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When the dust settles, DAL+UAL, NWA+CAL

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max motoring

May 23, 2004
Totally a guess but..........With bankrupt DAL and NWA in the next few weeks, maybe this thing will finally shrink down to the oligopoly that the market demands.

US Air + America West.........done
DAL + UAL........both in BK piece together the good parts and dump the rest.
CAL+NWA.........CAL does same thing with NWA.
AMR + TWA......American's already taken care of business.

That leaves four Legacies...........about right IMHO. And maybe the industry will right itself for a few years.
I think you are right in your idea, but wrong in your combos. I don't see DAL and UAL. Nor do I see NWA and CAL. I could see CAL + DAL, or CAL + UAL. Or maybe NWA + DAL. Either way, I do think there will be consolidation.
Isn't NW a major shareholder in CAL? Or, am I thinking of years-back? I would agree, NW + CAL = Northwestinental.
Delta and NW would be the merger battle of the millenium. CAL will try to eat one or two of these guys without buying anything other than 787's and waiting for desperate airport authorities to weazel out of leases. Heck, DAL is already talking about subleasing BOS.
Not sure , I get this one

The level of synergy as oposed to risk seems very low for any of these combinations. The way I see it each one of these organizations needs to re-invent the way they are doing business. The everything to everybody mentality is definitely not working. The legacy carriers are going into bankruptcy to avoid paying certain obligations, this really leaves a shell as far as value goes for a potential merger. If both carriers have no value eg. UAL, USAir then a merger is merely a shell game covering up futher value to capital improvement.
The way I see it, change with the times, change your image and way of doing business or fade into the night. The AM West and USAir thing is a classic case of a merger to cover problems in the short term. The long run problem is that they will bleed faster and in the end fall out of the game.
For me unfortunately I see the UAL thing in much the same light. We are continuing to bleed at a rate that can not be overcome with the present strategy. Anybody who would want to merge with this dysfunctional family would be putting a knife to their own throats. Re-invent the product and pricing strategy and be happy to find a smaller niche that can pay the bills. The current load factors at rates that just stem losses will not turn this train wreck around.

Just my .02, there I feel better now
NWA holds large amounts of prefered stock in CAL, as well as some of the Common stock. NWA was forced to sell it's majority hold in CAL, not all of of it's stock.

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