Ben makes the case that a merger between Alaska and American is the most logical move among the major US carriers, though he's skeptical it will ever happen.
Probably would get approval under the current administration but it would be one very ugly merger. Very different corporate cultures.
It wouldn't be the worst thing he's ever done, but if Trump also ruins Alaska Airlines, I'll also never forgive him for that either. Bah!
"Let me of course acknowledge that some people are probably yelling at their consumers “WTF is wrong with you to want to ruin Alaska in this way?”"
Full stop right there. Making this statement should have ended the post, or at least had you reconsidering it.
Add me to the list of those saying 'hell to the NO' on merging these two carriers. AS doesn't need AA on more levels than it could use AA. Alaska is perhaps one of the most respected brands in US aviation, and what's best for consumers is for organic growth and change to occur naturally - by EARNING it, rather than ruining another brand in what seems to be a never-ending race to the bottom through a merger with a carrier that has incompetence at the helm.
Good grief.
Oh - and did you mean 'computers' and not 'consumers' in that line I quoted?
Alaska new product announcement article coming soon? I sort of figured you would already have the inside scoop.
If you're referring to AS plans to include lie-flat on their new 737max10, I'm all for that!
Yes - it just came out moments ago - New Aurora and Leihōkū Suites on all 787, A330 and select MAX10 aircraft. Mostly the same suites the 787s have now, just refreshed with a more refined look. Another reason to keep AA FAR FAR FAR away from Alaska.
Well, if Alaska leadership came into AA, and could wholesale wipe out the rest of the "ULCC America West" crowd that destroyed AA ... I'd be all for it. Nothing good has come of the Doug Parker coaching tree.
I'd look for a new post by Ben highlighting the latest presser that was just sent a few mins ago. Looks like a new Curb-to-Cabin premium experience, including Aurora Suites-only lounge in SEA, and lie-flats on MAX 10 aircraft for transcons from SEA, PDX, SFO, LAX and SAN, as well as refreshed/rebranded suites - Aurora on AS, Leihōkū on HA - for the 787s and A330s. Same suites the 787s have now, just nicely refreshed.
From a consumer standpoint mergers never make sense. But from a corporate standpoint they always do.
Do you think this makes more sense than a JetBlue - Alaska merger? I always thought those two were a good fit culturally, separate coasts, etc. I actually had hoped JetBlue would get Virgin American back in the day.
If this were to happen - a big if - does that make Jet Blue - United more or less likely? I could see United then feeling compelled to act (and regretting it did not act sooner), but a second big merger being even less likely to be approved in short order.
With all due respect, you neither understand corporate balance sheets or spent any time addressing the reality of how cost is a drag on airline operations. American’s balance sheet is a mess- huge debt, negative shareholder equity, that debt will start getting turned over in a higher interest environment (thanks you know who). It’s one thing to look at a route map to fill in holes, it’s another to look at balance sheets.
There’s a reason that why both times AA bought a West Coast foothold by acquisition they frittered it away within a few years.
Switching Alaska’s route network to American’s cost structure (employee wages, contracts, debt service, etc) would be a huge drag on performance- SEA, LAX and SFO would be even more vulnerable to Delta, Southwest and United than they are now (and Alaska pretty much fumbled whatever of the bag they inherited from VX already out of SFO/LAX; their turnaround on premium is belated recognition of that). You can reasonably expect to see a lot of cuts when routes just won’t work any more out of places like California, the Mountain West, and core hubs.
Come back in five years and we’ll see if AA can right the ship and reduce their debt overhead and right the ship (and Alaska can actually finish the job of the Hawaiian integration). Maybe then. But in the near future? Madness.
American definitely needs the help more but feels like a merger with Delta would make more financial sense both in terms of cash on hand (ability to pay for it) and value (Delta’s Seattle hub can finally be profitable and it leaps to #1 by a wide margin in LA).
For us fliers the alliance already provides the benefits of a merger without the downside. Reciprocal elite benefits, redemption, and two programs to choose from. Alaska tries to grow in spots that keep DL and UA on their toes.
The old NW/CO alliance was similar and great.
Get over this Isom obsession. Alaska has been in the cards before Pieper showed up - the alliance happened because a merger wasn’t able to happen at the time.
And Alaska management / culture is hardly special - for being in a tech hub city their app and site are clunky and glitch prone.
If AS joins in the TATL and TPAC joint ventures, wouldn’t AA get what they really need (TPAC service) without the hassle of a merger? I don’t necessarily see the upside for AS here, though I agree they’re much better run and should be the dominant management structure in this hypothetical.
I think the Alaska/Hawaiian merger was beneficial and complementary, and both airlines came out of it better. I can’t say the same for American. All three airlines belonging to Oneworld does not in and of itself make the case for a merger. What was that talk about United and JetBlue merging again?
I have been saying this would make sense even before AK/HI merged or the Pandemic. I agree it might be why everyone is getting cozy and it would cause Kirby to go insane. . .an added side bonus.
It’s funny. All these new improvements announced today seem groundbreaking for Alaska and put them slightly in a different category. Meaning more threatening to the big 3. Transcon lie flats is a game changer for me. I fly three or four times a year to LA from NY and I never consider Alaska now I will. That’s anecdotal for sure. The thing is as soon as I saw this I realized this is the beginning of the end for Alaska they will get gobbled up. It’s giving Continental to me. The most premium airline but too small to be considered with the big 3. Huge merger candidate. And then I see this. So yea. It’s not if but when iMO. And who with. United thinks they should own every airline and hub in every city. That’s my fear.
However they are trying to get 1/2 pregnant. The numbers of business class lie flats is bucking the trend - way too small. Look at American even bulking up the size of their business cabins. This is a major miss and when there is a merger the likelihood will be that these planes get reconfigured.
"The most important point here is that American’s senior, legacy management, can be allowed nowhere near this new airline."
What are the chances of this happening given AA management's ability to continuously fail upward? Lol
Exactly what I was thinking. Robert Isom (and Doug Parker before him) is clearly very good at managing the Board in ways we don't see from a public / customer-facing perspective. There is never any guarantee in these situations that the right person (whether your vantage point is consumers, or honestly even shareholders) is the one who gets the job - and people (board member) management is always a massive dynamic with M&A.
As someone who flies Alaska regularly and values how their treat their customers, I refuse to fly American because of how they treat theirs. There is no “win” in a merger or acquisition between these two carrier. .
The title of your post is “ Why An Alaska & American Merger Makes Sense, But Probably Won’t Happen.”
You talk about why the merger makes sense but you don’t clearly articulate why it “probably won’t happen.” In fact, your arguments lean to it actually more likely to happen than not.
United is definitely looking at acquiring JetBlue.
AA would absolutely like to acquire Alaska however, the impetus is really which leadership team or organization becomes the acquiring partner. 100% agree Alaska should be the acquiring partner should this move forward.
I see a merger with AA as inevitable. As much as one argues that AA "needs" AS, all this investment into a single long-haul hub in a remote corner of the country, while a deep-pocketed competitor is chomping at the heels seems like a losing gamble (especially when its coupled with another sizeable investment in a Hawaiian network that's been a money-loser for years). The products are aligning with AA...there will be a merger down the road, hopefully with AS management at the helm.
The day this happens will be a major tragedy for Seattle based travelers. Alaska is known for having the best service of any airline in the country, meanwhile American is known for having the worst…