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(NYC Aviation)   DOJ blocks AA/US merger because it would lead to worse service. They allowed the DL/NW and UA/CO mergers since service couldn't get any worse   (nycaviation.com) divider line 32
    More: Obvious, American Airlines, US Airways, DOJ, United States, AMR Corp., Americans, ancillary revenue, mergers  
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587 clicks; posted to Business » on 13 Aug 2013 at 1:13 PM (1 year ago)   |  Favorite    |   share:  Share on Twitter share via Email Share on Facebook   more»



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2013-08-13 01:20:35 PM
From TFA:   As US Airways CEO Parker stated in February 2013, combining US Airways and American would be " the last major piece needed to fully rationalize the industry."

So THAT's what they were waiting on.  It's so simple now.  This one merger would finally put to bed all the incoherent fees, ridiculous fare structures, incompetent baggage handlers, and all the other irrational nonsense that is now the airline industry.
 
2013-08-13 01:26:49 PM
I understand the DoJ's complaint (all of it's "absent the merger" rationalizations), I just think they're wrong about it.
They're way too optimistic about American's survival outlook without a merger.
 
2013-08-13 02:02:29 PM
 The cynical side of me (and really, since we're talking poli-business here, is the only side that matters) wonders how much Continental/United/NW/Delta paid to buy the DoJ?  I also have to wonder why AA/USA didn't see this coming and make a better offer.  I mean, they're in bankruptcy; it's not like it's THEIR money.
 
2013-08-13 02:17:47 PM
The lobbyists that worked on getting this delayed or blocked must have thrown out some major perks.
 
2013-08-13 02:19:08 PM

The Bestest: I understand the DoJ's complaint (all of it's "absent the merger" rationalizations), I just think they're wrong about it.
They're way too optimistic about American's survival outlook without a merger.


Is American actually bankrupt, or are they merely "bankrupt", as in "lets go bankrupt to dump expensive union contracts"?  You seem to think it's actually the first, which, if true, is definitely a reason to allow the merger.
 
2013-08-13 02:38:38 PM

Geotpf: The Bestest: I understand the DoJ's complaint (all of it's "absent the merger" rationalizations), I just think they're wrong about it.
They're way too optimistic about American's survival outlook without a merger.

Is American actually bankrupt, or are they merely "bankrupt", as in "lets go bankrupt to dump expensive union contracts"?  You seem to think it's actually the first, which, if true, is definitely a reason to allow the merger.


American is on schedule to fully pay back all creditors with the exception of the pilots pension.

Even the shareholders will recoup money.

Things accomplished in bankruptcy:

1) end pension plans for employees not in top 100 of mgmt
2) break all union contracts
3) award CEO Horton $20 million bonus for leading company into bankruptcy
4) buy new planes
5) profit?
 
2013-08-13 02:45:30 PM

mcreadyblue: Geotpf: The Bestest: I understand the DoJ's complaint (all of it's "absent the merger" rationalizations), I just think they're wrong about it.
They're way too optimistic about American's survival outlook without a merger.

Is American actually bankrupt, or are they merely "bankrupt", as in "lets go bankrupt to dump expensive union contracts"?  You seem to think it's actually the first, which, if true, is definitely a reason to allow the merger.

American is on schedule to fully pay back all creditors with the exception of the pilots pension.

Even the shareholders will recoup money.

Things accomplished in bankruptcy:

1) end pension plans for employees not in top 100 of mgmt
2) break all union contracts
3) award CEO Horton $20 million bonus for leading company into bankruptcy
4) buy new planes
5) profit?


Yeah, that's what I thought.
 
2013-08-13 02:47:32 PM

mcreadyblue: Geotpf: The Bestest: I understand the DoJ's complaint (all of it's "absent the merger" rationalizations), I just think they're wrong about it.
They're way too optimistic about American's survival outlook without a merger.

