What happens to Midwest Airlines if DAL buys NWA? (from LCC section)

[General Lee]

This was gotten via CitationLover on the 1st page of the LCC section concerning the same subject.


Airline deal would still fly: Northwest sale to Delta won't stop buyout of Midwest, executive saysThursday, January 17, 2008; Posted: 04:56 AM

Jan 17, 2008 (Milwaukee Journal Sentinel - McClatchy-Tribune Information Services via COMTEX) -- NWA | news | PowerRating | PR Charts -- Any sale of Northwest Airlines Corp. to Delta Air Lines Corp. would not affect the pending sale of Midwest Air Group Inc. to Northwest and a Texas investment firm, a Midwest Air executive said Wednesday. The Oak Creek parent of Midwest Airlines still expects to complete its $451.8 million sale to TPG Capital and Northwest by Jan. 31, said Carol Skornicka, senior vice president of corporate affairs.
Northwest is in talks with Delta regarding a possible merger, House Transportation Committee Chairman James Oberstar (D-Minn.) said in remarks first reported by the Minneapolis Star Tribune. Oberstar generally does not favor airline consolidation and would likely hold hearings on any proposed merger, said his spokesman, Jim Berard.
Meanwhile, the sale of Midwest Air to TPG/Northwest is still being reviewed by U.S. Department of Justice antitrust regulators.
TPG Capital, a private equity firm based in Fort Worth, Texas, would own a 53% stake in Midwest Air. Eagan, Minn.-based Northwest would own a 47% stake but would not participate in management or control of Midwest. Northwest would have the option to eventually buy TPG's stake.
Midwest Air, through Midwest Airlines and regional carrier Midwest Connect, holds a 54.1% market share at Mitchell International Airport, according to airport data. Northwest is the No. 2 carrier at Mitchell, with a 12.6% market share, and Delta is No. 4, at 6.6%.
The No. 3 carrier at Mitchell International, with a 7.2% share, is AirTran Holdings Inc. of Orlando, Fla. AirTran in August dropped its takeover campaign for Midwest Air after being outbid by TPG/Northwest.
"We see no impact from these discussions on (Department of Justice) approval of our transaction," Skornicka said. "Keep in mind that we are not merging with Northwest at this time. If that would happen down the road, the DOJ would be required to conduct a fresh analysis that would include then-current market conditions."
A Northwest spokesman declined to comment, and a Delta spokesman couldn't be reached for comment.
Some airline industry analysts said reports of Delta's interest in buying either Northwest or UAL Corp., the Chicago-based parent of United Airlines, could affect the Midwest Air sale.
"In my opinion, everything could be up in the air if things start to move along these lines," said Ray Neidl of Calyon Securities in New York.
A Northwest sale to Delta offers greater opportunities to cut costs than a sale of United to Delta, according to an analysis conducted by Morningstar Corp., a Chicago investment research company.
But Delta executives might be concerned that Northwest's planned 47% stake in Midwest Air, along with Northwest's option to buy Midwest, would cause problems in gaining antitrust approval for Delta to buy Northwest, said Marisa Thompson of Morningstar.
Under that scenario, a combined Delta/Northwest/Midwest could eventually control over 73% of the market at Mitchell International. Delta executives would likely seek assurances from Northwest that such a scenario wouldn't hurt the chances of a Delta/Northwest merger gaining antitrust approval, Thompson said.

So, how would this all pan out? Would they be kept seperate, or blended in? Could 717s replace DC9s? If the DOJ doesn't like it, I could see them saying "if you want DAL/NWA, then you have to sell your stake of Midwest to Airtran..." Any comments?


Bye Bye--General Lee

 

[woody]

I dont think any of this is going to happen. First The respective asian governments own NWA's Pacific Rim routes(not NWA). This means that they can not be sold or transfered to another entity. The routes and route structure that NWA currently has rights to in the pacific were negotiated after WWII. I may be mistaken on this point but I beleive that they are the only foreign carrier that is allowed to fly point to point from Tokyo to other foreign destinations. This all goes away if they become Delta in a merger. Second I find it strange that NWA has much more cash on hand and far less debt.( While Delta is larger in scope, NWA is the by far the Alpha carrier in this merger.) Delta has hardly any Pacific Rim presence and that is where the big revenue dollars will be made for the next few decades. Deltas european routes and South American Routes have always been losers and were one of the primary cause of Pan Am's demise before Delta aquired them. Delta needs NWA far worse then NWA needs Delta! Also NWA has huge penalties associated with abandoning MSP in terms of corporate offices as well as the scope of flying being diminished. I think that Steeland (NWA)is a crook who makes money by charging fee's associated with bankruptcies and mergers. This is great Idea to him and his cronies but not necessarily a good idea to guys like Ken Oberstar(transportation Secretary) who has vowed to fight this. Also Wall Street is casting a wary eye on this merger. (Two Airlines barely out of bankruptcy and not showing long term profitability merging could prove to be a huge money losing venture.) I doubt even if they can negotiate a merger that the justice department will approve it. I guess we will find out! As far as NWA aquiring Midwest that may very well happen, but without the big merger happening!

 

[CitationLover]

if the deal goes through look for nwa to offer to buy aai's 717's as the dc9 replacement. the new nwa will then have street cred when they paint the rap group nwa on the sides of those former aai 717's. they will have come full circle from elton john to eazy e, dr dre, and ice cube.