Analysts Reports – July 31, 2012

Throughout the bankruptcy, financial and aviation industry analysts have been advocating for consolidation. Most are in agreement that the only way for American Airlines to stay competitive is to merge with another carrier. See the links below for articles from some of the country’s leading minds and publications.

Wall Street concensus is highly critical of an AMR Standalone Plan. Not only that, but they are supportive of a merge with US Airways.

 

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NYC Heating Up for AMR This Winter – July 31, 2012
By Daniel McKenzie, CFA – Senior Airline Analyst

“…It also explains in part why AMR needs to explore merger options sooner rather than later. Of the airlines targeted by AMR, JetBlue and Alaska don’t seem willing and even if they were, neither is a credible response to Delta’s overall East Coast strength in our view. Interestingly, AMR has shrunk dramatically in JetBlue’s markets (overlapping just 21 of JetBlue’s 54 markets from NYC in 4Q), but industry sources nonetheless tell us slots will be a source of deal friction with the DOJ. Ultimately, we believe US Airways puts a sufficiently compelling deal in front of the unsecured creditor’s committee, forcing it to have a heart-to-heart with AMR mgmt. As for timing, a merger after AMR exits Ch. 11 is sub-optimal given the difficulty of optimizing IT contracts, fleet orders, credit card agreements and real estate needs, in our view.”

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Morningstar Equity Analysis “Us American Cleared For Takeoff” – June 7, 2012
By  Basili Alukos, CPA, CFA

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Four Reasons Why American Should Merge With US Airways – June 5, 2012
By Trefis Team

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Linenberg/Deutsche Bank on AA/US Airways Merger and M&A History – May 28, 2012
(APFA Note: Pay particular attention to pgs. 44-50)

“… Over the course of the past year, we have seen British Airways and Iberia merge, United merge with Continental, Southwest merge with AirTran, and LAN and TAM are weeks away from finalizing their merger which will create the largest airline equity market capitalization. Consolidation, in our view, represents a latter stage for a mature industry that is seeking ways to address its financial volatility. Furthermore, we think there is a growing recognition that network size does matter, particularly to the most profitable revenue segments. Which names do we think are the best way for investors to participate in a consolidating global airline industry?”

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Jamie Baker/JP Morgan on AA’s Standalone Plan – March 7, 2012
(APFA Note: Wall Street Analysts have been highly critical of the AMR’s Standalone Plan as well as supportive of a merge long before the Unions’ intentions of merging with US Airways were announced. Jamie Baker is arguably the most widely-known and respected airline analyst in the nation.)

“We are underwhelmed with AMR’s Standalone Plan…”

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http://beta.fool.com/tdalmoe/2012/04/11/future-amr-air/3516/?ticker=LCC&source=eogyholnk0000001
http://business.time.com/2012/02/06/is-american-the-worst-managed-airline-in-america/
http://blogs.wsj.com/deals/2012/04/13/texas-senator-dont-mess-with-american-airlines/
http://online.wsj.com/article/SB10001424052702304023504577322010253299758.html?mod=WSJ_qtoverview_wsjlatest
http://www.thestreet.com/story/11491540/1/us-airways-labor-pacts-could-hinder-amr-merger-effort.html
http://travel.usatoday.com/flights/post/2012/04/american-executive-expresses-doubts-about-us-airways-merger/669230/1?csp=34travel&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+UsatodaycomTravel-TopStories+(Travel+-+Top+Stories)
http://www.charlotteobserver.com/2012/02/03/2982584/american-ceo-pans-us-airways-merger.html
http://www.nycaviation.com/2012/03/american-airlines-merger-with-us-airways-a-done-deal-if-domain-name-purchases-to-be-believed/
http://www.bloomberg.com/news/2012-03-23/us-airways-said-to-brief-amr-creditors-on-takeover-plan.html
http://travel.usatoday.com/flights/post/2012/03/charlotte-hub-would-withstand-merger-us-airways-ceo-says/653851/1
http://bottomline.msnbc.msn.com/_news/2012/03/23/10829396-us-airways-seeking-to-acquire-american-out-of-bankruptcy
http://www.bloomberg.com/news/2012-01-20/us-airways-said-to-consider-american-airlines-merger-to-fill-revenue-gap.html
http://blogs.barrons.com/stockstowatchtoday/2012/04/03/us-airways-pushing-hard-for-american-airlines-merger-report/
http://www.forbes.com/sites/thestreet/2012/01/27/us-airways-flight-attendant-deal-could-help-merger-effort/
http://www.thestreet.com/story/11383088/1/whats-right-with-us-airlines.html?cm_ven=forbeslinks
http://www.tulsaworld.com/business/article.aspx?subjectid=45&articleid=20120126_45_E1_CUTLIN603027
http://www.independent.co.uk/news/business/analysis-and-features/british-airways-key-to-us-merger-mania-6298050.html