't worth anything--it's vastly more valuable broken up than it is as a going concern.

[Gucci_Suit]

Exactly. If you want to be a full service "legacy" carrier then you have to concentrate on corporate contracts and luring that person who is willing to part with $5k for r/t to LHR. This is done by offering System-wide upgrades to EXP's, keeping exclusive clubs exclusive, developing the hell out of your international network, and creating a loyalty program that has cult followers. AA does these things really well (except for the Intl network, though its getting better).

Keeping a new fleet helps too. I flew up to DTW last weekend to watch the Rangers-Tigers series and our 737-800 was on its first day of service. I was thrilled with it... I'm a dork.

If you want to cater to the person who flies 2 or 3 times a year with the family, that's fine but you'd better keep your costs incredibly low. Southwest is going to be hurting in the near future with a maturing labor force and expiring fuel hedges. At least that's my guess.

[Gucci_Suit]

I have no problem with SWA, by the way. Excellent airline. Just not for me.

[Longhornmaniac8]

You hit on a real problem with this takeover.

I haven't done any research on it, but I'm willing to bet that AA has more high-dollar, high-mileage FF's than any other domestic airline. AA's market share in the Northeast Corridor, Los Angeles, Dallas, and Chicago almost guarantee that that's the case.

US does its thing fine. It's not a crappy airline. It's a fine airline for what it is. But its thing does not include catering to ultra-high-mileage FF's in the way AA's business requires. If they try to impose the US way of doing things on AA, they're going to piss off all of AA's ExecPlats. And that's really much of the value left in the AA business. If you can't keep the ExecPlats happy, then AA isn't worth anything--it's vastly more valuable broken up than it is as a going concern.

To be honest, I really would be surprised to see too much change to AAdvantage. It just doesn't make sense to change something that every other FF program has aspired to be. AAdvantage has been the gold standard of FF programs, so why $#@! with something that is a completely an asset. DP is too smart to do that, IMO.

IF this takeover/merger goes through (and that's still a huge "if"), I really see US using it as a growth tool. Rather than incorporate AA into US, I actually see US incorporating itself into AA. AA is better than US in just about every sense (labor situation notwithstanding, and with US, that's saying something). Better hubs, larger, better international presence, more diverse fleet, better FF program, better brand recognition etc...and Doug Parker et al. know it. If they can get a chance to marry AA on their terms, that is a huge plus. Quite frankly, if AA comes through this bankruptcy solo leaner and in a better financial situation (which I would expect to happen if they survive US' bid), I wouldn't be stunned at all to see AA take over US in the not so distant future. US is the odd man out of the remaining "legacies," (and I still consider it a legacy, no matter how they've tried to rebrand themselves). They're smaller, and, well, less important than DL, UA, and AA. It would be tough sledding competing with the three of them. In the next 5 years US will be gone. It will either be gone because they bought AA and rebranded themselves as AA, or because they were bought by someone (quite possibly a post-bankruptcy AA).

Long story short, AA is going to come out of this in a better situation either way as I see it. The only people who aren't going to be happy are the unionists who are going to have to come to terms with their new reality. They contributed in a huge way to putting AA in this mess, and while I respect they gave concessions in 2003 to keep AA solvent, the post 9/11 aviation industry is different. They're being paid more for less work. Simple as that. When that changes, and AA can get rid of their atrocious scope clauses (whether through bankruptcy or a merger/takeover), AA will continue to grow. They're investing in their future with the new aircraft orders, their JVs, and I still maintain oneworld is the best alliance to be a member of.

Their pilots have prevented any meaningful long-haul growth (DFW-PEK, XXX-HKG come to mind). That will change through this process, one way or another. I expect we'll see AA back in Middle East (DXB or TLV would be my guess...they can get their TWA debts with Israel sorted out), possibly MIA-South Africa and new routes to Asia as a result of this. Keep in mind, the 77W and 787 are both great planes for these types of routes.

Maybe I'm a bit of a sunshine pumper, but I really do see things looking up for AA.

[USC Traveler]

To be honest, I really would be surprised to see too much change to AAdvantage. It just doesn't make sense to change something that every other FF program has aspired to be. AAdvantage has been the gold standard of FF programs, so why $#@! with something that is a completely an asset. DP is too smart to do that, IMO.

