Delta may shrink

[9rj9]

Steenland: Fuel costs may shrink merged Delta/Northwest




Minneapolis-St. Paul will retain a "vibrant" hub and a substantial number of jobs if a Delta-Northwest merger moves forward, Northwest Airlines Corp. CEO Doug Steenland told business leaders Monday. But he said that soaring fuel costs may ultimately shrink local operations.
Speaking at a meeting of the St. Paul Area Chamber of Commerce, Steenland said the combined carrier will keep its reservation offices, data center and flight-training facility open following the close of the deal. Overall, he expects the deal to have a similar impact on the Twin Cities as the 1998 merger between Minneapolis-based Norwest Corp. and San Francisco-based Wells Fargo; In that deal, Minneapolis lost a corporate headquarters, but ultimately gained more jobs.
But Steenland cautioned that with the price of oil soaring, it's hard to predict how many workers the carrier will employ into the future. "This can only go on so long," Steenland said, of airlines absorbing the high price of fuel. "Fuel costs will have to be passed onto consumers. That will mean higher fares, so we'll see demand come down, and the airline will have to shrink."
Atlanta-based Delta Air Lines Inc. (NYSE: DAL) and Northwest (NYSE: NWA) last week began crafting a plan for integrating the carriers, Steenland said. The companies expect the merger to close by the end of the year. Northwest may operate as a standalone airline for a full year after the deal wraps up, he said.
While the combined airline's headquarters will be based in Atlanta, the merged company will continue to have a big presence in the Twin Cities. "What won't be different is that Minneapolis-St. Paul will continue to be a vibrant, robust hub," Steenland said.
The airline also will continue to support Twin Cities cultural institutions and non-profits, he said.

 

[Cpt Oveur]

The merger will not result in any destinations being cut. The rise of fuel and low load factors will result in markets being cut. The reduction in ASM means fewer frequencies, markets, planes, and pilots.

 

[FLYLOW22]

How convenient...

At least DAL/NWA management has something to blame the massive furloughs on instead of the normal boring list they've long used since the 80's.

Fuel costs!! Yeeeaaaaah. That's the ticket!

 

[johnsonrod]

DAL/NWA won't be the only airline shrinking in that scenario - every airline will see shrinkage... The only thing growing will be Steeland's bank account.

I'd say the regional feed in mid/large sized markets will be the first to go... You can't make any money with 37-50 seat airplanes when gas is so pricey.

 

[Abbey]

Steenland: Fuel costs may shrink merged Delta/Northwest




Minneapolis-St. Paul will retain a "vibrant" hub and a substantial number of jobs if a Delta-Northwest merger moves forward, Northwest Airlines Corp. CEO Doug Steenland told business leaders Monday. But he said that soaring fuel costs may ultimately shrink local operations.
Speaking at a meeting of the St. Paul Area Chamber of Commerce, Steenland said the combined carrier will keep its reservation offices, data center and flight-training facility open following the close of the deal. Overall, he expects the deal to have a similar impact on the Twin Cities as the 1998 merger between Minneapolis-based Norwest Corp. and San Francisco-based Wells Fargo; In that deal, Minneapolis lost a corporate headquarters, but ultimately gained more jobs.
But Steenland cautioned that with the price of oil soaring, it's hard to predict how many workers the carrier will employ into the future. "This can only go on so long," Steenland said, of airlines absorbing the high price of fuel. "Fuel costs will have to be passed onto consumers. That will mean higher fares, so we'll see demand come down, and the airline will have to shrink."
Atlanta-based Delta Air Lines Inc. (NYSE: DAL) and Northwest (NYSE: NWA) last week began crafting a plan for integrating the carriers, Steenland said. The companies expect the merger to close by the end of the year. Northwest may operate as a standalone airline for a full year after the deal wraps up, he said.
While the combined airline's headquarters will be based in Atlanta, the merged company will continue to have a big presence in the Twin Cities. "What won't be different is that Minneapolis-St. Paul will continue to be a vibrant, robust hub," Steenland said.
The airline also will continue to support Twin Cities cultural institutions and non-profits, he said.[/quote]

Whew!!! Close call. He waited to the very end for that one. Good thing they are giving away shareholder's money when they are losing money faster than the mints can print it. Only in the airlines can the people that run them be so totally incompetent.

 

[johnsonrod]

Again, Steeland won't have to worry about anything shrinking - including his wallet after his $22 million merger bonus. He'll have the biggest house on the lake and he can sit back and watch the downsizing of the entire industry if oil stays above $125 for the next few months...

 

[IXLR8]

As I have posted before, they say that they will keep all of the hubs open....that doesnt mean they wont go down in size...if it wasnt for fuel costs they would make up another excuse. NWA is the only airline I know that used sars as a reason for cutting back flights....they would probably resort back to that if it wasnt for fuel. As soon as the ink is dry on the deal, you will see them claim "because of fuel costs, we can no longer maintain the level of flying we are at." And the cuts will begin. But, Delta will now have the gem of the industry, NWA's Pacific division and everyone will be happy in ATL.

 

[General Lee]

There will be some "shrinkage"---mainly RJs to smaller cities from all of the hubs. Everyone is aware that it is very tough to make a profit with 50 seaters these days, and they are first on the chopping block. Not very many cities will be cut, rather frequency.

As far as Delta mainline shrinking, all we have officially said is that we will lose 15-20 mainine planes---consisting of some MD88s and 757s that are due for heavy mx anyway. We will also gain planes--6 737-700s and 6 777LRs on firm order. Add to the possible mix of a few more 777s on rumor, with an additional 20 or so MD90s that could come from Saudia. As far as adding to the Northwest mainline, I do not know---although some on here are saying thanks to the 787 delays, they might get some additional 744s from Boeing.

We also know that Steenland will be getting an extra bonus for staying on at NWA THROUGH the merger, but afterwards he will be thrown out of management and onto the board of directors--with time to enjoy his new mansion on Lake Minnetonka.


Bye Bye--General Lee

 

[Whine Lover]

"Do they KNOW about Shrinkage Jerry?"....G. Costanza

YKMKR

 

[jetjockey#1]

The merger will not result in any destinations being cut. The rise of fuel and low load factors will result in markets being cut. The reduction in ASM means fewer frequencies, markets, planes, and pilots.

And that is why I hope they drag this SLI as long as possible. There is very little doubt that if oil remains over 100$ a barrel by the fall, furloughs will occur. I believe there will be at least two DC9s parked for every MD88 and 75.

It would be extremely unfair if we merged the lists and they park nothing but MD88 and 75 and they furlough a bunch of NWA guys, totally unfair. And viceversa if they park mostly DC9s.

Furloughs should be a byproduct of A/C type. For the first 2 years A/C and company should remain attached when it comes to something so important as furloughs. I sure hope the union addresses that because a lot of DAL guys feel the DC9 will be the first A/C to be parked with oil at 126$ or higher.