Hey NWA guys, what's in a name??

[General Lee]

I have a question for you guys. You stated that Northwest would have to retain the name in any merger for Japan rights. Didn't Northwest change their name from "Northwest ORIENT" to Northwest? Wasn't that a name change that wasn't on the original paperwork with Japan way back when? So why can't a combined carrier named Delta have the same rights in a merger? Pan Am gave up their routes to United. What happened to the Orient part? Just curious.


Bye Bye--General Lee

 

[NuGuy]

General,

It isn't so much the name, but the certificate. The Pacific flights are tied to the NWA Air Carrier Certificate.

As has been explained to you, ad nausium, by multiple people, due to this NWA must be the "surviving corporate entity" in any transaction.

With that said, there is nothing stopping them from a "DBA", such as Northwest Airlines, doing business as XXXX. Many certificates have been ammended this way, however, the corporate structure is unchaged.

It's doubtful that any name change would happen, as the NWA name carries significant goodwill in Asia, and red (as Red Tail)is a sign of good luck.

So you're just going to have to deal with it...NWA may merge/aquire DAL, but the certificate will remain the same.

Nu

 

[General Lee]

General,

It isn't so much the name, but the certificate. The Pacific flights are tied to the NWA Air Carrier Certificate.

As has been explained to you, ad nausium, by multiple people, due to this NWA must be the "surviving corporate entity" in any transaction.

With that said, there is nothing stopping them from a "DBA", such as Northwest Airlines, doing business as XXXX. Many certificates have been ammended this way, however, the corporate structure is unchaged.

It's doubtful that any name change would happen, as the NWA name carries significant goodwill in Asia, and red (as Red Tail)is a sign of good luck.

So you're just going to have to deal with it...NWA may merge/aquire DAL, but the certificate will remain the same.

Nu

How about "Delta Orient" ? I like it. If the Delta named survived, wouldn't we own the certificate anyway? Could we put a small "operated by NWA" on the door? And, don't get so upset here, it is all in good fun. IF we have to merge, then I would rather do it with NWA.


And, what did Ray Neidl mean when he wrote this? Is it a misprint?

"Northwest would sell under the right terms," says Ray Neidl, an airline analyst for Calyon Securities in New York. "And strategically, Delta and Northwest are a good fit."


Bye Bye--General Lee

 

[doh]

How about "Delta Orient" ? I like it. If the Delta named survived, wouldn't we own the certificate anyway? Could we put a small "operated by NWA" on the door? And, don't get so upset here, it is all in good fun. IF we have to merge, then I would rather do it with NWA.


And, what did Ray Neidl mean when he wrote this? Is it a misprint?

"Northwest would sell under the right terms," says Ray Neidl, an airline analyst for Calyon Securities in New York. "And strategically, Delta and Northwest are a good fit."


Bye Bye--General Lee

What did he mean? Duh! This is flight info. He was spot on and meant what he said if you agree with him, and he is a moron who obviously misspoke if you don't!

 

[NuGuy]

If the Delta named survived, wouldn't we own the certificate anyway?

Asked and answered. This would be a change in corporate control, and is one of the transactions that is strictly forbidden by the agreement. You guys will just have to live with red tails, leather jackets and the phrase "flying yesterday's technology into tomorrow" as the DC-9s are not slated to be replaced until the aft-bulkhead mod is due, which is at 100,000 cycles.

I really don't think most of the Wall Street types (that talk to the press anyway) have an intimate knowledge of the details.

Nu

 

[lostplnetairman]

IF we have to merge, then I would rather do it with NWA. Bye Bye--General Lee

You do know what NWA does to labor?

Sounds like jumping from the frying pan to the fire to me!

 

[General Lee]

You do know what NWA does to labor?

Sounds like jumping from the frying pan to the fire to me!

Read the last sentence: just speculation, though....


For one, analysts note that Northwest has an aging workforce that is poised to retire in coming years, making the task of cutting labor costs that much easier. "A lot of those Northwest workers are going to drop off the rolls," says Roger King, airline analyst for CreditSights, a New York-based institutional research firm. Delta management would also have a selfish reason for partnering with Northwest: It's likely that Delta executives would run the combined airline, and preserve its headquarters in Atlanta.


Bye Bye--General Lee

 

[Diesel-9]

DAL management has been incompetent for years. A shadow of UAL, only a year or two behind.

 

[General Lee]

DAL management has been incompetent for years. A shadow of UAL, only a year or two behind.

Thanks. Most of the Delta management that made the huge mistakes are gone now. Leo Mullin, Fred Reid, Michele Burns, Vicki Escarra, all gone. The only one left is Grinstein, and he is leaving when we emerge from BK. The new guys have done a great job of getting back from the brink. You have a great one.


