Report: Delta, U.S. Airways Among Those With An Eye To Buy American Airlines Parent Company

As American Airlines parent company AMR tries to sort itself out during bankruptcy proceedings, there are already a few vultures circling it. A report says Delta Air Lines and U.S. Airways are considering buying AMR, along with a buyout firm called TPG Capital.

The Wall Street Journal cites people familiar with the matter who said the three companies are separately studying bids for AMR Corp. Two months ago it became the last of the legacy airlines to file for bankruptcy protection. It’s currently the third largest airline in the U.S., after United and Continental merged and Delta has gone through a successful expansion.

Although the three potential buyers have declined to comment, the buzz is building enough that shares of Delta rose Thursday, according to the Detroit Free Press. Airlines have been merging left and right, it seems, since 2008. When companies merge and shrink the pool of competitors down by doing so, it makes it easier for the industry to raise prices.

Because a merger between Delta and American would be pretty darn big, regulators will likely take a long hard look at any such deal. After all, Delta previously gobbled up Northwest Airlines in October 2008 so ingesting yet another airline is a big move. Didn’t we all learn a lesson from the AT&T/T-Mobile debacle? Monopolies aren’t gonna fly that easily.

Delta may try to buy troubled AMR [Detroit Free Press]

Rivals Eye American Airlines [Wall Street Journal]

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  1. thomwithanh says:

    Isn’t US Airways having problems of its own?

    • bendee says:

      Last I checked (which was a while ago), they still have many US East (old US Airways) and US West (America West, who bought US Airways and assumed the name) workgroups separated seniority wise as they cannot agree on an integration list.

  2. KyBash says:

    I guess this matters to some people. As long as the TSA exists and until someone brings back Braniff, I won’t be flying.

    • thomwithanh says:

      My wishlist for the new Braniff…

      *Two checked bags free
      *All economy domestic layout, leather seats with a 34in pitch – reasonably priced premium economy offering on transatlantic and transcon service (i.e. not Delta and United’s sorry excuse for premium economy but something more akin to what Qantas, Virgin Atlantic and BA offer)
      *Satellite TV and AVOD in every seat
      *Meals at meal time

      Let’s make flying enjoyable again

  3. Gundy says:

    I thought it was interesting that American ordered 460 new planes in July over 5 years and then filed for bankruptcy which would allow them to break their existing leases on their MD-80 fleet.

    • cowboyesfan says:

      MD-80s comprise 1/2 thier fleet. They can’t break the leases on all of them.

      The ones mothballed in the desert however…

      Supposedly, the operating costs on the new planes will be 30% lower (mainly due to fuel savings).

      • wetrat says:

        According to Wikipedia MD-80 make up only a third of American’s fleet… and they have enough Boeing and Airbus on order to completely eliminate the remaining ones.

  4. The Bunk says:

    I would also argue US Airways is in the weakest position to make such a move. They’re still sorting out labor issues from the US Air-America West merger from 2005.

  5. cowboyesfan says:

    Delta covets AA’s Miami hub and deep routes into South America.

    I think they will take those and let US Air have the rest.

  6. AllanG54 says:

    According to Bloomberg, Delta knows they could never buy AA because of anti-trust problems but they are looking to buy pieces of the airline, like gates and landing rights that AA might sell in order to stay solvent.

  7. gman863 says:

    Didn’t we all learn a lesson from the AT&T/T-Mobile debacle? Monopolies aren’t gonna fly that easily.

    Agreed. In addition to raising airfares, it will create a “Big Three” trinity of Delta, United and Southwest (in contrast, other players such as Jet Blue, Spirit and Frontier only have a tiny percentage of flyers in most markets).

    If – no, when – one or more of these “Big Three” get their financial nuts in a wringer, they’ll be whining to the government for a financial bailout, just like GM and Chrysler did.

  8. jp7570-1 says:

    Neither potential suitor makes sense. US Airways – the former “Agony Airlines” is having its own problems and would likely run AA further into the hole they are already in. Delta already has a huge network since it absorbed Northwest, meaning most of AA’s routes are already covered.

    TPG Capital is the Texas Pacific Group, based in Fort Worth, TX – also where AMR is based. It is conceivable that TPG might go it alone and buy out AMR themselves.

  9. AD8BC says:

    If Delta buys AA, once they combine the Frequent Flyer accounts (like they did with Northwest) I’ll be nearly a million-miler!