IF this takeover/merger goes through (and that's still a huge "if"), I really see US using it as a growth tool. Rather than incorporate AA into US, I actually see US incorporating itself into AA. AA is better than US in just about every sense (labor situation notwithstanding, and with US, that's saying something). Better hubs, larger, better international presence, more diverse fleet, better FF program, better brand recognition etc...and Doug Parker et al. know it. If they can get a chance to marry AA on their terms, that is a huge plus. Quite frankly, if AA comes through this bankruptcy solo leaner and in a better financial situation (which I would expect to happen if they survive US' bid), I wouldn't be stunned at all to see AA take over US in the not so distant future. US is the odd man out of the remaining "legacies," (and I still consider it a legacy, no matter how they've tried to rebrand themselves). They're smaller, and, well, less important than DL, UA, and AA. It would be tough sledding competing with the three of them. In the next 5 years US will be gone. It will either be gone because they bought AA and rebranded themselves as AA, or because they were bought by someone (quite possibly a post-bankruptcy AA).

Long story short, AA is going to come out of this in a better situation either way as I see it. The only people who aren't going to be happy are the unionists who are going to have to come to terms with their new reality. They contributed in a huge way to putting AA in this mess, and while I respect they gave concessions in 2003 to keep AA solvent, the post 9/11 aviation industry is different. They're being paid more for less work. Simple as that. When that changes, and AA can get rid of their atrocious scope clauses (whether through bankruptcy or a merger/takeover), AA will continue to grow. They're investing in their future with the new aircraft orders, their JVs, and I still maintain oneworld is the best alliance to be a member of.

Their pilots have prevented any meaningful long-haul growth (DFW-PEK, XXX-HKG come to mind). That will change through this process, one way or another. I expect we'll see AA back in Middle East (DXB or TLV would be my guess...they can get their TWA debts with Israel sorted out), possibly MIA-South Africa and new routes to Asia as a result of this. Keep in mind, the 77W and 787 are both great planes for these types of routes.

Maybe I'm a bit of a sunshine pumper, but I really do see things looking up for AA.

The idea of US taking over AA is terrible to me, as US is by far the worst of the big carriers IMO.

I'm one of those people LL is talking about.

LAX-JFK in first or business on AA is light years better than Delta, which is a joke. And OneWorld has the best partners in Cathay, BA, Quantas, JAL, etc.

My concern is that US takes over AA and completely $#@!s it up.

[austintx71]

I quit a job I really liked in Pa. because after a year and a half of flying US Air, I knew that sooner rather than later I was going to TSA jail. $#@!ing US Air flying waitresses think they are goddamn cops with arrest powers.

[Longhornmaniac8]

The idea of US taking over AA is terrible to me, as US is by far the worst of the big carriers IMO.

I'm one of those people LL is talking about.

LAX-JFK in first or business on AA is light years better than Delta, which is a joke. And OneWorld has the best partners in Cathay, BA, Quantas, JAL, etc.

My concern is that US takes over AA and completely $#@!s it up.

Agreed with everything you said, I just really don't think US will $#@! it up. Doug Parker is a smart man. And don't worry, there is absolutely zero chance the new AA doesn't remain in oneworld. That is an absolute given. The new airline will be named American, will be based in DFW, and will be in oneworld. Is it possible other things like AAdvantage see significant changes? I suppose, but I'm entirely skeptical.

I'll also point out that I've been against this merger from the start, since I really do think AA is going to shed a lot of dead weight in bankruptcy, and come out ready to compete on the other side. It's just that reflecting on it, I don't think pairing up with US is the worst thing that could happen.

[Ghost of LL]

Doug Parker is a smart man.

Even conceding that Parker is plenty smart, he's not going to be making the day-to-day, on-the-ground decisions that are going to determine whether a merger is a success or the complete cluster$#@! that I expect. But there's really no use in debating it--we'll probably get to find out first hand in the coming months and years.

A fundamental problem that US is going to encounter is the conflict between its interest in keeping AA's institutional knowledge and its interest in getting rid of AA's structural problems. AA has a lot of people who know a lot more about running a massive airline that anybody at US. Part of the value of obtaining AA through the bankruptcy process as an intact entity is to keep that human capital and institutional knowledge in place. US is going to want to know how AA runs AAdvantage, how it does security in El Salvador, how it greases palms in Lima. Those are all things AA's current employees know about, and its a good reason to keep them on board.

