Delta and America West merger?

[DesertFalcon]

Friday March 22, 12:19 pm Eastern Time
Delta and America West Could Be Getting Serious
By Holly Hegeman
Special to TheStreet.com

It seems that merger talks between Delta Air Lines (NYSEAL - news) and America West (NYSE:AWA - news) have entered a phase that's worth discussing.

Although the airlines have declined to comment on the report I first made in the RealMoney Columnist Conversation on Wednesday, sources inside Delta confirmed that the Atlanta-based carrier is sniffing around Phoenix-based America West. Sources also tell me that some union representatives were given a heads-up by management about the talks.


Posted by DesertFalcon

 

[skydiverdriver]

I've heard this rumor before. One question though, if AmWest still had Dash-8's, would they merge only the big airplane drivers with Delta, and put the Dash-8 pilots in with Comair/ASA? Or will all of America West's pilots be merged with Comair? Just a question.

 

[flx757]

Your question is about as relevant as this question: What if Spartacus had a Piper Cub?

 

[DesertFalcon]

I've heard this rumor before. One question though, if AmWest still had Dash-8's, would they merge only the big airplane drivers with Delta, and put the Dash-8 pilots in with Comair/ASA? Or will all of America West's pilots be merged with Comair? Just a question.

Sounds like a question for, "LAWMAN!!

 

[spongebob]

Where are AmWest pilot domiciles ?

Hey Amwest guys, when the time comes that you can fly out of lovely QNY, where are your domiciles so we can do some western flying?

Also, how many pilots on the property now?

 

[ifly4food]

I don't put much stock in anything Holly Hegeman says. In my book, she's right up there with Mary Schiavo in the big mouth-little proof department.

I'd say more, but she has a history of suing those who publicly call her for what she is.

As for DAL-AmWest, I'd say doubtful at best. upside for Delta... a fledgling west coast hub. Downside... enormous debt and labor trouble. Don't forget that the US Government now owns some 30% of that airline in exchange for the "bailout". Delta would have to buy that back.
Upside for AmWest... huge, downside none.

About the only thing Delta may be interested in is getting its hands on Mesa (feeder for AmWest). They see great potential in it's president, a.k.a. the "Frank Lorenzo of this decade". He's just the master of alter ego and whipsaw Delta needs to make its crush of ASA and CMR complete.

If Delta gets in bed with Mesa, I see a future of 70 to 90 seat RJs flying routes that used to be flown by ASA, CMR, and DAL. They could paint them in the America West livery and say they don't fall under the scope clauses. Of course, their pilots will make a fraction of what ASA/CMR pilots do. It would be a great addition to DCI's "portfolio of carriers". It would be management's wet dream.

Got scope?

 

[skydiverdriver]

So,how is Delta crushing Comair and ASA right now? Aren't both airlines growing? RJDC's wet dream? You obviously have the most incredibly wrong idea of what the rjdc is doing, and I don't think you have any reason to think that way. Oh well, I'm done arguing about it. The lawsuit goes on, and it's the only thing protecting our jobs from things like this.

 

[ifly4food]

Sorry for the cheap RJDC shot SDD, that was a poor choice of words. I've edited my comment.

See my post under the RJDC update thread. I mean that DAL is using this RJDC issue to divide and conqour us. Yes, we're growing now, but not for long. You and I are on the same page here. You saw the Enquirer article. Delta is growing the non-wholly owned carriers twice to three times the rate they are growing us.
We need to quit fighting and get together. I don't think RJDC in it's present form is the banner we will all (ASA, CMR, DALPA) unite under. That's all.

 

[FlyingSig]

My take on this DAL/AmWest rumor:


A.) Don't think it's gonna happen. I don't see how you can cry poor and "circumstances beyond the control" then run out and buy another airline.... but that's JMHO

B.) What does AmWest bring to Delta? Nothing really. 757's and some old 737's in addition to the Airbus'.

PHX and LAS, thanks to SWA are both low yield origination hubs. While SLC is expensive and certaily rumored to be cutting back I don't see a "Delta Express" expansion in these hubs as upper management has said that model no longer works due to the reduced traffic. Express worked when you could take the leisure fares and overfly ATL on the way to FL leaving more seats in ATL for the high yield pax. Now they don't have enough pax to make it worth overflying....


So why AmWest? Simply to get rid of some competition. Buy them, sell of the airbus and most of the 737's and viola, now you have one less competitor along with less seats in markets which will drive up prices. At $6 /share right now (give or take) it's probally a bargain to buy them to do this....


