Texas, Arizona, Florida, Pennsylvania, Tennessee, Virginia and the District of Columbia have all decided that they have a stake in the merger of US Airways and American Airlines and joined the Department of Justice in their suit to block the merger of those two airlines.
OK, so, let’s take a look at that.
Texas and Arizona hate the idea of a merger but because of entirely different reasons. Arizona hates it because it knows that corporate jobs which are high paying will be lost. That’s a fact and no one should deny it.
Texas doesn’t want the merger because, frankly, it’s an insult that a company from Arizona and a man such as Doug Parker should be upstarts and take over an Texas institution: to wit American Airlines. If you think this sounds silly and foolish, then you do not live in Texas and have not operated within the political / business landscape of Texas. The speculative statement I could make is that it frankly wouldn’t surprise me to learn one day that AA CEO Tom Horton’s political buddies (Texas Senators, Attorney General and even the Governor) decided to help make this stink on his behalf.
To add more stink to the Texas move, I think politicians in Texas is trying to prevent its neighborhood from being busted by a dirty foreigner.
That will hurt Southwest Airlines quite badly in the future and those guys don’t care because Southwest has never pandered to them in the manner AA has.
Pennsylvania is still pissed that US Airways pulled out of Pittsburgh. Never mind the fact that as a large focus city, it made no money for the airline and the decision to withdraw from that city was largely made by the management of the airline that was US Air and which managed to steer its company into bankruptcy not once but twice. When incompetent management can even see that serving a city like that is folly, you know that it is folly.
But Pennsylvania is angry and they’ve found an avenue to get political retribution. And they’re taking retribution against the wrong management even. But politicians never claimed intelligence, just power.
Tennessee is pissed at Delta and is therefore just lashing out. It really doesn’t have a dog in this game for either of its 2 major cities nor its minor cities. But Delta recently put Memphis into a small “focus city” role and Tennessee is angry about that and it wants revenge against anyone it can find. So US Airways and American Airlines are its whipping boys since it can’t get to Delta.
Florida is scared to death that it will lose American Airlines international flights to Charlotte, North Carolina. That’s hilarious but it also shows you just how corrupt Miami has been about holding on to American Airlines. They know that their airport is expensive, shoddy and not up to standard and they fear the alternative that is Charlotte.
Washington D.C. is in this because Congress does *not* want to see *any* flights to stupid, small cities reduced for fear they’ll have to fly from Washington Dulles to go home on the weekends. Since Washington D.C. is entirely dependent on Congress for financial largesse, it does what Congress wants done.
The states involvement in this is about various States’ Attorneys-General wanting to get elected to higher office. Sadly, this merger isn’t about them protecting their constituents, it’s about showing how tough they can be.
What is epically stupid is that their actions will severely and materially harm their very own constituents.
I’m talking about the combined employees of these two airlines. Because rest assured that American Airlines is now frantically wondering who else to cut to reduce costs further in order to keep their heads above water. US Airways labor just lost a ton of money potentially by seeing this deal killed which saw their membership achieving substantial salary gains when the deal went through.
And the viability of these two airlines as stand alone entities is questionable if the merger doesn’t go through despite what both CEOs have said to the contrary.
Delta Airlines is rubbing its hands greedily and the well oiled machine that it is will now engage in exceptionally predatory behavior towards those two airlines.
Jeff Smisek is having a tall tumbler of Scotch tonight and celebrating that he may well see his airline survive and succeed now that he has an advantage in having made it through the “merger door” just in time.
Southwest Airlines and its crew is looking at the landscape and realizing that Delta and United will take aim against it quickly in light of the fact that the only way Southwest can hope to grow going forward is organically.
There is no merger future for Southwest. None. It just went “poof” until and unless the merger suit is found in favor of US Airways and American Airlines.
Creditors who were set to realize payback on all their debt with American Airlines just saw their chances evaporate like a drop of water on a Texas highway in August.
The Collective States have participated in an extraordinary act of treachery against their own citizens so that their politicians may appear “tough” for one more day.
Filed under: Airline News, Mergers and Bankruptcy by ajax
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