On 13-08-16 20:36, John Levine wrote:
> Not sure, since they'll have to redo their plan if they're going to
> stay standalone.
>
http://www.frequentbusinesstraveler.com/2013/08/american-airlines-us-airways-merger-not-over-until-the-fat-lady-sings/2/
Interesting article. Portrays what used to be the world's largest
airline as a small regional player that needs to merge with another to
stay relevant.
Had not realised that the DL-NW and UA-CO mergers had made American so
small. In hindsight, they should have gone chapter 11 earlier in what
is turning out to to be a game of musical chairs where the last merger
candidate gets denied.
As a cyclist who avoided flying US-Aorways this summer because of their
outrageous bicycle fee (USD $200), the concept of US applying its higher
baggage fees onto AA to increase revenues is basically proof of market
failure/lack of competition. In a competitive market, it would be the
opposite.
Looking at AT&T and T-Mobile, the later had basically thrown in the
towel and had bet the farm on AT&T buying its spectrum and customers and
not bothering with its network. But not long after DOJ blocked the
takeover, T-Mobile found itself having to fight for survival, and
started to deploy 3G onto the standard 1900 frequency, plans for LTE
onto 1700, got the iPhoen and restructired its price plans to be cheaper
and much more competitive. (and it has begun to grow its customer base
again)
Based on that experience, I could see the DOJ wanting the US-AA merger
to be rejected and force AA to rebuild itself by being competitive,
cheaper and better service to attract customers from the DL and UA
oligopolies.
So, assuming the merger is rejected, does AA have an alternative rich
uncle to recapitalise AA out of chapter 11 ? Or was this chapter 11
"mild" enough that AA can do this without total recapitalisation and
voiding previous shares ?