Discussion of the day:
According to the Aviation Biz Blog, an aviation-themed blog published by The Dallas Morning News, Delta Air Lines, Inc. and private equity firm TPG Capital are separately assessing potential bids for AMR Corporation, the parent company of American Airlines. Given AMR’s state in Chapter 11 bankruptcy, the restructuring efforts could make it attractive for a potential buyer.
Of course, the one thing that springs to my mind almost immediately is the buzzword, ‘Antitrust.’ However, according to the article, Delta has conducted an anti-trust analysis on a potential merger involving some concessions, with a “good chance of getting approval from regulators,” according to the journal.
In addition, it doesn’t appear as though American is unwilling to concede to a takeover. In fact, the new CEO of America, Tom Horton, did caution employees that American could be the target of an acquisition in midst of its bankruptcy restructuring. The airline, despite the factors that drove it into bankruptcy (high labor costs, aging fleet, etc) has some very profitable and attractive assets, amongst a very top-tier customer base, that piques the interest of other legacy acquirers. Moreover, it is not uncommon that such discussions inevitably occur when carriers are in restructuring.
My personal take on the matter is that right now, there are too few data points to draw conclusions just yet. Ultimately, while I do agree that consolidation is necessary for the US airline industry, how long can you go before you take it too far? First, US Airways merged with America West. Then it was Delta and Northwest. Now, United and Continental own a Single Operating Certificate (SOC). Southwest and AirTran will get theirs in May (allegedly). So if AA goes to one of them, when do we start screaming, “Duopoly!”
More on that later…
Article of the Day:
Enjoy, and have a great weekend!