Delta Hopes for Merger Agreement with NWA or UAL in Next 2 Weeks

[ACL65PILOT]

None, but I think that they can change the summer schedules. Those normally are published in March. Other than that I have no clue. Just stating what I have been told.

 

[snow-back]

Reducing hubs will not be politically acceptable... When is it ever acceptable to reduce thousands of jobs? Probably never unless liquidation is imminent... The local politicians will never allow that and they will balk at anything that could adversely impact their districts. That's why merger combinations with the least hub overlap make sense - you can still preserve some jobs.

In that case, DAL + NWA makes more sense than DAL + UAL (LAX, JFK and SLC/DEN hubs will need to be reviewed at the very least). DAL and UAL also both offer competing transcon service and JFK-London service. The DOJ could nix everything or take a very long time to complete impact studies - how will competition and consumers be impacted by reducing choice in certain markets? You can bet that a Democratic-led Congress will do whatever it can to protect employee interests. Any consolidation process could take a long time. Just imagine the thorny integration planning process - OUCH!

One thing is for certain, with the potential for a big mess in the 121 world, the Fractionals are looking better all the time!!!!!!!!!!

Didn't AMR tell St. Louis that their airport would remain a hub? I haven't been there recently but I've heard it's practically a ghost town now.

In the end, the airline(s) will tell whoever they need to tell, whatever they need to hear to get what they want for the Corporation. Laborers...beware of "synergies".

 

[Eagle757shark]

Reducing hubs will not be politically acceptable... When is it ever acceptable to reduce thousands of jobs? Probably never unless liquidation is imminent... The local politicians will never allow that and they will balk at anything that could adversely impact their districts. That's why merger combinations with the least hub overlap make sense - you can still preserve some jobs.

In that case, DAL + NWA makes more sense than DAL + UAL (LAX, JFK and SLC/DEN hubs will need to be reviewed at the very least). DAL and UAL also both offer competing transcon service and JFK-London service. The DOJ could nix everything or take a very long time to complete impact studies - how will competition and consumers be impacted by reducing choice in certain markets? You can bet that a Democratic-led Congress will do whatever it can to protect employee interests. Any consolidation process could take a long time. Just imagine the thorny integration planning process - OUCH!

One thing is for certain, with the potential for a big mess in the 121 world, the Fractionals are looking better all the time!!!!!!!!!!

I don't think so. When US Airways and America West mergered, Pittsburgh was the hub that was terminated. US Airways is down to 22 mainline flights a day. Pit used to have over 500 flights a day. The reason the airlines are pushing for mergers now is because of the current administration in Washington. If Northwest and Delta merge, Memphis will fade away as a hub. Memphis may remain a focus city but with Atlanta close by it will go. CVG will go with either carrier given the close distance to Detroit and Chicago. With a Delta United merger, I think you would definitely see Salt Lake City fade as a hub given the close distance to Denver and San Fransico. All of these hubs may remain focus cities but will lose their major hub status. Airlines like AirTran, Jetblue, and Southwest would probable beef up those cities themselves. The politicans know this!

 

[zonker]

"This is like a closed circle. It's like pals taking care of each other," Oberstar said. "These money managers are just leaping over a host of concerns that have to be evaluated and any one of which can block a proposal."

 

[ACL65PILOT]

Where is regulation when you need it?

 

[Eagle757shark]

Where is regulation when you need it?

Sorry buddy, it's called a Global Economy and every regulator knows it! America has to prepare for this global economy. With the Euro becoming stronger everyday, business' will have to think globally. That is what Delta is positioning itself for.

 

[On Your Six]

I don't think so. When US Airways and America West mergered, Pittsburgh was the hub that was terminated. US Airways is down to 22 mainline flights a day. Pit used to have over 500 flights a day. The reason the airlines are pushing for mergers now is because of the current administration in Washington. If Northwest and Delta merge, Memphis will fade away as a hub. Memphis may remain a focus city but with Atlanta close by it will go. CVG will go with either carrier given the close distance to Detroit and Chicago. With a Delta United merger, I think you would definitely see Salt Lake City fade as a hub given the close distance to Denver and San Fransico. All of these hubs may remain focus cities but will lose their major hub status. Airlines like AirTran, Jetblue, and Southwest would probable beef up those cities themselves. The politicans know this!

PIT has some of the highest user fees in the country - reducing the PIT hub was done for economic reasons. Why is that you don't see other airlines filling the void at PIT now? Because it is still very expensive to use that airport and it doesn't have large O&D traffic. USAirway's PHL hub handles most of those feed cities anyway.

One reason why USAirways and AWA were allowed to merge was because their hubs did not overlap. Their route structures were very complementary. The fact that USAirways was about to liquidate also contributed.

It's true that an airline like Air Tran or SWA could come in and fill the void when a hub is reduced, but that also takes time to ramp up. Local politicians won't appreciate it when hundreds or even thousands of their constituents are put in jeopardy from potential hub closures - even if they are unemployed for only a few months. It's gonna be interesting to watch...