Bye Bye--General Lee

 

[flap operator]

If you read the history of NWA General, you will read that the Northwest has been the name of the company since the very first day. That's how they can claim the oldest airline flying under a continuous name. Northwest ORIENT was simply a branding technique to advertise the service to the Orient. After the merge with Republic, they dropped the Orient portion in the branding to advertise the fact they were a domestic airline as well.

That's 0 for General and 2 for NWA. Keep trying though, it's rather amusing.


FO

 

[AA717driver]

I'm sure the NWA guys would prefer to go with Delta rather than AA. I mean, look what a great deal the Delta MEC gave the PanAm guys. TC

 

[Fly4hire]

I'm sure the NWA guys would prefer to go with Delta rather than AA. I mean, look what a great deal the Delta MEC gave the PanAm guys. TC

Let's not forget there is no deal announced with NWA, just talks. LCC has a deal on the table to the DAL creditors cmte, and the view among a number of analysts is the NWA-DAL talks was an intentional leak/diversion by DAL management to take the heat off the LCC deal that has a lot more weight behind it than "talks"

If and when there is an actual competing bid made then we can speculate about names, integration, etc - until that happens I'd be a lot more worried about the LCC merger/aquisition if I were a DAL employee

 

[Occam's Razor]

Here's some background:

In the late 90's (pre- and post-strike) the NWA MEC did a lot of research on the issue of 5th Freedom rights with Japan, as well as the transferability of Pacific routes awarded thru bilateral trade agreements (China, India, etc).

Here's the poop:

Some of the 5th Freedom rights in Japan were "restructured" during the bilaterals that granted JAL and ANA broader access to the US. Those talks were precipitated by three events: Access restrictions placed on US carriers in/out of the new Osaka airport, which was just being completed...and a new interpretation of the "beyond" rule aimed at NWA's flying Osaka-Sydney without technically adding a new flight from the US. (The details of that fracas are mostly semantics.) The third event was the awarding of "B" slots to the new short runway at NRT.

The old rule, dating from the original agreement reached right after WWII, was that NWA could add a "beyond" flight anytime it added a route from the US to Japan. PAA received similar rights, but had them capped. The difference was NWA's assistance in establishing JAL as Japan's flag carrier.

When the new agreement was reached (I think it was signed in 2000), NWA was allowed to keep all existing 5th Freedom flights, with the ability to change the "beyond" destination, and, with some restrictions, the Japanese airport it used. They were also granted a large number of "B" slots, and allowed to operate them as origination and destination flights to new Pacific destinations. NWA first operated them with A320's, but switched a couple of years ago to B757's. They are very profitable, in large part because the Japanese Tourist Bureau has a long-term block seat agreement with NWA on them.

The "B" slots are a linked deal with the Japanese government, and are based on NWA not flexing it's 5th Freedom muscle at a time (like now!) when Japanese leisure travelers perfer to fly on US airlines because the Yen is kicking the dollar's behind.

The bottom line on transferability of the 5th Freedom rights (and the linked "B" slots) is that the rights were designated an "asset of the people of Japan" in the new agreement. That means NWA can't just transfer (spelled "S-E-L-L") them to another carrier, or alllow another carrier to operate them. The big question the MEC grilled NWA management about, and directed our NWA Board member to research, was whether or not NWA would have to be the surviving carrier to retain the rights.

The definative answer from all informed sources was a clear "We don't think so".

The functional language in the agreement is "while operated by". Since we live in an age of holding companies and subsidiaries, none of the bilateral trade agreement experts retained by NWA or ALPA believed the restriction was much of a roadblock.

The experts expect the Japanese government to wheedle a couple of slots to the US in exchange for looking the other way, but nobody expressed any concern about the Japanese trying to kill the rights.

Three interesting bits of trivia:
1. The agreement specifically prohibits the two 5th Freedom carriers (NWA and UAL) from exchanging or combining rights.
2. UAL's rights are "use or lose", while NWA's are not. That clause stems from UAL's choice to not pursue "B" slots.
3. The 5th Freedom rights between certain Japanese airports (eg: Narita-Naha) are not classified as cabotage because Japan didn't own Okinawa when the original rights were granted. It was grandfathered in the latter deal.

 

[On Your Six]

Didn't United buy Pan Am's Asian routes and rights? It didn't have to change its name to Pan Am to start flying the Asian routes.

 

[EdTeachLives!]

