Delta CEO Says Consolidation Possible

[STL717]

Delta CEO Says Consolidation Possible
ATLANTA (AP) -- The chief executive of Delta Air Lines Inc. said Tuesday that the carrier wants to be the "undisputed leader" in the industry and that a deal with another airline may be in its best interest.


http://wsbradio.com/common/ap/2007/10/16/D8SADRV00.html

 

[densoo]

Delta has indicated before that if it was involved in consolidation, it would want to be the acquirer. Anderson hinted at that again Tuesday when he said that consolidation would make sense to Delta if it was done from a position of strength and in the long-term best interest of shareholders.

Too bad there is no mention of the "interest" of the employees. Not part of the bottom line "interest of the shareholders" I guess

 

[Schiphol]

Actually, if you read the whole transcript; that is mentioned in the same breath with increasing shareholder value. Not that it will happen, but Anderson is paying it due lip service for now.

 

[gutshotdraw]

Of course it's going to happen. We always knew DAL-NWA was a matter of when, not if. He's just laying the groundwork for the market, employees, and stockholders.

 

[Tomct]

Definitly not good news. I hope that all of my friends that just got hired over there don't get SCREWED! I personally thought it was a bad move to bring in Anderson....former CEO of NWA. NOT GOOD!!

 

[Whiskerbizkit]

Delta + NWA, followed by CAL + UAL, Then Alaska + Airtran, JB + Frontier, Spirit. Am I missing anyone?

 

[Occam's Razor]

Delta + NWA, followed by CAL + UAL, Then Alaska + Airtran, JB + Frontier, Spirit. Am I missing anyone?

Likely.
Unlikely
Who cares?
Ditto.

My guesses:

DAL/NWA
UAL/AAA
AMR/Other(s)

The non-network carriers (jetBlue, Frontier, AirTran, Spirit, Sun Country, Midwest) will either remain unaffiliated within their niche, or be assimilated by SWA or one of the network carriers.

CAL is the wildcard. They aren't truly "independent" without NWA's consent, so they would most likely be involved in a triggered deal.

 

[Aubie]

Where's the General on this?

Oh wait - he's busy trolling SWA threads to toss in LBB overnight/ 7 legs-a-day comments..

 

[Tanker Clown]

Maybe Delta will aquire Song. I hear they are really giving it to Air Tran these days.

 

[bleagle]

Maybe Delta will aquire Song. I hear they are really giving it to Air Tran these days.

Maybe United will acquire TED....:nuts:

 

[Furloughed80]

If DAL and NWA merge, NWA's "golden share" with CAL is terminated.

 

[General Lee]

Definitly not good news. I hope that all of my friends that just got hired over there don't get SCREWED! I personally thought it was a bad move to bring in Anderson....former CEO of NWA. NOT GOOD!!

No, that is the best possible merger IF MERGERS were to happen for Delta. Delta and Northwest do not have a lot of overlap, and that means more people will keep their jobs. There are a couple areas that could be trimmed, like MEM (next to ATL) and CVG (next to DTW), which could become focus cities to appease local politicians. Overall, the MSP/DTW bases along with NWA's strong Asian presence mix well with ATL's strong SE presence, JFK and Europe, and Delta's West Coast bases in LA and SLC. As you can see NWA hasn't named a replacement for their DC9s yet (maybe E190s, but no large order), but could add 737-700s someday. NWA has ordered 787s, which is something Delta has yet to do. There would have to be a large realignment in fleets to have this happen. Just remember Delta has 13 different planes at one time in their fleet (pre-9-11), so adding a few different types would not be that big of a deal. A combination of their names would yeild a merged name of DELTA AIRLINES. I don't care what the NWA pilots say about Asian routes needing to have the NWA name, that could be changed during a golf game. Really.

If CAL and DAL combined, a huge problem would be who would get rid of their JFK or EWR base, since other airlines would challenge that as a monopoly, not to mention that CLE and CVG are pretty close to each other. The fleets are close with CAL and Delta, but the NYC deal is a huge hurdle.

DL and United don't really make sense because of United's IAD base and their DEN base, very close to Delta's JFK and SLC bases. Both also have LA hubs, and that would be like giving terminal 5 away at LAX because one would have to give something up I am sure. Not worth it.

DL and USAir will not get together, ever. CLT and PHL are too close to ATL and JFK. Nah.


I still think the economy really has to take a larger dump for this to happen, and I see LCCs merging first. Jetblue/Frontier/Spirit etc. Maybe Jetblue and Skybus too. No unions at Jetblue will help faciliate a merger with someone.

Bye Bye--General Lee

 

[Occam's Razor]

If DAL and NWA merge, NWA's "golden share" with CAL is terminated.

That is correct.

 

[snoopbomb]

delete

 

[johnsonrod]

Delta and NWA will not merge - you heard it here first

Of course it's going to happen. We always knew DAL-NWA was a matter of when, not if. He's just laying the groundwork for the market, employees, and stockholders.

