Sink r8

I think the cost of cancelling the code was previously stated in some SEC filing, and I recall $50 million (I could be wrong).

Alaska is valued at ~ $2 billion. You think the person that takes the code away from DAL wouldn't gladly write the check?

Sink r8

The timing also doesn't make sense in terms of the unionization effort. As long as the AFA/IAM claims are not settled, and considering the close vote, it doesn't seem like DAL would want this to happen now.

I think the only way this happens is if RA is very, very sure he has no alternative.

Sink r8

That makes more sense. There was an article about the manner it which Kelley and Fornaro negotiated the LUV/AAI deal, and VERY few people were involved until it was all but done.

Bucking Bar

Very true. ...

Sink r8

Right. To be fair, as an investor I have been betting that Alaska ultimately will be one of the most fought-over pieces in this little Monopoly game, and so far that guess has proven to be very lucrative. That being said, I think you have to be realistic about Delta's motivations, and about some of these rumors. It seems obvious to me that Delta would only move if it the alternative meant losing the codeshare.

I think the key to understanding the rest of the game entails LCC, JBLU, and AMR. I'm definitely not smart enough to forecast exact outcomes, but it seems to me that LCC's may to re-market or re-package itself somehow, and JBLU would be a valuable asset to anyone. A lot of this is about wrapping up positions in the most constrained airports, i.e. the New York area. I think the West Coast is more open, and I think oneworld and STAR have a pretty good set-up for West Coast-Asia via HND. IOW, ALK matters to DAL, but not so much to the others. Why would UAL try another merger when the first is still in progress, and why would AMR commit resources there?

So ALK might end up being the very valuable piece that everyone lusts after, but noone actually trades for. That might suit ALK, its' employees, and its' shareholders just fine.

iceman49

Doesn't AMR have to divest the MIA LHR route because of the hook up with BA?

acl65pilot

I would venture to bet that there are other layered costs besides the poison pill. ( I am sure the exact number is NDA as a trade secret) Things like AS having to move out of our gates in T-6 would be one of them. We incurred the cost of moving them, but canceling the code agreement would probably put the cost of moving on AS or their buyer. I know that is how I would have structured the rental, or use agreement. They would have to find gate space in a bunch of cities, like BOS, ATL, MCO, DFW, etc where they are on a use agreement with DAL.

There are many agreements like the DGS ground handling agreement that are very beneficial for AS to keep. It is my observation that DAL has continued to layer penalties on AS for each subsequent move to a more harmonious operation.

Sink r8

Suspicion, or observation?

acl65pilot

Both. It makes sense. They stated they paid for the AS move in LAX.

I would assume that we did not give them the gates, only access to them. If they would cancel our code I would also assume that they would lose access to our gates based on other situations like CAL. I am sure we would not willingly move them, but force them out. Just a guess though, and our real estate guys are good, real good.

I am sure that AS divesting of its DAL Code Share would cost them or their acquirer dearly. Just my dot connecting. I would not purport any NDA info.

reddog25

They'll buy AS the same way they 'bought' NW...with the other airline's money.