Let's not forget there is no deal announced with NWA, just talks. LCC has a deal on the table to the DAL creditors cmte, and the view among a number of analysts is the NWA-DAL talks was an intentional leak/diversion by DAL management to take the heat off the LCC deal that has a lot more weight behind it than "talks"

If and when there is an actual competing bid made then we can speculate about names, integration, etc - until that happens I'd be a lot more worried about the LCC merger/aquisition if I were a DAL employee

Interesting idea...but I don't think so. Doug found out about the talks late last spring, hence his letter proclaiming that even though they are presently merging with AAA, don't count cactus out. September, UAL hires GS as advisors, Parker gets nervous and throws out the hostile offer. DAL blows it off until the middle of October and tells him no way. November 15th rolls around and time is running out so Doug goes public. A couple of days ago he get anxious and the salty talking Bethune slaps him upside the head. He increases the original offer that he said would not be raised.

He has seen this shake out coming down the road for awhile and is right in thinking if he does not act first, cactus will be left out. I'm not so sure about that though. These NW/DL talks that have been on going for quite some time and very well might lead to a friendly, private equity backed merger.

I then would not be surprised to see CO make a move on US and basically tell Parker its us at our price or the dust bin, take your pick. Don't take our offer, we're gonna get together with Tilton. If that happens Cactus is in a bad spot. Does AA buy them, don't know and would guess not. If they take CO's offer you then probably have 4 majors NW/DL, CO/US, AA, and UA. Government likes it better than only having three (UA-CO, US-DL, NW-AA.)

 

[Occam's Razor]

Didn't United buy Pan Am's Asian routes and rights? It didn't have to change its name to Pan Am to start flying the Asian routes.

Yes, UAL bought PAA Pacific operation in the mid 80's...well before the bilaterals started on JAL/ANA expansion. Since the PAA 5th Freedom rights were more restrictive than NWA's, the Japanese government didn't try to alter the original agreement.

The scrutiny on 5th's started when the Japanese economy started it's swoon in the mid-90's.

Both the attitude regarding, and the specific language in, the Agreement has changed since 1985.

Surprise!

 

[PCL_128]

The big question the MEC grilled NWA management about, and directed our NWA Board member to research, was whether or not NWA would have to be the surviving carrier to retain the rights.

The definative answer from all informed sources was a clear "We don't think so".

I suspected as much. Rarely are these kinds of agreements so set in stone. The way corporations are structured nowdays (with multiple holding companies and subsidiaries) it just doesn't make sense to create such a narrow set of rules.

Overall, I think a NWA/DAL merger would do better under the Delta name. Something I've seen over the years of flying for the NWA system and living in a Delta hub is that NWA has virtually zero brand loyalty from their customers, while Delta still enjoys at least some brand loyalty, especially in the South. Overall, Delta also has a much better reputation for customer service.

 

[TAWS]

I think Occam is really Steenland! - He knows too much! Either that, or he is the curator of the NWA ALPA museum.

 

[Cobraair75drvr]

Nah. Former lec rep. imho.

 

[Occam's Razor]

I think Occam is really Steenland! - He knows too much!

Ulp!

Signs I'm not Steenland:

1. I have opposable thumbs.
2. My parents were married.
3. I've been at NWA a lot longer than that FNG.
4. I'll be here after he's "moved on to explore other opportunities"
5. I took a pay cut last year.
6. I don't drop the F-bomb at pilot meetings (Ok, maybe I do...but not in the same context he does!)
7. My moral gyro hasn't tumbled.
8. I know how to lead people. (Thank you, USMC!)
9. His FI s/n is "MAGNUM!" (See? I told you it'd be unobserved!)

Either that, or he is the curator of the NWA ALPA museum.

If you're referring to the last 20 years, I'm probably as close as you'll find.

And that's sad...

 

[Fly4hire]

Interesting These NW/DL talks that have been on going for quite some time and very well might lead to a friendly, private equity backed merger. (UA-CO, US-DL, NW-AA.)

Interesting take on events. Do you mean to infer a merger where the equity partners take the merged company private?

In any case I think things will happen sooner than later - NWA just filed it's reorg plan this morning, with an extension on disclosure statement until Feb 15. Doesn't DAL have an extension until Feb 17?

 

[TAWS]

Funny post Occam!

 

[dbrownie]

I think Occam is really Steenland! - He knows too much! .

Now that is funny!

Dbrownie

 

[jetflier]

Hey Occam,

Did you used to be a MSP Capt rep and host new hire welcome aboard meetings ?

Inquiring minds want to know...

 

[Clacker]

Hey Occam,

Did you used to be a MSP Capt rep and host new hire welcome aboard meetings ?

Inquiring minds want to know...

Yes, and how about the annual hunting trip with the accompanying photos posted on the wall in the MSP pilot lounge? Risible indeed! I'd recognize that writing style anywhere...
I won't tell though.

 

[Fly4hire]

and host new hire welcome aboard meetings ?

What's a new-hire?

Inquiring minds want to know

Etiquette here is no "outing"

 

[Airbus_Driver]

Occam's

Very interesting and informative post. I am a NWA furlough scheduled to return in March. My biggest fear on returning to NWA is to experience a furlough due to merger.

Could you provide any insight as to what I could expect from the NWA MEC or from management should a merger occur? How about if it was with a non-ALPA carrier (ex..AMR)?

Thank you for your response.

 

[FDJ2]

I'm sure the NWA guys would prefer to go with Delta rather than AA. I mean, look what a great deal the Delta MEC gave the PanAm guys. TC

Here's a little something to refresh your memory.

"Pan Am's conduct during earlier asset sales also supports ALPA's thesis. In 1985, for example, when Pan Am sold routes to United, Pan Am trained only those pilots with experience on the planes transferred to United, not its most senior pilots. In addition, in its 1988 term sheet for the collective bargaining agreement, Pan Am refused to provide pilots any "assurances" regarding their treatment in an asset sale; and it refused to accept any contractual responsibilities that could jeopardize its ability to complete a transaction.

Moreover, in late 1990, when Pan Am sold its London Heathrow routes to United, it did not transfer its pilots solely on the basis of seniority. United agreed to hire pilots in seniority by category ( i.e. , captains hired to fill captain positions; first officers for first officer positions). As a result, senior captains who sought employment at United, and who were qualified to fill first officer positions, were passed over in favor of junior first officers for the first officer positions. When ALPA subsequently sought Pan Am's agreement to protect senior pilots during asset sales, Pan Am again refused to limit its flexibility. "

"Thus, prosecuting pilot grievances would not result in the adoption of a more favorable training program since the most senior pilots did not have a contractual right to receive training for transfer to Delta. This position is reasonable because: (1) ALPA had unsuccessfully attempted to negotiate contractual restrictions on Pan Am's freedom to arrange employment opportunities at other carriers; and (2) Pan Am, on two prior occasions, implemented asset sales involving employee transfers without permitting ALPA to do more than comment on the terms. Because ALPA's decision not to prosecute pilot grievances was based on a reasonable interpretation of the PWA, ALPA did not breach its duty of fair representation."

"The "factual and legal landscape" surrounding ALPA's decision required the union to balance not only the interests of the Spellacy plaintiffs, but also the pilots who remained at Pan Am and who were counting on the infusion of cash from the Delta deal to keep Pan Am afloat. It was of paramount importance to the remaining pilots that Pan Am meet Delta's deadline. By adopting a short course requalification program, rather than the long course program advocated by the senior pilots, Pan Am could train twice as many pilots in the same number of simulator hours."

"The pilots' claims regarding the B-727 training similarly fail. The evidence does not support their contention that, absent the alleged breach, Pan Am would have agreed to provide the requisite amount of B-727 training courses. Pan Am never claimed that the facilities for such training were unavailable. Rather, Pan Am indicated that it had a sufficient number of "current and qualified" B-727 pilots to meet Delta's quota. Accordingly, Pan Am refused to accept any proposal requiring the expenditure of money to train pilots for the B-727."

 

[AA717driver]

FDJ--Yeah, wash your hands. You have a clear conscience.

In the UAL Pacific route transfer, the pilots were given a chance to bid to the Pacific and, thus, to UAL. At that time, PAA actually had a better contract than UAL so most of the senior pilots ELECTED to stay at PAA.

So you're saying you F'ed 'em because you could? In the Delta Rape Case, unless you had a buddy in the training center who could get you a A310 class, you had no opportunity to go to Delta.

The Delta MEC turned its back on the PanAm guys (not that they had a duty to consider them at all). All they cared about was getting the seats and routes. So Delta DID F'em because they could...

And, you're quoting from where? The ALPA defence against the PanAm lawsuit? You mean the case where ALPA got its ASS handed to 'em?

I can only hope you get the same treatment in YOUR acquisition. That would be only fair, right? TC

 

[Occam's Razor]

AA717driver,

If you get the chance, you should check out how that case (Duke-Spellacy)was finally settled. The jury found for the plaintiffs. The judge queried the jury, member-by-member, and learned that the entire jury believed that either method offered for the transfer, including the method proposed by the plaintiffs in their suit, would have been a breach of DFR by the PAA MEC.

That's why the judge suspended the verdict and directed the parties to reach a settlement. They did.

A case where there was no "fair" solution.

To avoid exposure to a similar no-win situation, ALPA (National) has the authority to set aside transfer terms and require independent arbitration or execution of ALPA Merger Policy (which would most likely lead to ...arbitration).