Alright - here's my look into the crystal ball:

No way DAL and NWA would ever happen. Nope. The DOJ would never allow it unless one of the airlines was in absolute dire straits (like USAirways pre-AWA merger). You will not see two majors merge if they are in good financial shape. There will be no merger of equals that will reduce consumer choice.

Now, I could see DAL and a smaller carrier that provides both a complementary route structure and fleet possibly merging - perhaps DAL and Alaska... Why not? Alaska will soon have an all-Boeing fleet that could easily fit into DAL's fleet. Alaska has the West Coast presence that Delta needs for feeding Asia-bound flights out of LAX. Alaska would strengthen DAL's domestic position and provide better feed as it looks to increased Asian/Pacific expansion. What would DAL do with NWA's MSP, DTW and MEM hubs? What would DAL do with the mix-match of fleet types (Airbus vs. Boeing)? That would be super-inefficient in terms of training, maintenance, etc. You would end up having less Asian competition among US carriers on the West Coast - that would not be good for consumers.

Instead, DAL and Alaska is a much more compelling match as fleet types match and route structures are very complementary. Consumers will not be hurt by combining these two carriers and no hubs would necessarily need to be shut down. In fact, Alaska customers would benefit from DAL's international connections - you could fly from Mazatlan or Cabo to Tokyo with one stop in a seamless fashion (not requiring a change of airline) and a US airline would retain the money vs. giving part of it away to a foreign carrier.

I really don't see a merger between two seemingly-healthy legacy carriers due to the reduction in consumer choice and the potential loss of redundant jobs. That's the point. Any merger would have to be completely complementary and Alaska/DAL appears to fit quite well and fill a gap in DAL's route structure. That's my 0.02.

 

[catIIIc]

Alright - here's my look into the crystal ball:

No way DAL and NWA would ever happen. Nope. The DOJ would never allow it unless one of the airlines was in absolute dire straits (like USAirways pre-AWA merger). You will not see two majors merge if they are in good financial shape. There will be no merger of equals that will reduce consumer choice.

Now, I could see DAL and a smaller carrier that provides both a complementary route structure and fleet possibly merging - perhaps DAL and Alaska... Why not? Alaska will soon have an all-Boeing fleet that could easily fit into DAL's fleet. Alaska has the West Coast presence that Delta needs for feeding Asia-bound flights out of LAX. Alaska would strengthen DAL's domestic position and provide better feed as it looks to increased Asian/Pacific expansion. What would DAL do with NWA's MSP, DTW and MEM hubs? What would DAL do with the mix-match of fleet types (Airbus vs. Boeing)? That would be super-inefficient in terms of training, maintenance, etc. You would end up having less Asian competition among US carriers on the West Coast - that would not be good for consumers.

Instead, DAL and Alaska is a much more compelling match as fleet types match and route structures are very complementary. Consumers will not be hurt by combining these two carriers and no hubs would necessarily need to be shut down. In fact, Alaska customers would benefit from DAL's international connections - you could fly from Mazatlan or Cabo to Tokyo with one stop in a seamless fashion (not requiring a change of airline) and a US airline would retain the money vs. giving part of it away to a foreign carrier.

I really don't see a merger between two seemingly-healthy legacy carriers due to the reduction in consumer choice and the potential loss of redundant jobs. That's the point. Any merger would have to be completely complementary and Alaska/DAL appears to fit quite well and fill a gap in DAL's route structure. That's my 0.02.

DAL would lose the bidding war against AMR over Alaska.

 

[General Lee]

DAL would lose the bidding war against AMR over Alaska.

But wait, the AMR management says they can't give their own pilots a raise, and that they have to earn extra money by "flying more hours." Who do you believe? An American pilot I talked to said their MEC told their management they would strike next July without a 30% raise. Maybe AMR won't have the cash to buy Alaska, eh? Riiiiiight?


Bye Bye--General Lee

 

[Jmoney]

Nwa

Better watch out general. The only question in this merger is now whether NWA is going to be the acquiring partner. If they are the acquiring partner, things will get ugly.

DAL will merge wih NWA-bet on it!

 

[Sonny Crockett]

UAL and DAL...

I am betting on UAL and DAL.

 

[ACL65PILOT]

It does appear that UAL is making some decisions that would indicate that they are setting up for a merger. Spinning off their MTC/MRO arm is a big red flag. Also there has be some subtle realignment of flights. I would not bet that they would go with DAL, but they do want to merge with someone.

 

[tomgoodman]

A head fake?

Hints and winks about a possible merger can have a number of alternative purposes:

--boost the stock price
--flush out a bidder when none currently exists
--prod an existing bidder to raise his offer
--distract employees from something else
--throw a wrench into someone else's merger plans
--test the waters with the feds before deciding
--cover all bases when you don't know what the next play will be

 

[John Pennekamp]

Regarding DAL/NWA, it makes the most sense. And if you look closely, both companies have been making subtle moves lately to distance themselves. The biggest hurdle would be that NWA is an Airbus airline, and DAL is Boeing airline.

