This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Does US Airways Have AMR in Checkmate?

Stocks in this article: AAMRQ.PK DAL LCC UAL

Meanwhile regulators let Delta and United form trans-Atlantic joint ventures with European partners, immunized against anti-trust violations. They would not let AMR do the same thing. AMR was not approved until 2010, long after Delta and United. Joint ventures can add hundreds of millions of dollars in annual revenue, but it takes years to make them work, because partner airlines start out less as partners and more as turf-protectors.

As a result of its history, by 2011, AMR was smaller than its two principal competitors because it had declined to engage in another merger. It had higher costs because, trying to be moral, it had avoided bankruptcy. It had lower employee morale because its executives had appeared to be greedy. It had lower trans-Atlantic revenues because regulators were misguided. It had no East Coast hub, due to history.

This is the hand CEO Tom Horton inherited when Arpey retired in November. Not Horton's fault, but this is a tough hand to play, even though some things can be fixed in bankruptcy court.

Now let us briefly examine the history of America West since it sought a merger with bankrupt ATA in 2004. That effort failed, but CEO Doug Parker said it confirmed that bankruptcy court is a good place to shed unwanted costs in a merger. In 2005, Parker's team roped in bankrupt US Airways. They took two weak carriers, put them together, and created a strong one.

In 2006, Parker pursued a merger with Delta. It failed dramatically and some said that made it appear the America West people were in over their heads. But the team learned it needed support from the acquiree's work force to make a merger work. This is the biggest advantage they have gained in the AMR case.

Subsequent efforts to merge with United also failed. It was said that US Airways was used by United to enable a deal with Continental. Probably so. But Parker said United's merger benefited all airlines by enabling reduced industry capacity.

In short, the America West management team has been pursuing mergers for the past eight years. They are not dumb and they have learned from each effort, from the failures as well as the single success.

This time, chasing a wounded prey, I don't think they can be stopped.

-- Written by Ted Reed in Charlotte, N.C.

>To contact the writer of this article, click here: Ted Reed

>To follow the writer on Twitter, go to http://twitter.com/tedreednc.

2 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 18,064.56 +10.85 0.06%
S&P 500 2,092.84 +4.07 0.19%
NASDAQ 4,811.9330 +5.0740 0.11%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs