Analyst Jamie Baker thinks Delta could walk away from NWA....article

[General Lee]

Analysts doubt that airlines can afford consolidation

By Christopher Hinton, MarketWatch
Last update: 4:58 p.m. EDT May 22, 2008

NEW YORK (MarketWatch) -- Surging oil prices are becoming so costly to U.S. airlines that some analysts are beginning to wonder whether industry consolidation is moving beyond the carriers' reach.

"Mergers, which are supposed to make the industry more efficient, may not work in this environment since there is a large cash outlay up front and high execution risk," wrote Calyon Securities analyst Ray Neidl in a note. "The current crisis may serve to cool the merger frenzy."
In the last week, oil prices have climbed to above $135 a barrel from around $126 on Friday. Analysts have estimated that for each $1 increase in the price of oil, roughly $465 million is added to airlines' total fuel expense. Jet fuel now represents more than 40% of the industry's costs.

The risk may have become so great that Delta Air Lines Inc. may find it can't raise the capital it needs to purchase Northwest Airlines Corp. and could potentially walk away from the deal, according to Jamie Baker, an airline analyst with J.P. Morgan.



Now, I think we received DOT approval today for flights across the Atlantic under a Skyteam Codeshare agreement, so I don't know if we are going to walk away at all. Regardless, this whole thing could be too expensive for Delta.... Wouldn't you know it? My DC9 upgrade may be slipping from my grasp---as if I were on ICE.


Bye Bye--General Lee

 

[General Lee]

Here is the DOT story.......

AP
DOT grants Northwest, Delta antitrust immunity
Thursday May 22, 4:13 pm ET Transportation Department gives Northwest, Delta and foreign partners antitrust immunity
WASHINGTON (AP) -- Northwest Airlines Corp. and Delta Air Lines Inc., which last month announced plans to combine, on Thursday won final federal approval to share revenue and coordinate schedules across the Atlantic.
[SIZE=-2]ADVERTISEMENT[/SIZE]

The two U.S. carriers -- along with Air France, Alitalia, Czech Airlines and KLM Royal Dutch Airlines -- wanted immunity to essentially operate as one airline for trans-Atlantic flights under the SkyTeam alliance.
The Transportation Department's grant of immunity makes final a tentative decision issued April 9, but does not affect a separate antitrust review of the proposed Delta-Northwest combination by the Justice Department.
Executives from both airlines have said they expect the Justice Department to approve their combination without requiring concessions.
The Transportation Department said the proposed SkyTeam alliance is in the public interest "because it features a proposed new and highly integrated joint venture that will likely produce efficiencies and provide consumers with additional price and service options."
The government requires the carriers to fully implement the proposed alliance within 18 months to retain immunity, and noted that they remain subject to antitrust laws for domestic service and international flights not covered by the agreement.
Atlanta-based Delta and Northwest, based in Eagan, Minn., first petitioned the government to allow the alliance in 2004.


Bye Bye--General Lee

 

[gutshotdraw]

The risk may have become so great that Delta Air Lines Inc. may find it can't raise the capital it needs to purchase Northwest Airlines Corp. and could potentially walk away from the deal, according to Jamie Baker, an airline analyst with J.P. Morgan.

Let's hope so......for Red Tail's sake.

 

[General Lee]

Let's hope so......for Red Tail's sake.

Yeah, then they can deal with the DC9s and 742s on their own. That will be fun.

Bye Bye--General Lee

 

[Tanker Clown]

Yeah, then they can deal with the DC9s and 742s on their own. That will be fun.

Bye Bye--General Lee

Isn't that like the pot calling the kettle black. Neither of you guys will make a nickle this year.

 

[Redmeat]

Baring government impedance the merger is DONE, no matter what oil does.

 

[Tanker Clown]

Baring government impedance the merger is DONE, no matter what oil does.

As a taxpayer, I hope the merger goes though. That way, when the new merged airline goes through Ch 11 it will be like killing 2 birds with one stone. Before the merger, they'd have to make 2 separate court dates, now only one. Now that's what I call synergy.

 

[johnsonrod]

Steeland will do WHATEVER it takes to get the deal done. He has $22 million riding on its completion - yeah, I'd be motivated too.... He's gotta buy a big boat for his lake house near Hibbing.

 

[Redmeat]

As a taxpayer, I hope the merger goes though. That way, when the new merged airline goes through Ch 11 it will be like killing 2 birds with one stone. Before the merger, they'd have to make 2 separate court dates, now only one. Now that's what I call synergy.

You're an idiot.

And your avatar fits your persona.

 

[Tanker Clown]

Thanks

 

[jetflier]

Yeah, then they can deal with the DC9s and 742s on their own. That will be fun.

Bye Bye--General Lee

FLAME BAIT

 

[Schwanker]

The risk may have become so great that Delta Air Lines Inc. may find it can't raise the capital it needs to purchase Northwest Airlines Corp. and could potentially walk away from the deal, according to Jamie Baker, an airline analyst with J.P. Morgan.

Let's hope this deal doesn't go through!!!

KEEP DELTA YOUR DELTA!!!

 

[General Lee]

FLAME BAIT

Did I say anything there that wasn't true? Higher oil will really affect the DC9 and 742, and it will be interesting to see how much longer they stay around in that environment. Any comments?


Bye Bye--General Lee

 

[Tanker Clown]

No comments...but a maybe a question. What's Song's plan with $130+ oil? Another $6.7 bil quarterly loss? Looks like people that live in glass houses shouldn't throw stones.

 

[737 Pylt]

No comments...

Of course not.....It must be hard to talk with your mouth full!

but a maybe a question. What's Song's plan with $130+ oil? Another $6.7 bil quarterly loss?

Song, much like your career, doesn't exist any more!

Looks like people that live in glass houses shouldn't throw stones.

You're 100% correct.....So how's your SWA ass kissing working out for you?
Isn't it time for the colonel's nightly cup of coffee private?
737