Why Delta Should Buy Northwest

[STL717]

With a new CEO and a clean balance sheet, Delta is pondering expansion. Here's why Northwest is the logical choice

http://www.businessweek.com/bwdaily/dnflash/content/oct2007/db20071030_734268.htm?campaign_id=yhoo

 

[Furloughed80]

So how will the seniority lists be merged? Percentage; DOH; will Delta pilots receive some type of priority if Delta is the acquiring airline?

 

[rayford steele]

So how will the seniority lists be merged? Percentage; DOH; will Delta pilots receive some type of priority if Delta is the acquiring airline?

Ahh the million dollar question(s)! It won't be decided on this thread but it sure will be fun to watch! Let the mudslinging begin.

 

[IXLR8]

Well,

Heres why...from the article:
The strategic combination of Northwest and Delta might make a lot of economic sense, and we'd like to see both companies explore that potential," says Matthew Philo, a senior managing director at MacKay Shields, a private investment firm that holds a 3.1% stake in Northwest and 1.8% of Delta. "It might be a win for all constituents…including labor."
It would not be for labor....but I see with the pertentages they hold with both companies..its obvious who the winners would be.

 

[Occam's Razor]

So how will the seniority lists be merged? Percentage; DOH; will Delta pilots receive some type of priority if Delta is the acquiring airline?

Blended (W2- and/or position-based). Fenced (with sunset). Bridged (with sunset).

 

[General Lee]

So how will the seniority lists be merged? Percentage; DOH; will Delta pilots receive some type of priority if Delta is the acquiring airline?

I am sure stapling NWA to the bottom would be in order.......No, not really. I am thinking fences for certain planes, no internal base movement for a few years, and a percentage merge to make it fair. Regardless, if it DID happen, it would have to be fair, and the only way to look at it here would be the ALPA merger policy with fences. NWA has 747s and some 787s coming, but their A330 pays less than our 767s, and we have more widebodies (767 and up) than any other carrier. We also have 5 times the number of 757s, and more 738s than they do A320s. Their mini busses are also smaller than our MD88s, and their DC9s are leaving. Very complex, but doable via ALPA's merger policy and some fences. I think the hedge fund people want this to happen more than the politicians, and they can turn it down if they choose.

Bye Bye--General Lee

 

[SkiFishFly]

How might this effect new hires and future hiring?

 

[Noserider76]

How might this effect new hires and future hiring?

I've worked at both NWA and am now at DL and there are great people at both companies. I think the DL people have the most to lose in this deal though, especially those of us who are not senior. DL has a better fleet, junior people on widebodies, and generally better pay, while a huge portion of the NWA fleet is DC-9s waiting to be beer cans.

I do see the benefits of a "too large to be allowed to fail company" and the route structure would be globe covering, but having just started recovering after almost 6 years of turmoil, I would hate to see this happen.

 

[General Lee]

I've worked at both NWA and am now at DL and there are great people at both companies. I think the DL people have the most to lose in this deal though, especially those of us who are not senior. DL has a better fleet, junior people on widebodies, and generally better pay, while a huge portion of the NWA fleet is DC-9s waiting to be beer cans.

I do see the benefits of a "too large to be allowed to fail company" and the route structure would be globe covering, but having just started recovering after almost 6 years of turmoil, I would hate to see this happen.

There might be a lot of talking right now, but that doesn't mean it will happen any time soon. The hedge funds are the ones talking it up, and they are always looking for ways to make a quick buck. The Gov't doesn't usually act that fast, making it a longer process to approve anything like that. It would have to be a win win situation for any large merger to happen (like USair and AWA---USAir was going to liquidate if it didn't happen, and there was very little overlap). There would have to be protections in place for workers, or the local politicians would be up in arms, throwing a stink. Even the hedge fund people know that, it just isn't that easy to merge airlines. So, take it with a grain of salt right now, it may happen eventually, but it would take awhile to complete the process if it did.

Bye Bye--General Lee

 

[xjhawk]

my two cents....

one, there is a reason Anderson is at Delta, and has a relationship with NWA and Steenland.........which seems like its been in the works for some time.

two......With Democrats coming into power, guess what, it might not happen, even if both parties want it so those rich hedge fund guys can make even more money......but teh trump card is the loss of jobs, if the unions can cry loud enough, the politics of it says it will not happen. I would vote no......but then I am not on some corporate board and could make millions.....billions

 

[On Your Six]

Highly doubt a merger would happen between DAL & NWA

It might make sense commercially, but that doesn't mean the DOJ will allow it. Again, when you reduce customer choice, the DOJ discourages any mergers. AWA/USAirways happened because USAirways was weeks away from liquidation - it was a necessity to preserve 50,000+ jobs. NWA and Delta are both in pretty good shape post bankruptcy - there ain't a dire need to merge. That's the deal.

