Originally Posted by watch

if i'm not mistaken, a merger is different from a purchase. A purchase could look like this, if it were done with crayons on a napkin:

ALK market cap is worth $8B. AMR buys half of it for a controlling interest with $4B in debt from a bank. Lay off redundant workers from both companies and sell off redundant or unprofitable routes / hardware / infrastructure / IT. Say that's worth $500M. ALK has $1.5 billion in cash. Pocket it. Cash basis on the loan is now $2.0B.

Next, keep the pilots, airplanes, FAs, and base personnel in the new bases, and only the other profitable aspects of the business. Renegotiate labor on both sides to reduce costs. Now AMR doesn't have to train 3000 new pilots and maintainers, also doesn't need to fight for gates / routes to expand. More money there, but for now keep the basis at $2.0B.

ALK makes $790M per year. Pay off the $2B loan in less than 3 years. Then you have an airline with 18,000 trained pilots, 1278 mainline aircraft, and SFO, SEA, PDX, ANC as bases added to AMR's list.

After ALK is paid off, use the yearly profit from that purchase and from productivity gaines to continue paying off AMR's debt. Crush Delta in SEA, crush United in SFO, former ALK pilots get to fly widebodies from both.

I'm sure an actual businessman would give me an F, I'm happy to learn where I am incorrect.