Sunday, April 8, 2012

American Airlines Merger

American Airlines was once the largest airline in the world, ten years later they have filed for bankruptcy and are potentially on the verge of merging with another airline for the first time since the merge with TWA.  On November 29th American Airlines filed for chapter 11 bankruptcy, that will eventually cut up to 13,000 jobs, most of them being management positions.  According to American Airlines they operate an all Boeing fleet with an MD-80 as well.  In 2011 American announced the purchase of 10 777-300's and an additional 200 boeing 737-800s both are supposed to be in service by 2012 and 2013.  It is going to be very interesting to see how and what American will do with these new aircraft considering they just filed for bankruptcy.

After talking to a ton of American Airlines pilots they all agreed on one thing and that was American needs to do something, but one thing they all were very negative about was the potential merge with U.S. Airways.  Every pilot I talked too said if they merged with U.S. it would be very disastrous, they never gave me a definite answer of why, but for whatever reason they all agreed.  When I asked what should happen, most agreed that American should merge with Alaska Airlines or JetBlue.  Jeremy Lemer wrote a great article in the Financial Times with the title "Rivals say AMR must find merger-or perish".  He suggests all sorts of different merger solutions from every US airline possible.  

According to Dallas News " 94% of AA pilots are at 12th year of pay longevity. That's the top of the pay scale, meaning that they aren't getting pay raises unless they move to a bigger airplane or move from first officer to captain."  The average age of AA pilots is 51.6, and for captains its 54.4years.  American is so senior in aircraft and pilots that 70% of their pilots have to retire within the next 7-10 years.  Its hard to believe that just 10 years ago American Airlines was the largest Airline in the world, and now there bankrupt laying 13,000 jobs off.  No one has a definite solution to fix there problem, from a potential merge with U.S Airways to JetBlue or Alaska, but everyone can agree that something needs to happen before its too late.          

3 comments:

  1. A merger with Alaska Airlines or JetBlue would both be very interesting. Both of these airlines have remained profitable and are good to work for and are good in customer satisfaction, so you can see why these worried pilots would dream of merging with these airlines. A merger with JetBlue would be particularly interesting being that JetBlue is a low cost carrier built on a much different business plan than American.

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  2. It's no surprise that the pilots of American Airlines wouldn't support a merger. Often times mergers result in immediate job cuts following the slow integration/consolidation of both carriers. Usually the pilots and flight attendants get screwed in the deal (pay cuts and/or job losses), unfortunately. I'm surprised there are talks about merging with Alaska or Jetblue. Jetblue doesn't make much sense given their fleet, and Alaska is primarily a Northwestern-airline (not much to offer to American). I think that ultimately, American will remain as a sole carrier (and will never merge), despite everything we hear in the news.

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  3. I was uninformed of the proposed merging ideas of JetBlue and Alaska. I'm not sure either would be seen as a benefit considering the routes they bring to the table. I applaud Americans efforts to find an alternate to merging in attempts to save a high employment statistic. Personally I feel American will continue on and fight for their solo freedom than actual merge whether it is an element which drives them to the ground or not.

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