Is American actually bankrupt, or are they merely "bankrupt", as in "lets go bankrupt to dump expensive union contracts"?  You seem to think it's actually the first, which, if true, is definitely a reason to allow the merger.

American is on schedule to fully pay back all creditors with the exception of the pilots pension.

Even the shareholders will recoup money.

Things accomplished in bankruptcy:

1) end pension plans for employees not in top 100 of mgmt
2) break all union contracts
3) award CEO Horton $20 million bonus for leading company into bankruptcy
4) buy new planes
5) profit?


z31-ae.com
 
2013-08-13 03:06:53 PM

mcreadyblue: Geotpf: The Bestest: I understand the DoJ's complaint (all of it's "absent the merger" rationalizations), I just think they're wrong about it.
They're way too optimistic about American's survival outlook without a merger.

Is American actually bankrupt, or are they merely "bankrupt", as in "lets go bankrupt to dump expensive union contracts"?  You seem to think it's actually the first, which, if true, is definitely a reason to allow the merger.

American is on schedule to fully pay back all creditors with the exception of the pilots pension.

Even the shareholders will recoup money.

Things accomplished in bankruptcy:

1) end pension plans for employees not in top 100 of mgmt
2) break all union contracts
3) award CEO Horton $20 million bonus for leading company into bankruptcy
4) buy new planes
5) profit?


This.  The fact that the shareholders will recoup money tells you all you need to know about the chapter 11 filing.  For those that don't know, shareholders are the very last pot to ever see a distribution in a bankruptcy - even behind general unsecured creditors (and the GUC pot has to be 100% before anything flows to the shareholder pot).

As other have said, the timing of this is suspicious.  You don't need a tin foil hat to see that something odd is going on.  It's not like they were hoping the EU would deny it in order to not be the bad guy.  The DOJ has an easy time being in that role.
 
2013-08-13 03:24:34 PM
OK, I know this is going to sound completely crazy and off-the-wall wacky here, but is it just possible that somebody at the DoJ has actually decided to act in the interests of the people rather than the Administration or corporations? Along with the mandatory sentencing thing, this looks like two nearly-sane decisions in two days.

Has Eric Holder suddenly woken up to the fact that his legacy was beginning to look like to fall somewhere between "incompetent and corrupt" and "outright Republican"?
 
2013-08-13 03:51:15 PM

czetie: OK, I know this is going to sound completely crazy and off-the-wall wacky here, but is it just possible that somebody at the DoJ has actually decided to act in the interests of the people rather than the Administration or corporations? Along with the mandatory sentencing thing, this looks like two nearly-sane decisions in two days.

Has Eric Holder suddenly woken up to the fact that his legacy was beginning to look like to fall somewhere between "incompetent and corrupt" and "outright Republican"?


You're correct. It does sound completely crazy.
 
2013-08-13 04:23:40 PM

czetie: OK, I know this is going to sound completely crazy and off-the-wall wacky here, but is it just possible that somebody at the DoJ has actually decided to act in the interests of the people rather than the Administration or corporations? Along with the mandatory sentencing thing, this looks like two nearly-sane decisions in two days.

Has Eric Holder suddenly woken up to the fact that his legacy was beginning to look like to fall somewhere between "incompetent and corrupt" and "outright Republican"?


Look, this isn't completely inconsistant.  They blocked the T-Mobile/AT&T merger under similiar circumstances.
 
2013-08-13 05:03:34 PM
read that as ANUS merger
 
2013-08-13 05:13:02 PM

czetie: OK, I know this is going to sound completely crazy and off-the-wall wacky here, but is it just possible that somebody at the DoJ has actually decided to act in the interests of the people rather than the Administration or corporations? Along with the mandatory sentencing thing, this looks like two nearly-sane decisions in two days.

Has Eric Holder suddenly woken up to the fact that his legacy was beginning to look like to fall somewhere between "incompetent and corrupt" and "outright Republican"?


The issue is that after the merger USAir/AA will control the majority of flights out of Washington Dulles & Reagan airports.