At the same time, some of how AA does things is what has landed it in bankruptcy. Do you want to keep the people in charge of labor relations around? Do you want to keep the guys who are in charge of facilities around? What about the guys who buy fuel?

Those decisions aren't going to be made by Doug Parker. They're going to be made by people one or two or even three steps down from Doug Parker. And those decisions are going to dictate how this merger (should it go through) works out.

[Longhornmaniac8]

Even conceding that Parker is plenty smart, he's not going to be making the day-to-day, on-the-ground decisions that are going to determine whether a merger is a success or the complete cluster$#@! that I expect. But there's really no use in debating it--we'll probably get to find out first hand in the coming months and years.

A fundamental problem that US is going to encounter is the conflict between its interest in keeping AA's institutional knowledge and its interest in getting rid of AA's structural problems. AA has a lot of people who know a lot more about running a massive airline that anybody at US. Part of the value of obtaining AA through the bankruptcy process as an intact entity is to keep that human capital and institutional knowledge in place. US is going to want to know how AA runs AAdvantage, how it does security in El Salvador, how it greases palms in Lima. Those are all things AA's current employees know about, and its a good reason to keep them on board.

At the same time, some of how AA does things is what has landed it in bankruptcy. Do you want to keep the people in charge of labor relations around? Do you want to keep the guys who are in charge of facilities around? What about the guys who buy fuel?

Those decisions aren't going to be made by Doug Parker. They're going to be made by people one or two or even three steps down from Doug Parker. And those decisions are going to dictate how this merger (should it go through) works out.

A perfect good point, and I agree with all of it. I was speaking more to the point that AAdvantage is going to get skull $#@!ed, and the Ex Plats are going to be thrown to the dogs. Those are executive level decisions that I would imagine Doug Parker, along with other top brass, will have plenty of influence on.

But your point about human capital is an excellent one. American has a lot of both good and bad human capital, that you alluded to. Determining which is which is no easy task, should the merger proceed.

To be honest, with the integration issues with HP/US, I'm surprised Parker has been as outwardly pro-merger as he has. Forcing AA's considerable labor issues to integrate with US' fragmented labor sounds like an absolute nightmare. I suppose it's not often an opportunity comes along for a second rate airline to acquire one of the most important airlines in the world, for pennies on the dollar, though.

[Ghost of LL]

A perfect good point, and I agree with all of it. I was speaking more to the point that AAdvantage is going to get skull $#@!ed, and the Ex Plats are going to be thrown to the dogs. Those are executive level decisions that I would imagine Doug Parker, along with other top brass, will have plenty of influence on.

My concern is that nobody at US has any experience dealing with the type of passengers on which AA's business relies. I'm sure they have the very best of intentions as far as keeping the ExecPlats happy, but only the AA people (kind of) have experience in actually doing it.

If they come in with an attitude of "we're the conquering airline and all you $#@!ers were responsible for your airline going to $#@!, so we don't have anything to learn from you," then they're going to $#@! up AA's relationship with its FF's, no matter how much they recognize the importance of AAdvantage. Unfortunately, experience from the HP/US merger is pretty damning on that front and should give some serious cause for concern.

[gecko]

Exactly. If you want to be a full service "legacy" carrier then you have to concentrate on corporate contracts and luring that person who is willing to part with $5k for r/t to LHR. This is done by offering System-wide upgrades to EXP's, keeping exclusive clubs exclusive, developing the hell out of your international network, and creating a loyalty program that has cult followers. AA does these things really well (except for the Intl network, though its getting better).

Keeping a new fleet helps too. I flew up to DTW last weekend to watch the Rangers-Tigers series and our 737-800 was on its first day of service. I was thrilled with it... I'm a dork.

If you want to cater to the person who flies 2 or 3 times a year with the family, that's fine but you'd better keep your costs incredibly low. Southwest is going to be hurting in the near future with a maturing labor force and expiring fuel hedges. At least that's my guess.

Exactly. United and others would be wise to heed this advice. They have already begum to water down the FF program by offering Premier Elie status to every dork dumb enough to sign up for their $95 credit card.