Cranky on the Web (July 9 – 13)

American, Mergers/Finance

American Airlines Merger Possibilities: The Bad and the WorseConde Nast Daily Traveler
American says it’s evaluating five different airlines for a merger. Oh please. This has to be a joke, right?

Photos: Inside the New(ish) Airplanes of Start-up Airline California PacificConde Nast Daily Traveler
Here’s a slideshow of my visit to California Pacific, including interior shots of the airplane.

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9 comments on “Cranky on the Web (July 9 – 13)

  1. Great article. I still think b6 and VX won’t be around within the next two to three years. This merger happenings only show the bigger you are; the stronger you are no matter what your position is now.

  2. Could the courts ok the selling off of parts of AA to pay creditors and there be no airline left at all? Like if Air ABC wanted to purchase AA’s Latin Routes, and Air XYZ wanted to buy their Europe routes, and so one with other AA assets.

    1. David – Sure if there was a proposal that would sell off the parts and that would make more for the creditors, then it could be a possibility. But that’s not going to happen. The reality is that American doesn’t have many assets that could be sold. And the proposal that US Airways is going to put out will be worth much more.

  3. As you point out, under Ch 11, AA management do not have full control of the company. If AA is going to merge, it needs to demonstrably convince both court and creditors that it has explored all the merge options, before picking one merge partner. By giving public reasons to reject Virgin America, AA covers itself from any oddballs who decide to file something in court after the event saying that AA’s best merger option was with Virgin and if only AA management had listened and purseud a merger withi Virgin, they wouldn’t be in such a mess

    Normally none of this is done in public at all. It’s just that Ch 11 forces AA managament to do it all oh-so-publicly.

    It’s all about AA management covering themselves from lawsuits from creditors with a possible conflict of interest in choosing a merger partner, so nothing comes back to bite them in a year or two’s time

    1. David – This is the same AA that wasn’t going to entertain any merger partners until the creditors pushed.

      The reality is that there’s no way that anyone is going to push for a merger with Virgin America or Frontier – it’s a waste of time to bother looking. Using your logic, then AA should also explore a merger with Delta and United if they truly have to cover all bases. But that’s not on the table.

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