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American Airlines and US Airways announcing there -- agreement to an eleven billion dollar merger to become the world's largest airline that marks the fourth major air line deal.
Over the past five years joining us now to give us some perspective and understanding the deal.
And its implications for passengers and of course investors.
Mike -- he's chairman of the aviation consulting firm Boyd group international -- good to have you with us.
This acute this is an industry where it's awfully tough to make.
Money and ID.
Is this we're gonna make money.
Oh yeah no there's no question about it both.
Both carried by themselves to make money put them together there's not a lot of overlap there's a lot of crossed -- that this can create.
Gonna help communities that's gonna help frankly the consumer to be one less brand choice but really if it's not that big -- deal because they don't overlap very much.
We're not is shocked me just a little bit have either of these companies ever been in bankruptcy might.
All I mean it's been they've been and I got a -- very -- related returns filed for crowd out -- The difference is those in the last five years both these carriers individually -- cut about 12% of their capacity.
And they're not adding net new airplanes so that the craziness is out of the industry right now and this year they can and we'll have even less capacity so we think.
I think stability is that don't -- your sons and daughters going to the airline business and don't bat but overall what's there they can make some money.
There barb Crandall used to run American allies.
Sometime back and sent -- if you if you -- if he knew then what he knows now.
-- you would never got near the airline industry the margins are -- -- the frustrations too large.
Yeah it is that no there's no question about it is just a very low margin business but I think there's the -- this is out of but the hubris is out of it.
And I think going forward gonna see a stable industry if not a highly profitable.
By an embargo -- judges got to say that not all the hubris is out of if American Airlines could take off the US Airways and and get that excited there's a little confidence we'll just -- confidence -- -- the -- -- the other way around it it's its US they're going after American more than the other way around well.
I take your point but we know what it's gonna be called though.
All right we do.
So what about most importantly for most of the people watching.
Two things one -- passengers -- we're gonna be paying more as a result of this merger.
Not necessarily as a result of the merger gonna be paying more you know in in most markets -- they don't really have a lot of pricing to.
Is 76 in the markets with the top one and a market where they can compete.
They get less than a 5% increase in market share points.
So we're gonna have that -- prices are gonna go up because capital cost is going up -- is going up so what what watch that to happen with or without this merger I think we get -- that went to Vegas to make book on.
Well -- going to -- ought to resist take a look at -- -- make your decision about.
The financials and give you -- all of reports listing should they even think about investing in this company.
Who are unbiased have been an all my life grew up -- and I wouldn't touch it with a barge pole but.
That it might be something that is suitable sophisticated investor could do.
At clarion call through sophisticated investors out there.
Of -- board thanks for being with -- we appreciate it thank you sir.
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