I am sure the hedge funds and stock analysts (and integration consultants) would love to see a merger between the two. But they have no say into what the DOJ will do (green light vs. red light). I highly doubt any merger between equals would happen.

Now, Delta and Alaska makes more sense because their routes/hubs are complementary and there isn't much international redundancy. This would not be a merger of equals in this case and both parties would benefit from the resources of the other.

 

[Diesel-9]

General, You are a little off on the B-757 comparisons. Here is a rough look at the fleets. NWA 400 a/c. DAL 450 a/c. Nwa 5500 Pilots, DAL 7000 pilots. FLEET= NWA 64 B-747/A-330, DAL 8 B-777, NWA 72 B-757, DAL 135 B-757, 100 B-767, NWA 156 A-320, DAL 70 B-737, 128 MD-80, NWA 110 DC-9, DAL XXX RJ's. Orders NWA 9 A-320, 18/50 B-787. DAL 8 777. If NWA doesn't sell half the 787 deliveries (34) for the new freighters, would be available sooner for DAL to purchase. Most 787 slots sold well into the next decade.

 

[Noserider76]

There might be a lot of talking right now, but that doesn't mean it will happen any time soon.

Bye Bye--General Lee

I hope you're right. I'm sure there is an attempt to jack up the stock price from management and the hedge funds by yelling CONSOLIDATION!!! on a regular basis. I've had a bad feeling though since Whitehurst was passed over for the top job and Anderson was brought in. Either way, I guess we are just along for the ride.

 

[FDJ2]

There might be a lot of talking right now, but that doesn't mean it will happen any time soon. The hedge funds are the ones talking it up, and they are always looking for ways to make a quick buck.

I agree General, just a lot of talk, very unlikely at this time. Most of the benefits can be derived through the current code share arrangement with NWA and the DAL joint venture with AF and KLM.

Here's a fleet snap shot for what's it worth.

NWA has 31 B747s DAL has 0

DAL has 8 B777s, NWA has 0

NWA has 33 A330s, DAL has 20 B767-400s

DAL has 80 B 767-300s, NWA has 0

DAL has 136 B 757s, NWA has 72

DAL has 71 B737-800s, NWA has 75 A-320s

DAL has 136 MD88/90s, NWA has 0

NWA has 66 A-319s and 115 DC-9s, DAL has 0

To summarize, DAL has significantly more wide bodied aircraft, but NWA's has 31 747s.

DAL's 757 fleet is roughly twice as big as NWA's.

The smaller narrow bodied fleets are about the same size, but DAL's aircraft are slightly larger.

Pilot demographics are somewhat comparable, so I don't see the same dynamics as the AAA/AWA merger.

Likelihood of a merger anytime soon, minimal. JMHO

 

[General Lee]

General, You are a little off on the B-757 comparisons. Here is a rough look at the fleets. NWA 400 a/c. DAL 450 a/c. Nwa 5500 Pilots, DAL 7000 pilots. FLEET= NWA 64 B-747/A-330, DAL 8 B-777, NWA 72 B-757, DAL 135 B-757, 100 B-767, NWA 156 A-320, DAL 70 B-737, 128 MD-80, NWA 110 DC-9, DAL XXX RJ's. Orders NWA 9 A-320, 18/50 B-787. DAL 8 777. If NWA doesn't sell half the 787 deliveries (34) for the new freighters, would be available sooner for DAL to purchase. Most 787 slots sold well into the next decade.

We are done parking our fleets, and should get 30 or more new planes (well, actually some used ones too, but additional no less) next year alone, including at least 8 new 777LRs in the next 2 years (up to 12 more total via a rumor), while you get rid of DC9s and some more of your A319s. The DC9s are not in your 5 year plan I don't think. Your 744s will probably take over your 742 cargo ops too, leaving the 787 or A330 as your largest plane (after the new 744 cargo ops). If the A330 is larger than the 787, then it will pay less than our 767, and we have more 767s than any other airline. I know we have a lot of RJs, but you too will have a lot, thanks to Compass and Mesaba getting plenty of CR9s and E175s. We both have an RJ problem, no doubt.


Those 110 DC9s are your anchor. We can use the MD88s for 10 more years with our new leases and the fact that they are a lot newer than AA's MD80s, and they could stay for another 5-7 years too. Combine the loss of your DC9s, plus those Cargo 742s that will go away, and your aircraft numbers decrease a lot.

Bye Bye--General Lee