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Tag Archives: merger

Doug Parker spoke today at the J.P. Morgan Aviation, Transportation, and Defense conference today on the proposed merger with American Airlines, who did not speak. Doug was speaking to a group of industry analysts so he was primarily in the roll of selling the merger to the bankers. He spoke and took questions for about 40 minutes and the entire webcast is archived at the link below for at least the next few months. Beyond the normal this merger is the greatest thing ever, I want to highlight a few pieces of information that he did say. Looking at the combined carrier, they expect to be the third largest on the West Coast, largest in Middle American and the largest carrier on the East Coast. Doug sold this as creating a viable third option to United and Delta. With the movement of US from Star Alliance to Oneworld it will give each alliance an equal share of the domestic market. This is just another way of stating that Delta, American, and United will all be about the same size. Finally as part of his presentation, Doug mentioned that the new AA would have over 100,000,000 members in the new loyalty program.

The question and answer section had a lot of interesting information if you look at it. In response to a question of merger difficulties he said that no matter the supposed cost benefits, the throughput costs of imposing the smaller airlines systems on the larger airline would be more expensive. This referring to United Airlines’ SHARES hiccup which wasn’t really that bad. But it does suggest that a lot of the systems will be coming from AA. Responding to a livery question Doug refused to pass judgment on AA’s new livery and said only that livery has to be professional and represent the brand. He also said what everyone already that passengers don’t care about what’s on the outside of the plane. In response to a route network question, Doug said to expect some Asia expansion but not to the level of Delta and United. Finally, when asked about the disparate nature of AA’s and US’ fleet Doug stated that there is no real advantage to eliminating large sub-fleets over 100+ aircraft but there is a distinct advantage to eliminating the small sub-fleets. Assuming current orders are correct, that would mean that Doug is going to look at eliminating AA’s 767-200s and some of their 757s. This is not unexpected, but on the US side it would include eliminating their entire widebody fleet A330’s and 767-200s, as well as their 757-200s and ERJ-190’s. Airbus has been cutting Doug sweetheart deals for aircraft for some time now. I don’t see them giving Airbus the boot, so it will be interesting to see what happens to US’ widebody fleet.

I’ll have the other participants summaries up as I write them.

Happy Travel!


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In 2008 the DOT awarded two slots to Spirit Airlines for daily non-stop service between Washington National Airport and Fort Lauderdale Airport. In July 2012 Spirit served notice to the DOT that they were abandoning their slots when the moved from DCA to BWI. The DOT made an announcement in the docket DOT-OST-2000-7182 that the two “inside perimeter” slots are again up for bid. The DCA perimeter is a 1,250 miles. So an inside perimeter flight must be within  1,250 miles of DCA. Three airlines filed bids

US Airways filed a bid to start Oklahoma City – Washington DC

Southwest filed a bid to start Houston Hobby – Washington DC

and JetBlue filed a bid to Start Washington DC – Jacksonville FL continuing on to San Juan PR.

Previously several years ago US Airways and Delta did a slot swap between New York LA Guardia Airport and Washington National. This allowed Delta to develop a large operation at LGA and allow US Airways to increase the size of their DCA operation. Now I haven’t been in DCA since 2007 so I am not too familiar with the airport. So I wasn’t too sure of the size of US Airways operation there. However, because your truly is nerd I was reading and I came across this:

Continue reading this article ›

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In what has to be the most anticipated non-surprise event in the commercial aviation world US Airways and American Airlines agreed to merger. The new airline will be called American Airlines and will headed by Doug Parker. American’s creditors will own 72% of the new company with the remaining 28% going to US Airways stockholders. American CEO Tom Horton will stay on as non-executive chairman.

The deal still has to pass US Regulatory approval and the bankruptcy judge.




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AP is reporting that AMR pushed back its board meeting regard the proposed and not-so-secret merger between AA and US.

Another day, still no deal.

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Bloomberg is reporting that AA and US board of directors will both meet on Monday to vote on the proposed merger.

The combined carrier will be called American Airlines and will be 72% held by the creditors committee. The other 28% will be held by US Airways stockholders. American stockholders will be bought out, at a yet to be determined price. Doug Parker will become CEO and Tim Horton the non-executive chairman for one to two years. In a move that looks a lot like the UA merger.

There are still details to be worked out, but it looks like it really could happen.

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So yesterday one news agency reported that AA and US were getting close to inking their merger deal. Then every aviation blogger and news agency that cared repeated the same information. For the most part they got it all wrong. Now Doug Parker and his merry gang of US executives have been searching for a merger partner for years. They tried to buy Delta in bankruptcy, United started talks with them when Continental balked at merging (The CO board overrode then CEO Larry Kellner’s refusal to merge, ousted him, installed the current CEO Jeff Smisek and inked the merger deal with United), and now they are working on American.

Right now we know that American and US Airways are doing the due diligence, and these talks have been going since 2010. While the preliminaries of a deal are in place, both board of directors have to approve the deal. Also in the case of American Airlines the creditors committee has to approve the deal. Neither board is scheduled to meet soon as far everyone knows and getting a deal through the creditors committee is no sure thing. AA has made repeated statements on how it wants to remain a stand alone airline.


It’s easy to see why AA wants to remain independent. Doug Parker is a controversial figure in American aviation. Doug Parker has to be one of the most capable airline CEO’s in the business, coming in second to Gordon Bethune. However, the decisions he has made have been universally unpopular with both staff and customers. But they are popular with the shareholders. By virtue of that fact, it is clear that if the companies merge Doug with take over as CEO of the combined airline. That is not something AA executives and staff want as cuts will be coming.

So here are the courses of action possible.

If the AA board rejects the merger, then US airways can pitch the merger to the creditors committee themselves. US bought a nominal amount of AA debt to gain access to the committee, though they do not have enough debt for a seat at the table, they do have access. If the committee green lights the US buy out plan for AA then AA board gets de facto fired by the bankruptcy judge and AA ceases to exist.

If the AA executive suite rejects the merger and the board green lights it, expect to see what happened in the CO/UA merger. The CEO will get fired followed by a joint merger announcement. Then as long as it passes the creditor committee then it goes through.

With either option the creditor committee will have the final say. But until news happens, everyone calm down ok?


Happy travels


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I got an e-mail announcing the death of bmi.

The e-mail stated a couple of things:

1. as of April 20, 2012 (today) bmi is no longer in star alliance.

2. Star alliance benefits will continue until the end of May 2012, except on Lufthansa Group airlines which ends today.

3. members will get equivalent status in BA’s executive club and have the option to transfer miles on a 1:1 basis.

Most telling of all, there was no announcement of bmi joining OW. It’s these last two I find most interesting. This basically signals the final death of the airline as a whole. It appears that IAG/BA intend not to run bmi as a subsidiary airline, like Iberia, but to fold operations into BA.

This is a sad day for both the employees of bmi and for the people who fly bmi. I always maintained that the best possible outcome for bmi would have been to merger with Virgin Atlantic so there would be two major carriers at Heathrow. Now there is only going to be BA and also ran VS.

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