Merger talks have begun

[GogglesPisano]

Delta began merger talks with United, Northwest: report
Tuesday January 15, 2:21 am ET


NEW YORK (Reuters) - Delta Air Lines Inc (NYSEAL - News) has started merger talks with UAL Corp.'s (NasdaqGS:UAUA - News) United Airlines and Northwest Airlines Corp. (NYSE:NWA - News), and hopes to negotiate an agreement with one of them in the next two weeks, The Wall Street Journal reported on Tuesday.
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The report, quoting people familiar with the situation, said Delta's board gave Chief Executive Richard Anderson permission last Friday to hold talks with both carriers simultaneously.

Industry lawyers and consultants say Delta will likely come under an unprecedented antitrust review if it decides to propose a merger with either airline.

The companies have so far not commented on reports of possible merger talks. A Delta representative was not immediately available for comment. (Reporting by Ritsuko Ando)

 

[IronCityBlue]

An "unprecedented antitrust review" is the understatement of the decade. It might pass, and Delta's leadership may be shrewd enough to pull it off, but there is no way every legacy is going to be allowed to merge in the interest of fairness just so everyone has a "dance partner" and we go down to 3 big airlines. Whoever Delta picks, if aprooved (and still a big "if") may be the only large merger aprooved this round.

 

[COpilot]

An "unprecedented antitrust review" is the understatement of the decade. It might pass,

I respectfully disagree IronCity, for example I have a friend in the banking industry; anti trust regulators are rolling over to "help, save" banks (see BofA last week).

Sorry I can't find referance to quote I read a few years ago, but the jest of it was the theory of 3; that in any industry having three main competitors was sufficient for consumers. I would offer the prediction that airline mangt. will find a favorable reception on capital hill.

 

[IronCityBlue]

I respectfully disagree IronCity, for example I have a friend in the banking industry; anti trust regulators are rolling over to "help, save" banks (see BofA last week).

Sorry I can't find referance to quote I read a few years ago, but the jest of it was the theory of 3; that in any industry having three main competitors was sufficient for consumers. I would offer the prediction that airline mangt. will find a favorable reception on capital hill.

You "respectfully" what? On F.I.com? AYFKM? :laugh:

Seriouslly though, I appreciate the "save the industry" angle, and perhaps it might play a role. But the banking industry really is in trouble. Lots of chits called in based on paper assets over inflated by fake speculation wealth that never existed in the first place, yet money was lent out on it, and a recession on the way to compound things. If our banking system collapsed, we're screwed.

Also, helping the banks by possibly rubberstamping consolidation would probably draw a lot less scrutiny by "for the people" regulators.

No polititian or government official stays up late every night worrying about the economics of free checking in their community. They do, however, worry a lot about the effect of low/competitive fares in their community. A merger would increase prices, and many mergers would have an even harder time passing.

Countrywide merges with BOA, how does it effect anyone's life? Any airline merger on the other hand, will result in higher fares and fewer choices to many communities. That's something polititians don't like at all. That's why I see them allowing one big merger, to look like they are helping the industry, and denying the rest, to preserve low fares for their constituents.

That said, consolidation will help the industry in the meantime if done right. Part of that means stopping any further open skies deals and making it much harder to start up a new airline. If the government doesn't fight both those battles (and I believe they will fight neither) then any savings from consolidation will be short lived as a flood of new competition, both foreign and domestic, will cut the industry off at the knees just as its beginning to recover.

 

[Headfake14]

yea...CNN has been talking about Delta and ??? all morning.

 

[Headfake14]

so if even ONE merger took place, then perhaps if we (all carriers) could charge another 10 bucks one way....

no more 'saving the airline' on our (pilots) backs

 

[GOULET!]

There is no way they have just begun talking now and expect to have something done in two weeks. We all know these talks have been going on for months behind closed doors and are just now becoming public because of all the hype on TV about it. Only a matter of time before somebody merges.

 

[densoo]

Wasn't a near merger of legacies, between DAL CAL, on the verge of being announced on Super Bowl Sunday 1998? For it to work within the airlines' business cycle, seems like it has to be done in a fairly short time frame. After the Christmas rush and before they start spinning up for Spring Break then Summer. It takes zero time to furlough 10% of both pilot groups, but it does take some time to reshufflle the remaining pilots into their summer seats.

 

[YourPilotFriend]

No, there will be an actual increase in mainline flying if NWA/DAL merger. There will be an increase in 76 seater flying in the merged airline. However, there will be a massive decrease in 50 seater flying. I would predict that comair, pinnacle, and ASA would hit the chopping block.

 

[newnan]

"Sorry I can't find referance to quote I read a few years ago, but the jest of it was the theory of 3; that in any industry having three main competitors was sufficient for consumers. I would offer the prediction that airline mangt. will find a favorable reception on capital hill.[/quote]

The first thing I thought of after reading this was the auto industry. That has worked well, now we've got foreign cars here from all over the world!

 

[ACL65PILOT]

I agree wholeheartedly that there talks have been going on for quite some time. It is all in the timing and the time is now. We know, the execs know it, and so does the government. Question is what will it be and how will it look. If it stinks of mergers past, there will be no way the DOJ will approve it, if not we are in for a wild ride.
I myself am preparing for the worst and hoping for the best, but expecting something down near the bottom end. This after all is the airline industry.