Replay: Today's chat about airline merger

Published: February 14, 2013 

CharlotteObserver.com

 Live Chat: US Airways/American merger(02/14/2013) 
12:15
Jen Rothacker: 
Welcome to the this afternoon's live chat about the US Airways/American Airlines merger with Observer business reporter Ely Portillo.

We'll begin taking your questions. Ely will join us around 12:30 to begin answering them.

Your moderator for the day is Observer editor Jen Rothacker. I'll try to get as many of your questions to Ely as I can.

Enjoy.
Thursday February 14, 2013 12:15 Jen Rothacker
12:19
Do you think this merger between US Airways and American will drive up fares?
Yes
 ( 61% )
No
 ( 8% )
Not sure
 ( 31% )

Thursday February 14, 2013 12:19 
12:20
Ely Portillo: 
Hi, thanks for joining me. Please let me know what questions I can answer for you about the merger of American Airlines and US Airways, announced today.
Thursday February 14, 2013 12:20 Ely Portillo
12:28
Jen Rothacker: 
We should get started soon: Ely is on the phone now with the CEOs of each companies, so he'll be coming into the chat with the newest information.
Thursday February 14, 2013 12:28 Jen Rothacker
12:29
Jen Rothacker: 
If you haven't seen this yet, here's a 90-second video American produced to promote the merger:

