U.S. Airways bids 8 Billion to buy Delta

[Swaayze]

I think this merger is brilliant. The overlap is what sells the deal. Think about how many cities have both Delta Connection and US Air Express operations. Cut your ground ops by 50% and add a 70 to 90 seat airplane instead of two 50 seat RJ’s and wha la your lining your pockets with cash.


You put bigger planes on the shuttle routes, fire half the ground people at dual out stations, combine ops in BOS, make CLT, SLC and CVG focus cities, Fifty seat RJ use is cut by 40%, All the MD-80’s and 73 200-500’s go to the desert, Boing gets a big order for the 787 and the only question then is how many parachute do you have for the Delta Execs?

dang why am I not an Airline Exec?

You seem to have the right idea. In fact I saw somewhere today that Kirby said LCC will look to essentially vacate the 50 seat RJ market and go with 70+ (and mentioned 90+ all at mainline).

 

[time builder]

I think this merger is brilliant. The overlap is what sells the deal. Think about how many cities have both Delta Connection and US Air Express operations. Cut your ground ops by 50% and add a 70 to 90 seat airplane instead of two 50 seat RJ’s and wha la your lining your pockets with cash.

Look at our pay rates, I took my year pay scale and divided pay by the number of seats on the airplane.
135 = 1.69
140 = 1.41
145 = 1.40
170 = 1.05 with 70 seats
170 = 0.96 with 76 seats
175 = 0.94

If we flew the 175 at the same rate as 145 per seat captain cost, seven year captain pay would be $120.06 per hour.

This is before the fact that they will give us the big “If we don’t lower our cost then we’ll lose flying” speech.

You put bigger planes on the shuttle routes, fire half the ground people at dual out stations, combine ops in BOS, make CLT, SLC and CVG focus cities, Fifty seat RJ use is cut by 40%, All the MD-80’s and 73 200-500’s go to the desert, Boing gets a big order for the 787 and the only question then is how many parachute do you have for the Delta Execs?

dang why am I not an Airline Exec?

I think you're on the right track also. The reason they called regionals cheaper to fly was because of the low break even load factor. In the last five years, regionals have gone from roughly 60% break even load factor to closer to 80%, which puts it closer to the majors. Maybe someone else can explain this change better than I can.

Not only does it make sense that you would pay less for pilots given the passenger to pilot ratio (as you pointed out), but they were never cheaper on the fuel. RJs typcially use as much fuel per seat mile as a 727.

Add in a "shortage of qualified pilots" coming out of the flight schools, consolidation and mainline focus would require less pilots besides the savings on the previously mentioned overhead costs, and would be a good move.

All this being said, the primary factor is that USAir is tired of being stuck in the low fare short haul market, and wants to get in on the international action where there's less competition.

 

[CallmeJB]

You put bigger planes on the shuttle routes, fire half the ground people at dual out stations, combine ops in BOS, make CLT, SLC and CVG focus cities, Fifty seat RJ use is cut by 40%, All the MD-80’s and 73 200-500’s go to the desert, Boing gets a big order for the 787 and the only question then is how many parachute do you have for the Delta Execs?

Just to throw this out there:

The way I see it, CVG would be a good asset. It's got another new runway and no ARTCC traffic issues. I'm thinking they finish the shutdown of PIT, make PHL a focus city, and hub out of CVG. LCC needs a midwest base as it is.

Discuss...

 

[time builder]

Why speculate, when you can read the proposal for yourself:
http://airlinepilotcentral.com/airlines/legacy/delta.html

They want CVG as a hub for the midwest, wheras PIT would focus on the Northeast.

As far as "hub closures" go, there's not mention of BOS, MCO, or LAS in the proposed hubs, but given the amount of local traffic, I would expect they would maintain a large presence.

 

[ballsdeep123]

Interesting how all the media articles relate to Delta's regional carriers and no attention is paid to Airways' carriers. Even though the combined company would retain the Delta name, this would be basically a hostile takeover of Delta by US Airways.

Aren't hostile takeovers usually when the creditors don't want the buyout? In this case the creditors would be the ones welcoming it.

 

[ballsdeep123]

Like others have said on these posts (like Johnsonrod, FDJ2 and others), I believe this merger won't happen for a few reasons:

1. Fleet complexity - DL and US only share the 757/767 and yet they use different engines. Way too many fleet types for any synergies

2. Anti-trust - I agree that the route networks completely overlap in the US. Taking capacity and customer choice out of the market will not help the customer. USAirways brings nothing to the table in terms of new international routes - UAL or NWA would at least provide Asia.

3. Big creditors have an active interest in keeping Delta around - Boeing is a big creditor and it does not want to lose another customer in a merger and then have it order Airbus airplanes - US is Airbus heavy...

4. USAirways and AWA have not integrated well and both pilot groups HATE each other - adding Delta to the mix would be a disaster.

Who knows what will happen in the end - anything can happen. But Delta is getting stronger and I think they will convince the judge and creditors that consumers and creditors will benefit long-term from being independent and growing...

I've talked to a couple of US Airways pilots and they said they think that most of the Airways pilots would probably welcome the merger. They both have senior pilots and it would probably would help them get a better integration with the America West guys, plus it would help ALPA become a little more unified.

 

[dav8or]

Cause you didn't work hard enough in school!

I partied just as hard as they did if not more in college. I just didn't play golf at the right CC or marry the daughter of the CEO

 

[atpcliff]

Hi!

My wife filled me in on a bunch of stuff happening 2 days ago:
USAir bid to acquire Delta about 2 months ago. Delta's mgmt and board didn't want to be bought out, so they didn't tell anyone.

So, USAir finally had enough, and went public, so the creditors and stockholders would know they'd been offered a ton of money for their stock and/or obligations.

The creditors love it, and want the deal badly. Delta mgmt and board hate it. No one knows what the stockholders want because they just found out.

If the merger goes through, then NWA will merge with CO to defend themselves.

In separate activity, AirTran announced a code share with Frontier, similar to the NWA/Delta/CO codeshare. Now AirTran is looking to buy/merge with Midwest Airlines, which would be even more incentive for NWA to merge with CO.

cliff
YIP

 

[WSurf]

I partied just as hard as they did if not more in college. I just didn't play golf at the right CC or marry the daughter of the CEO

lol True! Gotta love america!

Saw something interesting on TV! In the 1970's CEOs of Company's made about 17 times what there regular employee made! And today CEOs at companies make about 300 times as much! Sounds to me like the middle class of the country is going down the pooper!! The gap between the haves and have nots is growing fast in the country! Look Out!

 

[atpcliff]

Hi!

It doesn't matter how much of a monetary division between the classes. All you have to do is look back at history and you can see how it doesn't matter.

For example, in France in the 1800s, there was a HUGE difference between the few filthy rich and the teeming masses of the poor. Throughout all of the 1800s and leading into the 20th century, France was 100% stable and had no problems resulting from their monetary inequites.

cliff
YIP

PS-Wait...maybe the above assessment was wrong?