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American Airlines Considers Merging With 5 Airlines

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American Airlines is moving forward with merger considerations. They are reported to be considering six options including JetBlue, Alaska Airlines, Frontier, US airways, Virgin and are even considering themselves.

This move comes as creditors have pressed American Airlines on their stand alone restructuring plan.

Reuters has a good report with the following high level summary:

* CEO says will be reaching out to interested parties

* US Air, JetBlue, Alaska to be included -source

* Frontier, Virgin also included-source

* American sees itself as an acquirer -source

* Private equity, other carriers may be interested -source

American Airlines will reach out to the interested parties for merger options. Typically executives will evaluate options considering stand alone costs vs the one-time costs and synergies associated with any potential merger.

Regardless of any merger, buyer, or stand alone plan, this will be interesting to see how it plays out.

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{ 16 comments… add one }

  • Dennis July 11, 2012, 7:22 am

    wow this will be very interesting….

  • Scott July 11, 2012, 7:32 am

    Frontier, Alaska are the only 2 options I see happening. Virgin is too different of a structure, same with JetBlue.

    Both Frontier and Alaska would be good fits with the latter being the best.

    Those that think US Airways, well, there is NO WAY DOJ is going to allow a Big 4 to merge with another Big 4 at this point.

  • snuggliestbear July 11, 2012, 8:10 am

    I am hoping for either Alaska or Jet Blue and I would be very disappointed if they go with US Airways. I’m not sure how Frontier would be a good fit…

  • Noah Kimmel July 11, 2012, 8:32 am

    unfortunately, I dont see Alaska or Jetblue wanting to merge with a weak, bankrupt AA. Somehow their valuations are likely too expensive for AA to buy and be able to find true synergies. So those seem to be unlikely.

    Virgin does not seem worth it as it is so small, what is AA gaining? If they wanted to roll out IFE and good onboard product, they could do it without acquiring another money losing operation that flies redundant frequencies/routes.

    Frontier is interesting if AA needs planes. AA might be able to pickup the sum of the airline for less than its parts, but be sure, it would likely mean a real death for F9. Not sure what profitable routes, culture, or benefits F9 brings.

    Spirit could be interested simply to acquire route authorities in the Caribbean and remove a true low-cost competitor in some otherwise high-yield markets (caribbean/mexico/south america)

    And then there is US Air, the carrier who wants a merger, but cant seem to show why culturally or labor relations would work better, which of the obvious redundant hubs would be dismantled. All we know is it would help the industry, but piss off employees and customers alike.

    AA is the girl at the bar at the end of the night…no great options left, and not so great herself…

  • Carl July 11, 2012, 9:09 am

    I don’t see how merging American with Alaska or Frontier or Virgin solves any problems. American doesn’t need more low yield domestic traffic. American is much bigger than those carriers, and it’s inevitable that American’s cost structure and culture would be imposed. It just won’t work.

    A merger with US Air or JetBlue has somewhat more potential. To some degree the same problems exist with a JetBlue merger, except at least it would solidify AA’s JFK operation and expand Carribean presence.

    US Air still offers the most potential synergies since they have some international operations and there will be an opportunity to rationalize their hubs and keep the strongest ones. Under a US Air merger, I would see PHX, ORD and JFK all at risk, and the combined carrier might be hubbing primarily at DFW, CLT and MIA.

  • Carl July 11, 2012, 9:09 am

    And also PHL

  • Curtis July 11, 2012, 9:12 am

    I hope they stay put with my Million Mile lifetime gold which more than likely would not last through a merger!

  • HansGolden July 11, 2012, 9:42 am

    AS + AA makes a lot of sense route-wise. US + AA makes a lot of sense route-wise. In fact:
    AS: West Coast (LAX, SEA, ANC)
    AA: Central (DFW, ORD) & Latin (MIA)
    US: East Coast (PHL, CLT, DCA/PIT/BOS)

    A three-way merger would be quite the fit route-wise.

    Interesting thing about AA + F9 would be double hub overlap with UA at ORD and DEN.

    AA + B6 would help AA a lot in NYC where they’re a distant third (or is it 4th now with B6?) against UA at EWR and DL at JFK/LGA.

  • Whitney July 11, 2012, 11:13 am

    @HansGolden : One of the biggest gaps of AA is its Non-LatinAmerica international network. US could help plug a couple holes in Europe, but US+AA+AS still doesn’t add anything to its Asian offerings.

  • HansGolden July 11, 2012, 11:15 am

    @Whitney: Yeah, you’re right. They have to grow that organically or rely on (and strengthen) JL JV.

  • Zoran July 11, 2012, 11:27 am

    A merger with Virgin might not make sense on the surface, but given how much Richard B. was opposed to the AA-BA aliance deal, and access to LHR, he might be very willing to join in and have a huge presence on US to UK routes.

  • AJ July 11, 2012, 11:42 am

    I think a better headline would be “AA considering merging other airlines with itself” The sense the article is giving is that AA will make the first move and, AA is not considering itself. AA is wanting to be the ‘acquirer’ which means it wants to swallow some companies and become bigger itself. Hope this clarifies..

  • HansGolden July 11, 2012, 11:43 am

    @Zoran: I’m not tracking with that thought. The merged airline would 95%+ likely go OW and all that would happen is V/Branson would lose US toehold. They wouldn’t gain TATL/LHR.

  • Shindig July 11, 2012, 1:57 pm

    Wouldn’t the headline be more clear if it said something like “AA considers merging with one of five airlines”?

  • Ozaer N. July 12, 2012, 1:55 pm

    I think it will be Alaska, as they have sort of integrated their systems somewhat (i.e. flight partnerships, mileage, etc)

  • The Weekly Flyer July 12, 2012, 6:43 pm

    Hi Ozaer – Alaska would be a great partner for American Air for sure.

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