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.
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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

 

[ils2minimums]

What's Song's plan with $130+ oil? Another $6.7 bil quarterly loss?

Song is in the history books...


http://en.wikipedia.org/wiki/Song_(airline)

 

[Tanker Clown]

Song is in the history books...


http://en.wikipedia.org/wiki/Song_(airline)

Really? But it was such a great idea. I wonder what Delta has up their sleves now that Song is gone. Maybe they'll get together with Coke down in old ATL and rerelease New Coke!

 

[FDJ2]

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

I think you're right. IMHO, whether oil goes up or down, the merger will probably move forward because the the merger will probably makes both airlines stronger as a combined operation, than as two separate operations.

From a pilot point of view, we all have some anxiety, because this merger means change and uncertainty, particularly with regards to our seniority.

We all have our issues, whether its attrition, DC-9s, 747 flying, wide bodied ratios etc. These issues will work themselves out. It will take leadership to navigate us through the process, but I think we'll get there and hopefully negotiate a SLI we can all live with.

At the end of the day we'll probably work for a stronger combined airline than for two weaker seperate airlines. Stronger airlines can support better contracts and stronger airlines can grow. At the end of the day it's your compensation for your labor that matters and working for a stronger and growing airline tends to increase your compensation.

I've heard the latest NALPA hotline, I believe it was May 20th. IMO and I think most Delta pilots would agree, it was a good message from NALPA. Hopefully we'll get back on track.

 

[ACL65PILOT]

Lets Hope so.......

 

[johnboy99]

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

Look in the mirror G. How many MD-88's does Delta have. They are just a stretched DC-9. I would bet you will see some Delta MD-88's in the same boneyard as these NW DC-9 and 747's by years end.

 

[Whine Lover]

Haven't you guys heard? It a new concept..."an airline within an airline".

Delta is going to take a few dozen old jets, paint them real cool, and charge $49 fares.

Rumour is it's going to be called " Metro-Song-Lite-Shuttle-Express".

YKW

 

[Superpilot92]

I dont know where i saw it at but i read something that said both DAL and NWA would have to pay BIG fines if they up and back out now. Big Money is being dumped into making this happen i dont think there is anyway they would back out now.

 

[ACL65PILOT]

Agreed

 

[ChoadSnazz]

I dont know where i saw it at but i read something that said both DAL and NWA would have to pay BIG fines if they up and back out now. Big Money is being dumped into making this happen i dont think there is anyway they would back out now.

$165M payable by the party that initiates the breakup.

 

[dbrownie]

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

Bye Bye--General Lee

And you wonder why Nwa pilots don't trust the

Delta pilots?

DB

 

[Cobraair75drvr]

DB,

Don't feed the troll. General Lee, puffdrvr, fdj2 etc are most likely 98 hires or later by thier constant fear of a fair list. They know that with all the younger capts ahead of them that the fast movement has stopped at dal for a while and the only way for near term advancement is to capture some of our retirements and growth due to the large 78 order(and yes it will eventually fly and be a game changer) If you ever go to the alpa natl board, write down some of the chronic posters and check the dal seniority list. Most, not all are 97 hires or later. You don't see too many posters senior to that.

And you wonder why Nwa pilots don't trust the

Delta pilots?

DB

 

[Champ42272]

The EU approved the deal yesterday (per WSJ). It's a done deal, and it's the only way for management (either) to cash out.

I hope it works, the alternative is too ugly to think about.

Just my opinion, I could be wrong.

Champ 42272

 

[NuGuy]

DB,

Don't feed the troll. General Lee, puffdrvr, fdj2 etc are most likely 98 hires or later by thier constant fear of a fair list. They know that with all the younger capts ahead of them that the fast movement has stopped at dal for a while and the only way for near term advancement is to capture some of our retirements and growth due to the large 78 order(and yes it will eventually fly and be a game changer) If you ever go to the alpa natl board, write down some of the chronic posters and check the dal seniority list. Most, not all are 97 hires or later. You don't see too many posters senior to that.

Word. Every DAL poster at the ALPA National forum has an agenda, just like they do here, and every one fits into that same mold. The more junior, the louder they are.

Look at FDJ and Puff...they pop up out of nowhere on this forum at the beginning of the year (right after the merger talks heated up) to start spewing their "fairness" baloney.

I'll give a pass to the private and Fins...they've been yanking chains here for a long time.

Nu

 

[clippyrip]

Look at FDJ and Puff...they pop up out of nowhere on this forum at the beginning of the year (right after the merger talks heated up) to start spewing their "fairness" baloney.

They are probably moles attempting to sway the NWA pilots opinion. As if one day we'll wake up and say OK seniority does not matter. Or, yes the 742s and the DC9s are all being retired this month so we won't count them or OK the A330 should be below your "Widebody" 757 on the pay scale.

 

[FDJ2]

Look at FDJ and Puff...they pop up out of nowhere on this forum at the beginning of the year (right after the merger talks heated up) to start spewing their "fairness" baloney.

Really? Is that when I popped up on this forum?

Join Date: Aug 2003


I wouldn't think that fairness is baloney, I would think its important.

I also think that seniority is important to all the pilots, both senior and junior.