No, you are wrong. What he said was that US Airways CLT was our overall most profitable, then PHL and PHX. DCA had the best margin. I think Parker may know better than you, whoever you are.

 

It seems to me that a company with the cash AA had on hand doesn't file bankruptcy without an exit plan. Although we may question the character and ethics of AA management, I doubt they are stupid. AA didn't seem to be at the end of their rope, even though they were bleeding. I'll bet they were just looking for a way to shed debt, restructure labor contracts, etc.

All that being said, there is probably one more "consolidation" out there. AA might very well be a part of it.

Keep calm, and carry on...

 

I was thinking of this quote:

In an interview Wednesday, US Airways President Scott Kirby listed, in order, the four most profitable major airline operations in the U.S. in terms of profit margin. They are Newark, Washington Reagan National, Houston, and Charlotte. Two are East Coast airports dominated by US Airways, while two areUnited (UAL_) hubs. Kirby emphasized that US Airways could only estimate profit margins at other carrier's hubs, and said margins at US Airways hubs in Philadelphia and Phoenix are "in the middle of the pack."

Perhaps you're referencing some other quotes that I didn't see.

 

I was. It was on one of our company crew news sessions.

 

Something else to keep in mind.

JetBlue Now Takeover Candidate (JBLU, DAL, LCC) : Small Stocks Radar

According to an article in the recent Bloomberg Businessweek, JetBlue (NASDAQ: JBLU) is now a takeover candidate with Delta Airlines (NYSE: DAL) and American Airlines (PINK: AAMRQ) as the most logical suitors. US Airways (NYSE: LCC), now considering American Airlines, is always to looking to merge.

In the Bloomberg Businessweek piece by Robert Farzad and Justin Bachman, "Once High-Flying, JetBlue Returns to Earth," Delta Airlines and American Airlines are considered to be the most logical buyers due to JetBlue's strong presence at JFK. Several airline industry analysts noted in the article that this would be most appealing to Delta Airlines and American Airlines, once it emerges from bankruptcy.

At around $4.60 a share, JetBlue is certainly priced low enough to attractive a buyer looking to buy an airline at a discount. In 2007, JetBlue was trading at over $12 a share. Over the last year, JetBlue has fallen 21.33%. In recent trading, JetBlue has fallen while others such as US Airways have risen. Over the last quarter, US Airways is up more than 30%, by contrast.

As a result, it has very attractive valuations. The price-to-book ratio of JetBlue is just 0.74. The price-to-sales ratio is 0.29. On a quarterly basis, both sales growth and earnings-per-share growth are increasing for JetBlue. The forward price-to-earnings ratio for JetBlue is projected to be 7.32. There is also plenty of cash and short term investments to help defray the costs of an acquisition. JetBlue is profitable, but it pales in this area compared to other airlines.

Never appealing to a buyer, however, is a company with loads and loads of debt. With a debt-to-equity ratio of 1.78, JetBlue certainly qualifies under this standard. However, the stock is priced low, which mutates this rating. In addition, debt can always be bought back at a discount.

Lufthansa owns 19% of JetBlue and is monetizing its stake by issuing bonds backed by the shares. JetBlue is down 16.64% in the last quarter, so it is certainly priced to sell. It is also down for the last week and month of trading, too. Even if JetBlue does not sell, the mean analyst target price for the airline is $7.09 over the next year.

 

Bloomberg has to be wrong. Clear Right has stated repeatedly Jet Blue is too independently strong and too expensive to be acquired, so the analysts must be wrong.

 

I think Parker could have forstalled a lot of the nonsense that has transpired with the merger had he just said that since the Nicolau Award had been accepted by the company and had been the product of what was agreed upon within the TA, then that was what would be used going forward. But his waffling and aw shucks "that's for you guys to decide" attitude has only prolonged this merger. Now we see the company lawyers stating that the Nic is the list in court, yet Parker still seems to not understand what the lawyers are saying.

I think Parker is smarter than that. I agree that he has been playing both sides against each other and the benefit to him is saving 130 to 160 million a year in labor costs with the split in the pilot contracts. I know just to bring the East up to West contract, with our higher pay rates, vacation and work rules would be at least 80 million or more. I believe he has just been riding this gravy train as long as he can.

If the APA is indeed talking to Parker then I do hope that they get an ironclad agreement from him to commit to a single seniority system and a single contract in a timely manner. There is no way that a LCC/AA deal could ever work with 3 separate operations. I also believe that Parker knows he can't duplicate his ability to whipsaw the pilots and that he will actually have to take the steps necessary to fully implement a merger.

 

This article might add to the discussion too.

American pilots leery of US Airways merger, exec says | Airlines and Aviation | Dallas B...

Denny

 

Never said it wouldn't happen, just said it would be very expensive, and AMR couldn't afford it currently while in BK. B6 has an Enterprise Value of around 3 Billion. Not to mention the article talks about a takeover, not a merger. A Hostile Takeover would probably result in a bidding war between AMR, DAL, and maybe even SWA. Whoever wins instantly becomes the largest airline in New York, Boston and now Puerto Rico. Most likely this would be a very expensive takeover after the potential bidding war is complete. As you know analysts have been soo accurate in this industry, the takeover is right around the corner.

 

The first sentence from that article:

"An American Airlines executive says the airline's pilots, a pivotal group in a merger, are questioning the ability of potential suitor US Airways Group to orchestrate a successful takeover."