 

[ACL65PILOT]

It was meant tongue and cheek. AKA a joke. I understand all about a Global Economy. Whether or not we like it, it is here to stay.

 

[Eagle757shark]

PIT has some of the highest user fees in the country - reducing the PIT hub was done for economic reasons. Why is that you don't see other airlines filling the void at PIT now? Because it is still very expensive to use that airport and it doesn't have large O&D traffic. USAirway's PHL hub handles most of those feed cities anyway.

One reason why USAirways and AWA were allowed to merge was because their hubs did not overlap. Their route structures were very complementary. The fact that USAirways was about to liquidate also contributed.

It's true that an airline like Air Tran or SWA could come in and fill the void when a hub is reduced, but that also takes time to ramp up. Local politicians won't appreciate it when hundreds or even thousands of their constituents are put in jeopardy from potential hub closures - even if they are unemployed for only a few months. It's gonna be interesting to watch...

IT'S BUSINESS, they will find a way to work it out with the regulators. Do you think they would be discussing a merger if there weren't some way they could appeal to the regulators. Why is it some of you guys don't want the government in your business for some things, but now think the government is going to come in and save you to prevent some business transaction? The attorneys and business people hired in these transactions specialize in them and will work very hard to make them happen.

 

[On Your Six]

IT'S BUSINESS, they will find a way to work it out with the regulators. Do you think they would be discussing a merger if there weren't some way they could appeal to the regulators. Why is it some of you guys don't want the government in your business for some things, but now think the government is going to come in and save you to prevent some business transaction? The attorneys and business people hired in these transactions specialize in them and will work very hard to make them happen.

That's too simple. Why weren't USAirway and UAL allowed to merge a few years back? What happened when USAirways/AWA approached Delta? Was there not an uproar then from politicians as well as employees? Do you think local politicians won't do what they can to protect the jobs of their constituents?

This industry ain't like the retail business. You can open a store on any street corner but you can't just start an airline to compete with a huge, combined legacy carrier. The attorneys will get wealthy off of fighting for their client whether the client wins or loses...

 

[CAL EWR B737]

Did they tell you Delta and United will merge and US Airways and Northwest will merge? That is my predicition. Now if this does take place, which hubs will be reduced. I tend to think MEM, SLC, IAD, and CVG will be reduced as hubs.

I can't help but notice you continue to leave CAL out of the equation. I think you are totally underestimating our management. While as a union committee member SPSC Strike Prep Chairman I fight against them I do have an awful lot of respect for them and I never underestimate them either. The are the top management team in the business (at least in the recent past) and most importantly true or not Wall Street believes that to be the case.

CAL has said publicly to our union and all the new hire classes (Kelner visits each class) that we don't want to merge but if mergers take place we will be a part of it, guaranteed.

As Gordo used to say you don't want to be the ugly girl left standing at the dance.

CAL has stated to CAL ALPA many times the number one merger scenario is CAL/UAL and number two is DAL/UAL. They have said if a UAL/DAL goes down we are in deep trouble.

My two cents if these talks are serious CAL will insert themselves into them and they may even pull the trigger first as to not be left out. You mention US Airways (no disrespect to the Airways pilots on the board) but CAL is far stronger and a much better partner then Us Airways.

 

[Eagle757shark]

I can't help but notice you continue to leave CAL out of the equation. I think you are totally underestimating our management. While as a union committee member SPSC Strike Prep Chairman I fight against them I do have an awful lot of respect for them and I never underestimate them either. The are the top management team in the business (at least in the recent past) and most importantly true or not Wall Street believes that to be the case.

CAL has said publicly to our union and all the new hire classes (Kelner visits each class) that we don't want to merge but if mergers take place we will be a part of it, guaranteed.

As Gordo used to say you don't want to be the ugly girl left standing at the dance.

CAL has stated to CAL ALPA many times the number one merger scenario is CAL/UAL and number two is DAL/UAL. They have said if a UAL/DAL goes down we are in deep trouble.

My two cents if these talks are serious CAL will insert themselves into them and they may even pull the trigger first as to not be left out. You mention US Airways (no disrespect to the Airways pilots on the board) but CAL is far stronger and a much better partner then Us Airways.

NO....did not leave out CAL. Look at the the Thread I started AIRLINE MERGERS! I stated my off the wall opinion as to CAL potential merger partners. I believe Continental will be a big part of consolidation when the initial wave kicks off. I just have a different prediction than most. Continental is a very strong airline with outstanding management. Continental has a very strong transatlantic presence and has micronesia. I could definitely see Continental making a deal with Alaska gaining a hub in Seattle, Los Angeles, and Anchorage. Then micronesia and the pacific can be fed by Continental's new west coast hubs. With the caps being imposed on the New York airports, I could see Continental acquiring AirTran. Continental has always had an interest in Atlanta. Atlanta could give Continental the North-South feed with out congesting Newark forward. Newark would continue to be the gateway to Europe. Just my predictions. JUST AN OPINION! Hey its all in fun!