http://youtu.be/68xF-j9h6us
Thursday February 14, 2013 12:29 Jen Rothacker
12:31
Ely Portillo: 
I thought it was a very passionately voiced-over video here
Thursday February 14, 2013 12:31 Ely Portillo
12:31
Ely Portillo: 
I just got off the phone with Doug Parker and Tom Horton
Thursday February 14, 2013 12:31 Ely Portillo
12:31
[Comment From MikeMike: ] 
AAMRQ shares were over $2 today -- how long before they are worth zero? When the new AA officially emerges from bankruptcy?
Thursday February 14, 2013 12:31 Mike
12:32
Ely Portillo: 
The new AA will emerge in a few months, if all goes well. Then the old shares will be wiped out. BUT some shareholders will get something, as part of this deal. They won't be 100% lost
Thursday February 14, 2013 12:32 Ely Portillo
12:33
[Comment From BillBill: ] 
Any estimate on how much flight costs will increase for those in CLT? 10%? 15%
Thursday February 14, 2013 12:33 Bill
12:33
Ely Portillo: 
Not clear. The one thing I do know is flights are going to cost more, merger or not, because there is never going to be cheap jet fuel again.
Thursday February 14, 2013 12:33 Ely Portillo
12:33
[Comment From BobBob: ] 
So will American stick with 3 FF tiers or will they move to 4?
Thursday February 14, 2013 12:33 Bob
12:34
Ely Portillo: 
I think the FF program will look much more like AA when its all done.
Thursday February 14, 2013 12:34 Ely Portillo
12:34
[Comment From wend28wend28: ] 
Do think having one less carrier at the CLT airport will increase the odds for an expansion of service here by United/Delta/JetBlue/Southwest? Concourse A will have a few open gates.
Thursday February 14, 2013 12:34 wend28
12:35
Ely Portillo: 
Parker said it's easier to move to the larger company's systems today, so look to the American FF program to see what you'll be likely getting.
Thursday February 14, 2013 12:35 Ely Portillo
12:35
Ely Portillo: 
Hi Wend28. I think it will. You'll see more open, new gates in a few years too when Jerry Orr's concourse expansion will open near international terminal.
Thursday February 14, 2013 12:35 Ely Portillo
12:35
[Comment From saadsaad: ] 
Ely, what details do you have in regards to CLT?
Thursday February 14, 2013 12:35 saad
12:36
Ely Portillo: 
I just talked to Doug about CLT, saad. He said there will not be service cuts here, and was adamant about that. But who know about 10 years down the line? No one, at this point - but that's always been true.
Thursday February 14, 2013 12:36 Ely Portillo
12:36
[Comment From SarahSarah: ] 
My husband and I will be flying to Paris on US Airways in August. Are ticket prices going to go up so high that we are better to purchase them now?
Thursday February 14, 2013 12:36 Sarah
12:37
Ely Portillo: 
I don't think you should worry yet, Sarah. First of all, that will probably always be a pricey trip. But it's not even certain that they will have completed the merger by August. So don't panic! Buy as you normally would.
Thursday February 14, 2013 12:37 Ely Portillo
12:37
[Comment From ChadChad: ] 
Can you tell us what might happen to the frequent flyer programs for these two companies?
Thursday February 14, 2013 12:37 Chad
12:38
Ely Portillo: 
Hi Chad. They will be merged together in the coming months/year. They still have not decided on a combined credit card provider. But your miles will be combined in a single program once the companies close the merger. I would expect it to look more like American's program.
Thursday February 14, 2013 12:38 Ely Portillo
12:38
[Comment From RandyRandy: ] 
My guess is the new AA will,in the long run,cut Caribbean and Latin American routes from CLT as Miami will continue to serve as the premier gateway to those places.Your Thoughts
Thursday February 14, 2013 12:38 Randy
12:39
Ely Portillo: 
Hi Randy. The company definitely could. I wouldn't be surprised. BUT Doug and Tom said that the international flights from CLT work because of the feed, not because of the local traffic. More AMR flights in the network means more feed, so it's possible they'll stay. CLT is also cheaper to operate from than MIA.
Thursday February 14, 2013 12:39 Ely Portillo
12:39
[Comment From MarkMark: ] 
I've used the StarAlliance to fly to Germany, Spain and South Africa. Will US Airways now be cut off from that alliance?
Thursday February 14, 2013 12:39 Mark
12:40
Ely Portillo: 
Yes, Mark. They'll be oneworld.
Thursday February 14, 2013 12:40 Ely Portillo
12:40
[Comment From saadsaad: ] 
I meant in regards to the current employee base, and operations. We have a pretty decent international offering, and i think they will only get bigger out of CLT. Especially international. What are your thoughts ?
Thursday February 14, 2013 12:40 saad
12:40
Ely Portillo: 
Oneworld has Iberia, British Airways, so you might be OK, Mark.
Thursday February 14, 2013 12:40 Ely Portillo
12:41
Ely Portillo: 
Hi saad. No employees will be cut from the pilot, flight attendance, maintenance or training bases in CLT. The company doesn't intend to cut anything but management redundancies, for now. But if they cut int'l flying from CLT in the long-run, we'll see fewer employees in the long run.
Thursday February 14, 2013 12:41 Ely Portillo
12:41
[Comment From BillBill: ] 
Any chance government will block this merger due to competitive concerns?
Thursday February 14, 2013 12:41 Bill
12:42
What's your favorite airline to fly?
Delta
 ( 33% )
US Airways
 ( 50% )
American
 ( 0% )
United
 ( 0% )
Southwest
 ( 17% )
Other
 ( 0% )

