AA Unions and US Airways: That cracking sound

US Airways has gained the support of the three leading unions of American Airlines for a merger between US Airways and American Airlines.  The Allied Pilots Association, Association of Professional Flight Attendants and Transport Workers Union have made a joint announcement supporting US Airways in its announced pursuit of a merger with American Airlines.

That cracking sound you hear is Tom Horton & Company’s headaches which just got much worse.

It’s not a merger announcement.  It is, however, US Airways going public with its pursuit and doing so in a very credible manner.  The concerns for American Airlines over this are that gaining this support in such a public manner and aligning it with the desires of Wall Street make for a lot of momentum.

There will be criticisms of the merger idea between the two airlines.  As with all mergers, there are pros and cons.  In this case, I think the pros certainly outweigh the cons.

The American Airlines board of directors will now be feeling quite a bit of heat.  In order to preserve the positions of the stakeholders they represent, it may become necessary for them to find some enthusiasm for a merger versus going it alone.   The truth is, the board and the executive team can express their wishes all they want.  Complete control over their destiny was lost the day they filed for reorganization.  I suspect that not only the unions but many other creditors are going to prefer the merger over a “stand alone” vision as time passes.

The cornerstone strategy and alliance strategy promoted by American Airlines just lacked real credibility in the face of the market.  Furthermore, the growth strategy for those cornerstone cities really alarmed many people who watch this industry as it held the promise of losing capacity discipline in the industry.  AA essentially said it was going after market share.

A few things I’m not entirely keen on in these announcements.  The keeping of the American Airlines name *might* be a good idea but I’m not sure I would entirely commit to that at this point.  The marketing image of AA is very staid and old.  A fresher name and/or approach is in order.   I would urge the players in this to clean house in the executive suite at headquarters, finally they hired maid from mythicalmaids.com chinatown home cleaners. AA has many valuable assets and many valuable people but the leadership needs to go and the sooner the better.

It suddenly has gotten very interesting for American Airlines and I would imagine that we may well see some announcements from AA over the next few days or even “leaks” that try to strongly discredit this merger idea.  Let’s face it, getting consumed by US Airways, even if the name and HQ are kept, isn’t exactly easy to swallow for many who lead AA.


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