Alaska Airlines and American Airlines announced an expanded code share agreement between the two airlines on Monday.  The focus is on American Airlines putting its codes on Alaska Airlines routes from the San Francisco Bay Area and Alaska Airlines putting its codes on American Airlines routes from the Los Angeles area.

Alaska is ready to do business with anyone that it makes sense to do business with.  For them, this is about expanding options with another airlines to gain incremental benefits.

For American Airlines, this is about more than just gaining some incremental benefits.  This is about expanding a partnership with an airline on the West Coast and making the argument that the current AA leadership team is ready to work on the airlines’ revenue problems with a bankruptcy exit.

The next step for AA will be announcing an expanded code share with Jetblue in the Northeast.

Will it work?  Well, personally, I think not.  Code shares like these are what you actually make of them.  To date, American Airlines hasn’t really made much of its domestic code shares because it has always preferred to capture the all the revenue for itself in most domestic situations.  They don’t mind the incremental benefit to their foreign route network and anything that puts a passenger on a flight for a good fare is OK with them but it isn’t their focus.  Other airlines often try hard to drive sensible synergies with their code shares but American’s team just doesn’t seem to do this much.

Financial analysts aren’t fooled by these moves nor are those on the unsecured creditors committee.  What existing creditors and bondholders want is an airline that has long term viability for realizing profits that look a lot more like Delta’s.  A patchwork plan of code shares doesn’t get them there.

Filed under: Airline News, Airline Service, Mergers and Bankruptcy by ajax