Thursday February 14, 2013 12:42 
12:42
Ely Portillo: 
No, Bill. I don't think so. They let Delta-NW and United-Continental and Southwest-AirTran with no major changes, so they don't have much precedent to block this. Plus there's no big overlap in any one market.
Thursday February 14, 2013 12:42 Ely Portillo
12:42
[Comment From maxmax: ] 
Will the re center in winstin salem close
Thursday February 14, 2013 12:42 max
12:43
Ely Portillo: 
Hi Max. Today, Doug Parker said no res centers will close. So, not for now, at least.
Thursday February 14, 2013 12:43 Ely Portillo
12:43
[Comment From saadsaad: ] 
Oneworld is no where near as good as Star Alliance. I think CLT will be able to support a LH flight still, due to the fact we get a A346
Thursday February 14, 2013 12:43 saad
12:43
Ely Portillo: 
Hi Saad. Oneworld is definitely smaller, but adding US Air probably helps oneworld more than losing US Air hurts Star Alliance.
Thursday February 14, 2013 12:43 Ely Portillo
12:43
[Comment From BillBill: ] 
Does anyone believe that merging two lousy airlines will result in a better airline? What changes are they suggesting will result in better service?
Thursday February 14, 2013 12:43 Bill
12:44
Ely Portillo: 
Well, Bill, that's the big question. They know that they have to make this work, because both companies have now been through BK court a combined 3 times in 10 years. So if they can't keep costs down, they lose. But if they cut services and lose customers to Delta and United, they lose too. They're walking the knife's edge now.
Thursday February 14, 2013 12:44 Ely Portillo
12:45
[Comment From GuestGuest: ] 
what would be benefit of shifting international flights to Charlotte from other hub?
Thursday February 14, 2013 12:45 Guest
12:46
Ely Portillo: 
Hi Guest. In theory, you could shift the Latin American flights to Miami and it would cut down on times for connecting passengers, since MIA is closer. You could also shift some European flights to JFK or Philadelphia. But all of those airports are more expensive than CLT for the airlines to operate out of.
Thursday February 14, 2013 12:46 Ely Portillo
12:46
[Comment From wend28wend28: ] 
Do you forsee the new American adding domestic destinations that USAirways doesn't currently serve, such as Oklahoma City, from Charlotte?
Thursday February 14, 2013 12:46 wend28
12:47
Ely Portillo: 
Hi Wend28. They might, but I don't foresee a lot of that. They've been clear they want to use CLT as a southeast domestic hub, as it's been. I think you'll continue seeing Oklahoma and that kind of stuff go through places like Dallas
Thursday February 14, 2013 12:47 Ely Portillo
12:47
[Comment From RandyRandy: ] 
If I was a US employee,I would be more than a little concerned about a merger with AA.American's mergers with Reno Air,Air Cal and very much so TWA were major mistakes.The former TW employee's really suffered.Any idea if they can do better this time?
Thursday February 14, 2013 12:47 Randy
12:48
Ely Portillo: 
Hi Randy. Some AA employees are thinking the same thing probably - just look at US Airways and America West! Lots of suffering. But, the big thing is that some US Air work groups (pilots, FAs) haven't had a raise in something like a decade. This merger means more money in their pockets, immediately.
Thursday February 14, 2013 12:48 Ely Portillo
12:48
[Comment From GuestGuest: ] 
is there scope for significant international growth, given that other hubs (MIA, Phl, JFK) are at capacity and aren't expanding (physically) like CLT is?
Thursday February 14, 2013 12:48 Guest
12:49
Ely Portillo: 
Hi Guest. The good thing for CLT is that there is no ocean or river blocking new runways, like at PHL or JFK. They can grow a lot more still. I think CLT could see more international growth over the next decade, for that reason.
Thursday February 14, 2013 12:49 Ely Portillo
12:49
[Comment From wend28wend28: ] 
So by CLT being a "Southeast domestic hub", that doesn't mean flights from CLT to say San Francisco, Seattle, LA, etc would be on the chopping block, would it?
Thursday February 14, 2013 12:49 wend28
12:51
Ely Portillo: 
No, Wend28, those flights are needed for the hub to work. People don't want to transfer more than they have to, so every big hub will see some non-stops to major markets like that. But I think it does mean there's a greater chance new west coast flights could go through Dallas or Chicago, if they originate from, say, DC
Thursday February 14, 2013 12:51 Ely Portillo
12:51
[Comment From saadsaad: ] 
Ely, CLT will gain INTL flights due to PHL and JFK being pretty restricted in various terms. CLT has a huge competitive edge over all due to its location, added to its low costs. CLT is the ATL fighter, and always has been