 

[CAL EWR B737]

Just my predictions. JUST AN OPINION! Hey its all in fun!

I hear ya. Not that I believe everything that comes out of managements mouth. When specifically asked about Alaska and other small mergers Kellner has stated over and over the following.

The cost and pain of a merger of a small carrier is the same as with a large one. If for example a UAL/DAL deal is done it would leave CAL in good shape in the very short term but in the mid to long term it would be catastrophic to CAL. When you create mega carriers and we are not one of them we will lose our biggest corporate clients (who pay the most for tickets) due to advantages with booking with a global mega carrier and the flexibilities that would be inherent. He has stated specifically an Alaska merger is no appropriate reaction to legacies merging.

Just my two cents, and I usually don't listen to anything management says but some those I really respect within our MEC believe Kellner.

 

[Mr.B]

I can't help but notice you continue to leave CAL out of the equation. I think you are totally underestimating our management. While as a union committee member SPSC Strike Prep Chairman I fight against them I do have an awful lot of respect for them and I never underestimate them either. The are the top management team in the business (at least in the recent past) and most importantly true or not Wall Street believes that to be the case.

CAL has said publicly to our union and all the new hire classes (Kelner visits each class) that we don't want to merge but if mergers take place we will be a part of it, guaranteed.

As Gordo used to say you don't want to be the ugly girl left standing at the dance.

CAL has stated to CAL ALPA many times the number one merger scenario is CAL/UAL and number two is DAL/UAL. They have said if a UAL/DAL goes down we are in deep trouble.

My two cents if these talks are serious CAL will insert themselves into them and they may even pull the trigger first as to not be left out. You mention US Airways (no disrespect to the Airways pilots on the board) but CAL is far stronger and a much better partner then Us Airways.

I agree that UAL/CAL would be much better fit than DAL/UAL. Lets hope that UAL management just takes their $$$ and scram.

 

[General Lee]

Look at Yahoo finance before you post please....

IT'S BUSINESS, they will find a way to work it out with the regulators. Do you think they would be discussing a merger if there weren't some way they could appeal to the regulators. Why is it some of you guys don't want the government in your business for some things, but now think the government is going to come in and save you to prevent some business transaction? The attorneys and business people hired in these transactions specialize in them and will work very hard to make them happen.

Delta May Be Dealt Blow By D.C.
Carl Gutierrez, 01.15.08, 3:00 PM ET


Washington my ground Delta's merger hopes.
A week after Delta Air Lines (nyse: DAL - news - people ) soared on a report that the company will combine with either United Air Lines parent UAL (nasdaq: UAUA - news - people ) or Northwest Airlines (nyse: NWA - news - people ), investors learned on Tuesday that the Atlanta-based airline has begun merger talks with both suitors, and hopes to reach an agreement within the next two weeks.
Shares of Delta rose 3.5%, or 54 cents, to $15.84, in afernoon trading, while Northwest lifted 8.1%, or $1.29, to $17.30, and UAL gained 3.1%, or $1.10, to $34.03.
Tuesday’s news, first reported by the Wall Street Journal, said Delta’s board gave Chief Executive Richard Anderson permission on Friday to hold talks with both carriers simultaneously.
Delta hopes to present a preferred partner when its board meets next, in early February, with an announcement coming as soon as mid-February, according to the report.
Calyon Securities analyst Raymond Neidl said the outcome is entirely dependent upon Washington and whether or not it believes such a merger could pass antitrust standards.
“Delta’s serious about wanting to begin talks, and Northwest and United both like to be wooed, but we need a sign from Washington that they’d give their blessing,” Neidl said.
Looking at the broarder climate in the sector, Neidl said that investors view potential mergers positively because they believe that the industry is too fragmented, noting that American Airlines parent AMR is the largest with only a 17% market share.
"Many believe carriers are operating inefficiently, with too many expensive hubs and a lack of ticket price discipline because of over-capacity," Neidl said. "Furthermore, in an atmosphere of record high fuel prices and a slowing economy, we believe mergers would bring better operational discipline."
In late-August, Neidl analyst noted key players in the industry were looking to consolidate, and that Delta’s hiring of Richard Anderson, a proponent of consolidation, as CEO, as well as the elevation of Chief Financial Officer Ed Bastian to president, indicated that the airline was preparing for industry consolidation (See “Mergers Could Ignite Airline Stocks”).
In November, Delta and UAL shares soared after hedge fund Pardus Capital Management tried to push the two together (See "Airlines May Be On Course To Combine").
Pardus Capital, which owns 3 million shares, or 1.3%, of Delta and 5.6 million shares, or 5%, of United, sent a letter to Delta's management stating that it is "imperative" that the airline merge with another due to soaring oil prices, up 55% year-to-date, and the increased risks of going it alone.


Bye Bye--General Lee