Just my take on the rumor....like I said, since it first came from Holly and I haven't read it anywhere else I don't see it happening.

 

[skydiverdriver]

Sig,
So, why don't you answer my question about the merger of lists? Would the (former) Dash-8 pilots be treated differently than the Airbus and Boeing pilots? What if they still had the props? Just a question, don't get upset about it.

 

[FlyDeltasJets]

SDD,

It's a legitamate question, and I will be happy to answer it. As per section one of our contract, the company must integrate the lists within six months of the acquisition if they buy any carrier that "operates aircraft other than permitted aircraft types". Anything over 70 seats is not a "permitted type" so management would be forced to merge the lists of AWA, regardless of what else they operated, because they also operate airplanes other than "permitted types".


Clear as mud?

Example: If comair had one 737, than we could force management to combine the lists. They don't, so we can't. Right or wrong, that is the way the contract is written. I believe comair's contract contains similar language, except the 70 seat limit is 19 seats. Someone please correct me if I am wrong.

 

[skydiverdriver]

Nope, sounds clear enough to me. So, if DAL decided to purchase AmWest under Comair, in other words, have Comair buy them, then you would have to merge both of us, correct?

 

[FlyDeltasJets]

SDD,

That's an interesting question, though I doubt it would ever happen. However, if CMR attempted to buy AWA, only two things could legally happen, as far as I know.

1. They would not be allowed to, as they cannot buy any airplanes over 70 seats... or

2. We would have to merge the combined operations (CMR,AWA,DAL) as per our contract.


The only interesting (and scary) proposition is that CMR could buy awa and operate them as a seperate carrier (i.e. Freedom Air). I don't have your contract language handy, but I would hope that it includes language preventing this. Perhaps you could let me know?

As I said, I believe that our contract prevents this scenario, but it is nice to cover all the bases! (Not that I think the proposition is very likely)

 

[skydiverdriver]

I actually heard this scenario as a rumor quite awhile ago. Believe me, I find it as frightening as you do. But, if our company decides that it may serve some advantage, I don't know if we have the language in our contract to stop it. I'm not an expert at our new book, but our scope clause is pretty weak at best. Remember, our management wrote our contract, as we were railroaded into voting for it. I hope this never happens, but I'm afraid that it might.

 

[cactus]

To answer some of the previous questions:

PHX is only domicile. AWA has 1800 pilots. We haven't opperated Dash 8's since the early 90's, so that is a moot question.

Our MEC chairman addressed this rumor on last weeks hotline and he said he has heard nothing about a merger from ANY official sources.

This rumor has been going around for the last 10 years. I doubt it will ever come true. We are mainly an Airbus airline and Delta dosn't like Airbuses. I just don't see it happening.

 

[FlyDeltasJets]

Cactus,

I agree with you that this rumor is a long shot at best, but I've been surprised before! For the record, I hope you are right.

By the way, would you mind posting your MEC hotline number? I enjoy listening to them.

Thanks

 

[cactus]

FlyDeltaJets check your private messages.

 

[skydiverdriver]

Cactus,
Yes, I know you don't have Dash-8's anymore. I knew some of your pilots furloughed from in when I worked at Piedmont. However, it was a hypothetical question only, and I appreciate FDJ for answering it.

So, if Delta purchased Mesa, and they had one 90 seat airplane, all of Mesa's pilots would be folded into Delta ahead of Comair and ASA's pilots? Does that make sense to anyone? So, Comair is restricted from purchasing a 90 seater, because of Delta's scope clause, but another airline could do it BEFORE they were purchased and then be merged? So, just because we are owned by Delta, we are restricted from doing the one thing that would get us merged. This sounds pretty dangerous to me.

Well, if Delta does purchase Cactus, they will have to get behind Comair and ASA pilots since we were purchased first.

 

[RJFlyer]

SDD:

So, if Delta purchased Mesa, and they had one 90 seat airplane, all of Mesa's pilots would be folded into Delta ahead of Comair and ASA's pilots?

But I'm of the understanding that Mesa can't have 90 seaters (or 70-seaters, for that matter), that's why they're starting Freedom Air.

 

[skydiverdriver]

Well, Mesa has 90 seaters ordered, so they are getting them. How they fly them is a matter for the owner of Mesa to determine, but my point was as soon as they have one90 seater, they would be more worthy of merging with Delta mainline than an ASA or Comair pilot who has been owned by Delta for two years now.