Congressmen fly home ever weekend and prefer low fares. The merger will increase the costs of flights for Congressmen.

The end result will be x number if slots will be given to competitors at the two airports.

The stock is down 40% today...buy Mortimer*.

*Risky move, Eddie Murph would do it
 
2013-08-13 05:21:05 PM
Presumably they blocked it because US Airways would get worse, because American already is the worst
 
2013-08-13 05:37:42 PM
Holder really, really doesn't like Texas or businesses based here apparently.

Here's Robert Crandall's take on the news (NSFW expletives):

http://bizbeatblog.dallasnews.com/2013/08/crandall-goes-ballistic.ht ml /
 
2013-08-13 05:42:14 PM

Dead for Tax Reasons: read that as ANUS merger


You and me both. Not quite sure what that says..
 
2013-08-13 05:52:33 PM
Some airline corporate honcho bootlickers are apoplectic over this news.  The thread on the lawsuit is entertaining if not sad for the fact that many are pissed that since the DoJ approved Delta/Northwest and United/Continental, then they should approve AA/US.

My thorough legal analysis of the pro-merger crowd's argument is:"The DoJ rubber-stamped stupid shiat before, therefore, they should continue to rubber-stamp stupid shiat in the future, because that's consistent.  And to hell with ACTUALLY looking out for consumers! That would mean they are actually doing their job!"

http://www.airliners.net/aviation-forums/general_aviation/read.main/ 58 43637/1/#258
 
2013-08-13 06:07:35 PM
Then find out TX AG agreed with the DOJ.  He lost my vote.
 
2013-08-13 06:14:14 PM
Surprised, honestly.  I really expected they'd let them join to form Voltron-of-suck.  Does this mean US will stay in Star Alliance with UA, though?  Every 10 years or so, I actually need to go US flies directly and cheaply...

/still sad Northwest didn't merge with Continental
//then Delta-US would have been the Voltron-of-suck
 
2013-08-13 06:18:19 PM

Mi-5: Some airline corporate honcho bootlickers are apoplectic over this news.  The thread on the lawsuit is entertaining if not sad for the fact that many are pissed that since the DoJ approved Delta/Northwest and United/Continental, then they should approve AA/US.

My thorough legal analysis of the pro-merger crowd's argument is:"The DoJ rubber-stamped stupid shiat before, therefore, they should continue to rubber-stamp stupid shiat in the future, because that's consistent.  And to hell with ACTUALLY looking out for consumers! That would mean they are actually doing their job!"

http://www.airliners.net/aviation-forums/general_aviation/read.main/ 58 43637/1/#258


You could also make an argument that this is actually consistant.  That is, the DoJ allowed the mergers until the point where there were too few remaining airlines to provide meaningful competition.

That is, imagine a world where there are ten airlines, each with 10% of the market.  Having two of them merge isn't a big deal.  Having two more of them merge also isn't a big deal.  But, at some point, any further mergers is actually a big deal; in the real world, we are at that point now.
 
2013-08-13 06:30:32 PM

dbirchall: Surprised, honestly.  I really expected they'd let them join to form Voltron-of-suck.  Does this mean US will stay in Star Alliance with UA, though?  Every 10 years or so, I actually need to go US flies directly and cheaply...

/still sad Northwest didn't merge with Continental
//then Delta-US would have been the Voltron-of-suck


I don't think the deal is dead-dead, but I expect several concessions. Horton's compensation in particular is a huge point of contention, and I expect some gate and route guarantees as well.
 
2013-08-13 07:02:57 PM

czetie: OK, I know this is going to sound completely crazy and off-the-wall wacky here, but is it just possible that somebody at the DoJ has actually decided to act in the interests of the people rather than the Administration or corporations? Along with the mandatory sentencing thing, this looks like two nearly-sane decisions in two days.

Has Eric Holder suddenly woken up to the fact that his legacy was beginning to look like to fall somewhere between "incompetent and corrupt" and "outright Republican"?


