NW/DL Merger "Real Possibility"

[whaledriver]

AMSTERDAM, June 14 (Reuters) - The chief of KLM, part of the Air France (AIRF.PA: Quote, Profile, Research) group, said that a merger between U.S. airlines Northwest Airlines (NWACQ.PK: Quote, Profile, Research) and Delta Air Lines (DALRQ.PK: Quote, Profile, Research) was a "real possibility," Dutch news agency ANP reported on Wednesday.

Leo van Wijk, chief executive of KLM, told reporters in New York that such a merger would produce benefit for Air France-KLM, adding: "It would be easier to deal with one entity."

The U.S. airline industry has been battered by rising fuel costs, weak revenue and low-fare competition, leading some carriers, including Delta and Northwest, into bankruptcy.

In January, U.S. Transportation Secretary Norman Mineta suggested that a merger between Northwest and Delta could result from the latest round of industry restructuring.



Mineta is not the first industry expert to predict consolidation in the ailing airline industry. And analysts have speculated on the possibility of a Delta/Northwest merger.

 

[NewHampshire Black Bears]

Well THIS topic will surely bring World Traveler "out" !

Seriously though, a few "observations", and "1" very important question.

"IF" DL and NW did merge(acquisition), I feel DL would be the survivor.

CVG would be Gonzo, just like MEM.

The "new" DL would be the proud owner of,737-200's........S-80's/ 757-200's/757-300's/DC-10's/DC-9's/A-330's/747-200's/747-400's/A-319's/A-320's/767-300's/767-400's(Jesus, did I forget anything)

It WOULD add to DL's "missing link"(ASIA)

Create a LARGE non-Union workforce !!

(Actually 2 questions)

"what type of engines are on DL's 757's.....NW's 757's" ?

And now the 64 Million $$ question.

Does AA sit Idle/y by, while NW(with it's Asian routes) Prostitutes itself ???


NH/BB's

 

[Kev3188]

"IF" DL and NW did merge(acquisition), I feel DL would be the survivor.

*ahem*

CVG would be Gonzo, just like MEM.

The "new" DL would be the proud owner of,737-200's........S-80's/ 757-200's/757-300's/DC-10's/DC-9's/A-330's/747-200's/747-400's/A-319's/A-320's/767-300's/767-400's(Jesus, did I forget anything)

On the DL side: 737-300's (I think???), MD88's, MD90's.

On the NW side:747 freighters...And if you wanted, you could further break down the DC9's into the -30, -40, & -50 series.

It WOULD add to DL's "missing link"(ASIA)

Create a LARGE non-Union workforce !!

(Actually 2 questions)

"what type of engines are on DL's 757's.....NW's 757's" ?

Dunno, and Pratt and Whitneys respectively.

And now the 64 Million $$ question.

Does AA sit Idle/y by, while NW(with it's Asian routes) Prostitutes itself ???
NH/BB's

Highly doubtful....

 

[Deleted by Moderator]

I would believe HIGHLY that the Northwest name would be the survivor simply because the future is in Asia and NW has the routes.

As for AA, to watch them start whining would make this so worth it. UA/CO, NW/DL, AA/TWA? LOL

 

[flyhigh]

AA might just sit by...let's look at that list:
UA/CO - Combined for three bankruptcies
NW/DL - Combined for two bankruptcies...
...two wrongs don't make a right!

There would most likely be some divestiture on the part of UA or CO if they merge. Given that, AA might be happy to just play stand-by on this round. It would be interesting though.

 

[Fly]

Possibly....but the jewel everyone wants (ASIA!) would not be part of the 'divestiture'. In overlaps, they would be forced to give up routes but on routes that don't (ASIA!) they would be allowed to keep flying. That would make AA the odd man out for NOT filing for bankruptcy when they had their chance.

 

[flyhigh]

...that may be the crown jewel but AA hasn't really fared that well there. SJC-NRT, SJC-TPE, DFW-NGO. May only be a couple routes, but they don't have that much to begin with. As I mentioned, two wrongs don't make a right. IF (big if) DL & NW were to merge, I don't see it being an instant sucess. Two VERY different workforces and fleets. Sure you close the terciary hubs (CVG/MEM), but does that solve the problem. The reason some mergers work is because a stronger company buys a weak one (see DL-Western & it looks like US/HP is going this way too). Conversely you have AA/TW. It can go pretty wrong pretty quick. Sure it gives DL a much needed Asia presence, but I'm not sure it's worth it. I would much rather see Delta fix it problems and focus on its strengths than trying to buy new ones which just mask problems...