Has anyone considered this: a merger of the parent companies, but not the actual airlines?

It would be funny, and actually very plausible if the consolidation (which is sure to come for the legacy carriers), mirrored the consolidation of the regionals where there are only a few huge holding companies who run many airlines as a "wholly owned subsidiaries". This would offer the same benefit to shareholders, without the messy effects of the actual merger. And it could also introduce whipsaw to the legacy pilots, something you've never faced.

Imagine that. "Delta Air Lines, a wholly owned subsidiary of Excelon Transportation".

 

[ACL65PILOT]

John;
That is a very good idea, and very scary. Do not give them any ideas.

 

[General Lee]

Better watch out general. The only question in this merger is now whether NWA is going to be the acquiring partner. If they are the acquiring partner, things will get ugly.

DAL will merge wih NWA-bet on it!

I guess you missed this part of the article quoting Anderson:


"Delta has indicated before that if it was involved in consolidation, it would want to be the acquirer. Anderson hinted at that again Tuesday when he said that consolidation would make sense to Delta if it was done from a position of strength and in the long-term best interest of shareholders."



Bye Bye--General Lee

 

[General Lee]

I am betting on UAL and DAL.

A merger would have to be agreed upon by both sides most likely, since a hostile takeover already was shot down during our most vulnerable time, in BK. (With USAir) So, a consentual merger seems the way to go here. But, United doesn't bring much to the table except a lot of debt they did not get rid of during BK.(over $20 billion) NWA and DL got rid of debt in BK, and they are also close partners with Air France and KLM, while KLM is owned by Air France. If a merger is going to happen, I would bet on Delta and NWA. If UAL decides to do it first and try to merge with CAL, then DL and NWA will dance.

Bye Bye--General Lee

 

[FDJ2]

Delta CEO Says Consolidation Possible
ATLANTA (AP) -- The chief executive of Delta Air Lines Inc. said Tuesday that the carrier wants to be the "undisputed leader" in the industry and that a deal with another airline may be in its best interest.


http://wsbradio.com/common/ap/2007/10/16/D8SADRV00.html

Much to do about nothing. Anderson simply stated that if a merger made sense he'd consider it. Big deal. What CEO wouldn't consider a merger if it made sense.

 

[BID]

Much to do about nothing. Anderson simply stated that if a merger made sense he'd consider it. Big deal. What CEO wouldn't consider a merger if it made sense.

I agree, the media loves talking about this stuff. I think it will one day happen, but I would not worry much about it.

 

[FDJ2]

I agree, the media loves talking about this stuff. I think it will one day happen, but I would not worry much about it.

I agree, and let's not forget that Wallstreet loves talking about it also. There is a great deal of money to be made just on the speculation.

There will be a merger one day, but that day isn't anytime soon. jmho

 

[PeanuckleCRJ]

Much to do about nothing. Anderson simply stated that if a merger made sense he'd consider it. Big deal. What CEO wouldn't consider a merger if it made sense.

I agree. You can never trust what comes out of those sacks of crap's mouths, anyways. I only believe what I've heard when I see it happen in this industry.

 

[Sonny Crockett]

A merger would have to be agreed upon by both sides most likely, since a hostile takeover already was shot down during our most vulnerable time, in BK. (With USAir) So, a consentual merger seems the way to go here. But, United doesn't bring much to the table except a lot of debt they did not get rid of during BK.(over $20 billion) NWA and DL got rid of debt in BK, and they are also close partners with Air France and KLM, while KLM is owned by Air France. If a merger is going to happen, I would bet on Delta and NWA. If UAL decides to do it first and try to merge with CAL, then DL and NWA will dance.

Bye Bye--General Lee

General, UAL has much more CASH than DAL.

I have said Delta for more than 5 years. I am even more convinced today. Think about it. CAL has a pension. That is a humongous deal killer. CAL has told Tilton: "You can't even run water, let alone an airline". Delta's BK was a mirror image of UAL's. Delta is non-union except for ALPA. UAL has the maintenance operation for sale. And after selling the mileage plus, UAL has enough cash to substantially reduce debt at both carriers. Even after the sucking sound of cash leaving with manager types.

And Delta removed old-time airline guys from the CEO slot when the previous CEO retired. No coincidence. It was an order from two boards.

UAL has kept staffing lean. So has Delta. Coincidence? Cost control? BS! This is merger prep. And it is going to happen the next three months. A merger takes time, and in three months these a..holes are out of time before this corrupt administration is gone from the White House.

Thinking past the merger announcement, I figure 5 or 6 months of idle talk at the arbitration table. Then 30 days cooling.

See you on the strike line next summer or about a year from now.