Howard Hughes
Well-known member
- Joined
- Feb 7, 2007
- Posts
- 134
Just when you thought mergers where dead for a while...here's where I see things headed over the next 24 months related to mergers. It’s going to break down something like this:
Delta will buy Northwest with stock and some cash (creative financing) sometime between first and third quarter 2008. Prior to that time both companies will continue tweaking their operations in preparation for said merger. There are fleet issues but route compliments couldnt be much better. Not to mention after some fleet consolidation, NWA was smart enough to order up 20 787's and have 50 options which Delta could use in its international expansion. Delta has stated they wont merge "this year". That's how they always answer that question "not this year" but they and NWA both went to alot of trouble to block access to the backroom discussions they were having with each other during the US Airways debacle. They can't launch into a merger right away after the "keep Delta my Delta", block US Airways campaign but you will start noticing info from the new managment carefully placed so that employees can see the advantages of a combined NWA/DAL operation. If the DAL/NWA deal becomes more certain dont rule out the buyout of Jetblue by Delta as has been rumoured. Delta really wants to grow and solidify its operations out of NY. They would like JB's terminal. Also the A320's and EMB's become less of a factor if they are merging with a company that already owns both of these and will have to be dealt with regardless.Wait and see!
United, who has publicly gone on the record several times in the past six months saying mergers need to happen as 6 legacies is too much and see 3 large carriers a more efficient and profitable way to address current market conditions (high fuel prices and the constant onslaught of low cost carriers). Tilton has been "chompin at the bit" for some time to merge. United will combine with Continental, making them the largest airline in the world by about 800 pilots. The new Delta/NWA will be second biggest. Just like with Delta/NWA the CO/UAL combination will provide a nice compliment of asia, europe and south america.
American will stay independent but look to buy assets of other airlines as they become available due to shedding of hubs/routes that either may not be allowed by regulators or don’t make sense at the newly merged companies. American will continue to suffer without many Asia routes as this will be a huge growth area going forward.
US Airways will remain profitable for a while but then start a slow decline to eventually go the way of Pan Am. Assets will be picked up by the other carriers as they are sold off. As messed up as Doug P is he was smart enough to recognize this is where things might head and hence the pre-emptive attempt to get a peice of the action.
For those of you who keep wondering what all this “open skies” stuff is about and why U.S. airlines are willing to support it for what seems just a few landing spots in London Heathrow, you may be missing what is really at stake. As strange and unfathomable as it may seem the direction things are headed are international mergers and the ability to feed from hubs to cities everywhere. Before you scoff at this go back and read all the quotes from airline managers and what they have been subtly saying in regard to Open Skies. Also think KLM/Air France, who merged and is one of the most profitable operations in the world now. They happen to be in the same alliance as Delta and NWA and have worked closely with NWA in particular for years. For better or worse this is the new global airline concept.
This can be a really good thing, creating profits not seen in a long time with U.S. airlines at the corporate level but if not contained and properly tended to it could be like an uncontrollable fire further torching the prospects of U.S. Airline pilot obtaining quality of life and good pay. This begs the question; does anybody in the know have any word about where ALPA stands on this issue? Perhaps some protection clauses and language is being drawn up as we speak? OK back to my Crystal ball that only speaks to mergers
One reason IMHO a United/Continental merger hasn’t taken place yet is because NWA has some contractual language that allows them to block any merger with Continental. This power is relinquished however if NWA merges with someone else.
Also IMHO “friendly” mergers will take place and get past regulators (as long as any particular part of the market isn’t monopolized) but hostile takeover mergers still can be blocked as was the case with Delta and US Airways (the case was made that employees would suffer and a monopoly in certain areas would exist and Delta employees and creditors were better going this one alone).
PS- Did anybody happen to notice that the former CEO of NWA was just selected among others to be on the new Delta board of directors?
http://www.usaviation.com/forums/index.php?showtopic=34603
Comments, insights?
Delta will buy Northwest with stock and some cash (creative financing) sometime between first and third quarter 2008. Prior to that time both companies will continue tweaking their operations in preparation for said merger. There are fleet issues but route compliments couldnt be much better. Not to mention after some fleet consolidation, NWA was smart enough to order up 20 787's and have 50 options which Delta could use in its international expansion. Delta has stated they wont merge "this year". That's how they always answer that question "not this year" but they and NWA both went to alot of trouble to block access to the backroom discussions they were having with each other during the US Airways debacle. They can't launch into a merger right away after the "keep Delta my Delta", block US Airways campaign but you will start noticing info from the new managment carefully placed so that employees can see the advantages of a combined NWA/DAL operation. If the DAL/NWA deal becomes more certain dont rule out the buyout of Jetblue by Delta as has been rumoured. Delta really wants to grow and solidify its operations out of NY. They would like JB's terminal. Also the A320's and EMB's become less of a factor if they are merging with a company that already owns both of these and will have to be dealt with regardless.Wait and see!
United, who has publicly gone on the record several times in the past six months saying mergers need to happen as 6 legacies is too much and see 3 large carriers a more efficient and profitable way to address current market conditions (high fuel prices and the constant onslaught of low cost carriers). Tilton has been "chompin at the bit" for some time to merge. United will combine with Continental, making them the largest airline in the world by about 800 pilots. The new Delta/NWA will be second biggest. Just like with Delta/NWA the CO/UAL combination will provide a nice compliment of asia, europe and south america.
American will stay independent but look to buy assets of other airlines as they become available due to shedding of hubs/routes that either may not be allowed by regulators or don’t make sense at the newly merged companies. American will continue to suffer without many Asia routes as this will be a huge growth area going forward.
US Airways will remain profitable for a while but then start a slow decline to eventually go the way of Pan Am. Assets will be picked up by the other carriers as they are sold off. As messed up as Doug P is he was smart enough to recognize this is where things might head and hence the pre-emptive attempt to get a peice of the action.
For those of you who keep wondering what all this “open skies” stuff is about and why U.S. airlines are willing to support it for what seems just a few landing spots in London Heathrow, you may be missing what is really at stake. As strange and unfathomable as it may seem the direction things are headed are international mergers and the ability to feed from hubs to cities everywhere. Before you scoff at this go back and read all the quotes from airline managers and what they have been subtly saying in regard to Open Skies. Also think KLM/Air France, who merged and is one of the most profitable operations in the world now. They happen to be in the same alliance as Delta and NWA and have worked closely with NWA in particular for years. For better or worse this is the new global airline concept.
This can be a really good thing, creating profits not seen in a long time with U.S. airlines at the corporate level but if not contained and properly tended to it could be like an uncontrollable fire further torching the prospects of U.S. Airline pilot obtaining quality of life and good pay. This begs the question; does anybody in the know have any word about where ALPA stands on this issue? Perhaps some protection clauses and language is being drawn up as we speak? OK back to my Crystal ball that only speaks to mergers
One reason IMHO a United/Continental merger hasn’t taken place yet is because NWA has some contractual language that allows them to block any merger with Continental. This power is relinquished however if NWA merges with someone else.
Also IMHO “friendly” mergers will take place and get past regulators (as long as any particular part of the market isn’t monopolized) but hostile takeover mergers still can be blocked as was the case with Delta and US Airways (the case was made that employees would suffer and a monopoly in certain areas would exist and Delta employees and creditors were better going this one alone).
PS- Did anybody happen to notice that the former CEO of NWA was just selected among others to be on the new Delta board of directors?
http://www.usaviation.com/forums/index.php?showtopic=34603
Comments, insights?
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