Delta CEO Says Consolidation Possible

[STL717]

Delta CEO Says Consolidation Possible
ATLANTA (AP) -- The chief executive of Delta Air Lines Inc. said Tuesday that the carrier wants to be the "undisputed leader" in the industry and that a deal with another airline may be in its best interest.


http://wsbradio.com/common/ap/2007/10/16/D8SADRV00.html

 

[densoo]

Delta has indicated before that if it was involved in consolidation, it would want to be the acquirer. Anderson hinted at that again Tuesday when he said that consolidation would make sense to Delta if it was done from a position of strength and in the long-term best interest of shareholders.

Too bad there is no mention of the "interest" of the employees. Not part of the bottom line "interest of the shareholders" I guess

 

[Schiphol]

Actually, if you read the whole transcript; that is mentioned in the same breath with increasing shareholder value. Not that it will happen, but Anderson is paying it due lip service for now.

 

[gutshotdraw]

Of course it's going to happen. We always knew DAL-NWA was a matter of when, not if. He's just laying the groundwork for the market, employees, and stockholders.

 

[Tomct]

Definitly not good news. I hope that all of my friends that just got hired over there don't get SCREWED! I personally thought it was a bad move to bring in Anderson....former CEO of NWA. NOT GOOD!!

 

[Whiskerbizkit]

Delta + NWA, followed by CAL + UAL, Then Alaska + Airtran, JB + Frontier, Spirit. Am I missing anyone?

 

[Occam's Razor]

Delta + NWA, followed by CAL + UAL, Then Alaska + Airtran, JB + Frontier, Spirit. Am I missing anyone?

Likely.
Unlikely
Who cares?
Ditto.

My guesses:

DAL/NWA
UAL/AAA
AMR/Other(s)

The non-network carriers (jetBlue, Frontier, AirTran, Spirit, Sun Country, Midwest) will either remain unaffiliated within their niche, or be assimilated by SWA or one of the network carriers.

CAL is the wildcard. They aren't truly "independent" without NWA's consent, so they would most likely be involved in a triggered deal.

 

[Aubie]

Where's the General on this?

Oh wait - he's busy trolling SWA threads to toss in LBB overnight/ 7 legs-a-day comments..

 

[Tanker Clown]

Maybe Delta will aquire Song. I hear they are really giving it to Air Tran these days.

 

[bleagle]

Maybe Delta will aquire Song. I hear they are really giving it to Air Tran these days.

Maybe United will acquire TED....:nuts:

 

[Furloughed80]

If DAL and NWA merge, NWA's "golden share" with CAL is terminated.

 

[General Lee]

Definitly not good news. I hope that all of my friends that just got hired over there don't get SCREWED! I personally thought it was a bad move to bring in Anderson....former CEO of NWA. NOT GOOD!!

No, that is the best possible merger IF MERGERS were to happen for Delta. Delta and Northwest do not have a lot of overlap, and that means more people will keep their jobs. There are a couple areas that could be trimmed, like MEM (next to ATL) and CVG (next to DTW), which could become focus cities to appease local politicians. Overall, the MSP/DTW bases along with NWA's strong Asian presence mix well with ATL's strong SE presence, JFK and Europe, and Delta's West Coast bases in LA and SLC. As you can see NWA hasn't named a replacement for their DC9s yet (maybe E190s, but no large order), but could add 737-700s someday. NWA has ordered 787s, which is something Delta has yet to do. There would have to be a large realignment in fleets to have this happen. Just remember Delta has 13 different planes at one time in their fleet (pre-9-11), so adding a few different types would not be that big of a deal. A combination of their names would yeild a merged name of DELTA AIRLINES. I don't care what the NWA pilots say about Asian routes needing to have the NWA name, that could be changed during a golf game. Really.

If CAL and DAL combined, a huge problem would be who would get rid of their JFK or EWR base, since other airlines would challenge that as a monopoly, not to mention that CLE and CVG are pretty close to each other. The fleets are close with CAL and Delta, but the NYC deal is a huge hurdle.

DL and United don't really make sense because of United's IAD base and their DEN base, very close to Delta's JFK and SLC bases. Both also have LA hubs, and that would be like giving terminal 5 away at LAX because one would have to give something up I am sure. Not worth it.

DL and USAir will not get together, ever. CLT and PHL are too close to ATL and JFK. Nah.


I still think the economy really has to take a larger dump for this to happen, and I see LCCs merging first. Jetblue/Frontier/Spirit etc. Maybe Jetblue and Skybus too. No unions at Jetblue will help faciliate a merger with someone.

Bye Bye--General Lee

 

[Occam's Razor]

If DAL and NWA merge, NWA's "golden share" with CAL is terminated.

That is correct.

 

[snoopbomb]

delete

 

[johnsonrod]

Delta and NWA will not merge - you heard it here first

Of course it's going to happen. We always knew DAL-NWA was a matter of when, not if. He's just laying the groundwork for the market, employees, and stockholders.

Alright - here's my look into the crystal ball:

No way DAL and NWA would ever happen. Nope. The DOJ would never allow it unless one of the airlines was in absolute dire straits (like USAirways pre-AWA merger). You will not see two majors merge if they are in good financial shape. There will be no merger of equals that will reduce consumer choice.

Now, I could see DAL and a smaller carrier that provides both a complementary route structure and fleet possibly merging - perhaps DAL and Alaska... Why not? Alaska will soon have an all-Boeing fleet that could easily fit into DAL's fleet. Alaska has the West Coast presence that Delta needs for feeding Asia-bound flights out of LAX. Alaska would strengthen DAL's domestic position and provide better feed as it looks to increased Asian/Pacific expansion. What would DAL do with NWA's MSP, DTW and MEM hubs? What would DAL do with the mix-match of fleet types (Airbus vs. Boeing)? That would be super-inefficient in terms of training, maintenance, etc. You would end up having less Asian competition among US carriers on the West Coast - that would not be good for consumers.

Instead, DAL and Alaska is a much more compelling match as fleet types match and route structures are very complementary. Consumers will not be hurt by combining these two carriers and no hubs would necessarily need to be shut down. In fact, Alaska customers would benefit from DAL's international connections - you could fly from Mazatlan or Cabo to Tokyo with one stop in a seamless fashion (not requiring a change of airline) and a US airline would retain the money vs. giving part of it away to a foreign carrier.

I really don't see a merger between two seemingly-healthy legacy carriers due to the reduction in consumer choice and the potential loss of redundant jobs. That's the point. Any merger would have to be completely complementary and Alaska/DAL appears to fit quite well and fill a gap in DAL's route structure. That's my 0.02.