How is this in the interest of the American people when AA and US have only 12 overlapping routes?

They've never been competing to begin with. I don't see how this ruling will stand once it goes through the courts.
 
2013-08-13 07:40:12 PM

joness0154: czetie: OK, I know this is going to sound completely crazy and off-the-wall wacky here, but is it just possible that somebody at the DoJ has actually decided to act in the interests of the people rather than the Administration or corporations? Along with the mandatory sentencing thing, this looks like two nearly-sane decisions in two days.

Has Eric Holder suddenly woken up to the fact that his legacy was beginning to look like to fall somewhere between "incompetent and corrupt" and "outright Republican"?

How is this in the interest of the American people when AA and US have only 12 overlapping routes?

They've never been competing to begin with. I don't see how this ruling will stand once it goes through the courts.


Because AA and USAir occupy most of the gates at Reagan International.  Most of the congress critters fly out of Reagan to go back home.  Heaven forbid they get treated by bad customer service or higher fares.
 
2013-08-13 07:50:25 PM

SithLord: Heaven forbid they get treated by bad customer service or higher fares.


..or maybe even go to IAD or BWI..
 
2013-08-13 09:40:46 PM

Geotpf: Is American actually bankrupt, or are they merely "bankrupt", as in "lets go bankrupt to dump expensive union contracts"? You seem to think it's actually the first, which, if true, is definitely a reason to allow the merger.


I seem to recall that when American declared bankruptcy, they had $4 billion cash on hand. They weren't unable to pay their bills, they just didn't want to.
 
2013-08-13 10:23:40 PM

The Bestest: dbirchall: Surprised, honestly.  I really expected they'd let them join to form Voltron-of-suck.  Does this mean US will stay in Star Alliance with UA, though?  Every 10 years or so, I actually need to go US flies directly and cheaply...

/still sad Northwest didn't merge with Continental
//then Delta-US would have been the Voltron-of-suck

I don't think the deal is dead-dead, but I expect several concessions. Horton's compensation in particular is a huge point of contention, and I expect some gate and route guarantees as well.




Rumor at CPIV is that Tom Horton himself is the one trying to get the DOJ to put the kibosh on the merger so he can remain CEO of American.
 
2013-08-14 12:00:49 AM
As someone who has flown US Airways subby. I got a kick.

/It deserves the bad wrap it gets
//Hopes this deal can be stopped...American is already mediocre, don't need to make it any worse
 
2013-08-14 12:30:20 AM
As and Ex-Con (Continental Airlines) I am completely surprised by this.
 
2013-08-14 02:34:15 AM

Mrtraveler01: As someone who has flown US Airways subby. I got a kick.

/It deserves the bad wrap it gets
//Hopes this deal can be stopped...American is already mediocre, don't need to make it any worse


Oh good, I didn't want to be the only one who thought US Air was the worst airline you could fly.

/Never flown American
//Because of all the things I've heard about it.
 
2013-08-14 10:27:30 AM
Everyone calling US Air the worst airline ever has clearly never flown Spirit.
 
2013-08-15 12:43:47 AM

mcreadyblue: Geotpf: The Bestest: I understand the DoJ's complaint (all of it's "absent the merger" rationalizations), I just think they're wrong about it.
They're way too optimistic about American's survival outlook without a merger.

Is American actually bankrupt, or are they merely "bankrupt", as in "lets go bankrupt to dump expensive union contracts"?  You seem to think it's actually the first, which, if true, is definitely a reason to allow the merger.

American is on schedule to fully pay back all creditors with the exception of the pilots pension.

Even the shareholders will recoup money.

Things accomplished in bankruptcy:

1) end pension plans for employees not in top 100 of mgmt
2) break all union contracts
3) award CEO Horton $20 million bonus for leading company into bankruptcy
4) buy new planes
5) profit?


One more reason that such contracts should survive bankruptcy.
 
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