Bloomberg Article DL + AK M&A

You seem to think feed to Asia is the only thing AS is good for.

AS has the lions share of WestCoast-Mexico traffic, and pretty much owns both the marine and energy markets, plus the perishable cargo market.

Combined, that's worth a lot more than the feed to Asia is.

The feed to Asia is just gravy.
 
DL is AS' largest codeshare partner...that speaks to the value of AS to other airlines.

feeding international flights is only part of what AS does.

What is valuable to AS CAN be valuable to any other carrier at the right cost and acquisition price.

it still remains that AS is a better fit to DL than any other airline...if the point is to maximize value to shareholders and increase potential for AS to be best utilized as part of a larger airline DL id the best option
 
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I have no doubt that DL might think that they're the best fit for AS, but I suspect they have a different point of view up in SEA.

And I also have no doubt that DL is their largest partner. But, let's not overlook that their second largest codesharing partner is AA, and APA had some fairly strict conditions which prevented domestic codesharing from exceeding a certain cap.

Those caps were essentially lifted in the S.1113 process (not sure how the USAPA/APA MOU affects that). As I see it, AA and AS can't codeshare between AA hubs, but they can codeshare spoke-to-hub and spoke-to-spoke provided there's no material shift in the ratio of AA/AS operations after the fact.

That seems to opens up a lot of city pairs which weren't possible before because of the old contract, which I could see AA leaning on a little more going forward.
 
DL is AS' largest partner because DL has flights where it makes sense to pay AS' high fares.

this spat between AS and DL is in part be cause AS wants to charge higher fares than make sense on transpac flights. domestic connections make even less sense APA or not.

AS will merge with DL or they will merge with no legacy in the next few years.

AA simply doesn't exceed what DL can offer in a merger with AS
 
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WorldTraveler said:
are you sure DL and AS control all but 3 T6 gates at LAX? How many does AS have exclusively? Agree about the strategic necessity to have gates at LAX.

It will have to be friendly. Right now that isn't happening.

I also think the bigger impact on other carriers on the west coast will be if DL and AS battle it out with other carriers for a summer or two.....
I have listed what gates at at T6. 60,61,62,63 are UA gates  64,65, 66, 67A, 67B, 68A, 68B, 69A, 69B are DL/AS gates (DL has preferential use for 68B, also have the leases of 69A/68A)
 
So That would increase Delta's gate hold up to 24 gates. (and the use of 7 extra gates would allow them to add more flights. Even more so after merging the networks in LAX. Larger aircraft would allow them to, for example, go from 15 or so flights a day on LAX-SEA, back down to 8-10 using larger aircraft. That space could then be used to grow the network from LAX.)   
 
thanks, Dawg.
I can certainly see the benefit of gaining more gates at LAX.

I'm just not sure that almost $1B per gate is cost effective, even in LAX, considering DL can grow in SEA including by building - some of which has to be done because of the limited FIS there.
Also, AS and UA are the only two US carriers who can fly LAX-MEX. Not sure how badly DL wants that route but it is strategically necessary to build out Latin America from LAX.
DL should have never stopped flying that route and lost the rights.
 
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Hunter Keay issued a couple research notes this week, and here's a quote which won PlaneBusiness's quote of the week:
 
It is our opinion that DAL needs ALK more than ALK needs DAL in the context of their codeshare relationship given DAL’s Seattle-Asia plans and ALK’s dominance in the Pacific Northwest. If DAL pushes too hard we wouldn’t be surprised if ALK finds solace in the arms of its other partner, AAL (now the world’s largest airline), at DAL’s expense.
This is something I've been saying for a while now.
 
If they(ALK) are that important then it will become a bidding war. Which has the deepest pockets and the ability to take on such an endeavor.
 
that's all great rhetoric but there is a contract which requires performance by both sides and DL is not about to allow AS out of the contract unless DL gets what it wants.

Further, as the largest codeshare for AS, the loss of DL's revenues will impact more than any other airline and DL remains the greatest revenue growth opportunity that AS has - yet AS isn't smart enough to realize that so DL has had no choice to set up their own SEA operation.

SEA is moving forward with a terminal expansion plan that will be driven largely for DL's benefit and will provide the space DL needs. SEA also knows that DL will not sign on to the project unless it gets gates now. The notion taht DL needs SEA is a grasping-straw routine for those who are incapable of realizing that DL has strategized its west coast growth options enough ways to realize DL will win regardless. DL's own internal growth will impact other carriers and that may include AS but will certainly include higher cost carriers and those who have a presence in the west coast-Asia market. If AS wins or loses is immaterial to DL.

We can revisit this topic 2, 3, and 5 years from now but i can absolutely assure you that DL's strategic goals will be moving forward while other carriers will fare far worse, whether Ms. PlaneBusiness and E can see it or not.

your statement is true, Meto. And it is also very possible that DL's own internal growth will render AS far less valuable than they are now and than alot of people think they are.

AS does as well as they do because they have had free reign to expand in many key markets, esp. in the pulldown by AA, DL, and US in the past.
 
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