Thursday February 14, 2013 12:51 saad
12:52
Ely Portillo: 
Yes, I agree with you on that one Saad. People are talking about JFK and PHL cannibalizing each other in this merger more than they are talking about those hurting CLT. But I do think the chance of losing some INTL flights in the next decade is real, as traffic patterns evolve. Maybe not huge, but real.
Thursday February 14, 2013 12:52 Ely Portillo
12:52
Jen Rothacker: 
Any more insights in your talk this afternoon with Parker and Horton?
Thursday February 14, 2013 12:52 Jen Rothacker
12:53
Ely Portillo: 
They've made a lot of promises, Jen. Promises not to lay off masses of workers, promises not to cut hubs. I think the big question going forward is simply, can they keep those promises and run a profitable merged airline?
Thursday February 14, 2013 12:53 Ely Portillo
12:54
Jen Rothacker: 
So in the end, is this good or bad for Charlotte?
Thursday February 14, 2013 12:54 Jen Rothacker
12:54
Ely Portillo: 
Probably good - that's what most analysts who aren't contrarians say. But it opens the possibility of cuts, which wasn't there before, so from that standpoint, maybe not so good in a decade.
Thursday February 14, 2013 12:54 Ely Portillo
12:55
[Comment From VinnieVinnie: ] 
There has been no discussions in regards to Buy Out Packages for employees of both airlines.
Thursday February 14, 2013 12:55 Vinnie
12:57
[Comment From maxmax: ] 
vinnie there has been buy out offered at american already
Thursday February 14, 2013 12:57 max
12:57
Ely Portillo: 
Hi Vinnie. Some of that has been on the table. Flight attendants have a buyout clause in their new proposed contract at US Airways. I think they can get a few thousand bucks.
Thursday February 14, 2013 12:57 Ely Portillo
12:57
Ely Portillo: 
But also, they don't want to cut a lot of workers, yet. Maybe they will down the line, but right now their plan is to keep the same levels of flying.
Thursday February 14, 2013 12:57 Ely Portillo
12:57
[Comment From maxmax: ] 
ely this merger does not mean more money in there pockets the f/a group is voting on a contract now closing at end of the month and it is the same contract the rejected months ago
Thursday February 14, 2013 12:57 max
12:58
Ely Portillo: 
True, but that new contract has higher pay, and will, in theory, lead to higher pay down the line when the merger is complete. I know some employees are hopeful the merged airline will move US Air wages off the bottom of the industry's pay scale at last.
Thursday February 14, 2013 12:58 Ely Portillo
12:59
[Comment From saadsaad: ] 
CLT has been the envy of AA forever, thats why they had the RDU operation that completely failed, and CO tried opening one at GSO. Both failed vs CLT. CLT can be built up to the new ATL
Thursday February 14, 2013 12:59 saad
12:59
Ely Portillo: 
That's what Jerry Orr hopes, Saad! But ATL still has more than twice the traffic at CLT, so there's a long way to go there.
Thursday February 14, 2013 12:59 Ely Portillo
12:59
[Comment From GuestGuest: ] 
Charlotte has a larger 'hinterland' and is growing faster than Cincy, Pittsburgh, St Louis all are / were at the time of their downsizing. There are 6+ million people within 100 miles of charlotte. So charlotte being a 'small market' for a hub is rather misleading, no?
Thursday February 14, 2013 12:59 Guest
1:00
Ely Portillo: 
Hi Guest. Not misleading compared to markets such as Chicago, LA, New York, Philadelphia.
Thursday February 14, 2013 1:00 Ely Portillo
1:01
Jen Rothacker: 
Will this merger have any effect on talks of creating an authority to run Charlotte Douglas?
Thursday February 14, 2013 1:01 Jen Rothacker
1:02
Ely Portillo: 
Probably not directly, Jen. The airlines might prefer an authority, if they think it will keep costs lower. But CLT already has low costs under the current model, so it might be a loss. US Airways' official position is that it doesn't care as long as the per passenger fees stay low.
Thursday February 14, 2013 1:02 Ely Portillo
1:02
[Comment From saadsaad: ] 
Ely, might have to contact you post chat ! Thanks for your insight !
Thursday February 14, 2013 1:02 saad
1:03
Ely Portillo: 
elyportillo@charlotteobserver.com if you want to get in touch
Thursday February 14, 2013 1:03 Ely Portillo
1:03
Jen Rothacker: 
It looks like our questions are coming to a close. Ely, any last thoughts?
Thursday February 14, 2013 1:03 Jen Rothacker
1:03
Ely Portillo: 
Happy Valentine's Day everyone!
Thursday February 14, 2013 1:03 Ely Portillo
1:04
Jen Rothacker: 
Awww, how sweet.

Thanks, everybody, for joining our chat this afternoon.
Thursday February 14, 2013 1:04 Jen Rothacker
1:04
 

 
 
 

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