 

[USAir757]

The "new" DL would be the proud owner of,737-200's........S-80's/ 757-200's/757-300's/DC-10's/DC-9's/A-330's/747-200's/747-400's/A-319's/A-320's/767-300's/767-400's(Jesus, did I forget anything)

Plus the 737-800 NG's....

 

[RowUnderDCA]

I still think it's a bad combo. Proximate hubs fighting to connect passengers in identical markets over smallish hubs (except ATL and JFK). This is also a system ripe for LCC expansion.

Delta should not burden itself with NW's smallish vulnerable hubs. It might like to take DTW over CVG, but that's it. I think that the only carrier that would combine with NW whole would be LCC (and that only in consideration of the 'hybrid' strategy), otherwise, carriers are hoping to bid for NW's Asian ops.

 

[whaledriver]

Well THIS topic will surely bring World Traveler "out" !

Seriously though, a few "observations", and "1" very important question.

"IF" DL and NW did merge(acquisition), I feel DL would be the survivor.

CVG would be Gonzo, just like MEM.

The "new" DL would be the proud owner of,737-200's........S-80's/ 757-200's/757-300's/DC-10's/DC-9's/A-330's/747-200's/747-400's/A-319's/A-320's/767-300's/767-400's(Jesus, did I forget anything)

It WOULD add to DL's "missing link"(ASIA)

Create a LARGE non-Union workforce !!

(Actually 2 questions)

"what type of engines are on DL's 757's.....NW's 757's" ?

And now the 64 Million $$ question.

Does AA sit Idle/y by, while NW(with it's Asian routes) Prostitutes itself ???
NH/BB's

You're right, that's a lot of mixed metal today. However, at least (3) of those mentioned fleets between NW/DL will be phased out and replaced within a few years...with a merger, sooner than later.

Regarding AA, they are the odd man out on the next major round of consolidation. The DOJ would NEVER allow AA to hook up with NW or DL in any form...much too large (anti-trust issues will not pass). I believe AA will be recovering from the TWA mistake for several years to come.

Crystal ball reads: UA/CO* and NW/DL.


*NWA has CO Merger 'Veto' rights per DOJ stock deal.

 

[flyhigh]

...I'm still having trouble believing much of it. For UA & CO to hook up sucessfully, CO would have to be the surviving entity. UA after three years in ch 11 is still losing money. Not just net, but on an operating basis whereas CO is cash positive. Do we really see that happening? Even with the United name surviving, I just don't see it. Then again, maybe that's why Tilton has stayed there...he's still not done dressing the pig for sale.

Now, back to the main topic...a DL/NW hookup. Granted the fleet issues could be tackled relatively quick since both are in bankruptcy, but that's not going to be the problem. Two companies with aging workforces, closing hubs...what's the point. The only gain for Delta is some of those Northern tier folks who are splitters now (may fly DL West through SLC and NW East through MSP) and Asia. With Asia they're getting the costs associated with running the operation along with it. Two companies that have failed at maintaining their house should get together and expect something different.

 

[jimntx]

There's also the issue of a predominantly unionized workforce combining with a predominantly non-union workforce. Ugly would be only a euphemism.

 

[FWAAA]

Regarding AA, they are the odd man out on the next major round of consolidation. The DOJ would NEVER allow AA to hook up with NW or DL in any form...much too large (anti-trust issues will not pass). I believe AA will be recovering from the TWA mistake for several years to come.

Crystal ball reads: UA/CO* and NW/DL.
*NWA has CO Merger 'Veto' rights per DOJ stock deal.

It's not 2001 anymore - the DoJ would not block a combination of AA and NW. Far too much growth among the discount LCCs since 2001 to think the same analysis that sank the UA/US merger would be applied again in 2006.

AA has already recovered from the TWA acquisition. Huge positive cash flow, double digit unit revenue improvements, fiscal prudence on new aircraft orders (unlike the airlines currently in bankruptcy).

Look for the announcement of a takeover of NW by AMR as soon as the NWA FAs are beaten into submission or replaced by SCABs later this summer.

 

[NewHampshire Black Bears]

AA sat "idle/y by" in 85', when Crandall balked at PA/UA Asia.

He vowed, THAT would "never happen again"

Fast forward(Crandall to Arpey), though I don't see AA involved in a "merge", They will NOT sit "idle/y" by !!!!!!

NH/BB's

 

[FWAAA]

Fast forward(Crandall to Arpey), though I don't see AA involved in a "merge", They will NOT sit "idle/y" by !!!!!!

NH/BBs nailed it. I don't think it will be a Super Happy Fun Time simple merger; it will be a pick and choose "we'll take this but you can shove that" sort of acquisition. B)