A good take on the merger reasons

[North by Northwest]

For anyone looking for a windfall with the give away of Northwest:

"McKenzie has viewed airline consolidation as likely for months. In January he wrote that airline consolidation "must result in lower costs, lower fares, better service, a rationalization of high cost capacity, & hence, a more efficient and profitable industry." He said then that the largest risk to consolidation is the airlines' ability to deal with labor concerns." (this is the real take on the scene) I love how they use NWA (with the strongest standalone future) as the in trouble example.

These hedge Funds know that the higher oil gets the riskier their returns become. Build Delta up with low cost NON union employees and there's your "merger benefits." Now they know getting rid of NWA employees is a pipe dream, but they have NOTHING to lose, which will result in a battle royal between NWA BOD/Steenland and NWA UNIONS/ Oberstar/Dem.Congress! (and incoming Dem.President)

http://money.cnn.com/news/newsfeeds/articl...17_FORTUNE5.htm

Here's how I see it. Wellington Capital owns 1/2 Billion of NWA stock, 150 Million of Delta, throw in Fidelity's hundreds of millions in shares of both. Pardus owns a large cut of Delta/United. Both hedge funds pushing the boards. NWA Bostock and a few others are chummy with Wellington/Blackstone. Steenland gets a pay out and a way OUT. Northwest gets sold down the river. While they hope to get rid of as many NW employees as possible and finally get their hands on all of Asia with low cost non union Delta.

Northwest employees sacrifice of BILLIONS of dollars ...gone, rewarding scumbag hedge funds and another airline. Zero benefit for Northwest long term or its employees.

I think this is a pipe dream, they really don't know how long and nasty this fight will get. For all those that think Oberstar is just mouth with no power to stop a merger...that's because you don't want to see it.


"In conversations with investors who are increasingly worried about a looming cash crunch, airline executives have begun emphasizing the strength of their balance sheets. Last week in presentations at the JPMorgan conference, senior Northwest, Continental, US Airways and Delta officials all emphasized what they believe to be their companies' more-than-adequate liquidity in light of triple-digit oil prices.

Which is just the opposite they have been saying about the need to merge.

http://www.usatoday.com/money/industries/t...sts_N.htm#chart

I can't wait till they announce it.

 

[PA18]

For anyone looking for a windfall with the give away of Northwest:

"McKenzie has viewed airline consolidation as likely for months. In January he wrote that airline consolidation "must result in lower costs, lower fares, better service, a rationalization of high cost capacity, & hence, a more efficient and profitable industry."

Another "expert" who just doesn't get it.

The whole point of consolidation and rationalization of capacity is not to result in lower fares, but to allow the industry to finally price its product at a level that will allow it to at least cover its costs of producing that product.

If that means going back to the days when not everybody could afford to fly anywhere -- and felt entitled to fly anywhere for less than it costs to buy a ticket to a NASCAR race -- then so be it. We have become a mobile society. People are accustomed to traveling by air. Families are still going to take their kids to Disney World. College kids are still going to go south on spring break. Those who really want to go will grouse about paying a higher fare, but they will still go. Those who won't really couldn't afford to fly anyway, and shouldn't. And they're the ones whom the airlines actually lose money by transporting, just to sell that last seat for $39.

Of course, any talk of consolidation must include the phrase "lower airfares" to appease the politicians who pander to their 69-dollar-Internet-fare constituents.

If the pols insist on the airlines charging sub-prime airfares so that they can take credit for their constituents' freedom to move about the country, then let them damn well subsidize the airlines, like they do Amtrak.

Oh, Congress and the Administration alway threaten to cut off funding for Amtrak (to have more money for Halliburton); and then Amtrak says, "Okay, Congressman, but that means we'll have to eliminate train service to your district." And Amtrak get its money. Works every time.

Hey, I want a new pickup truck. I'm going to write my congressman and demand that Ford, Chrysler, and GM start selling pickup trucks at way below the cost of manufacture, just because I want one, and I'm entitled to one. And then the Big Three can start a "sticker war", to see who can give its product away the cheapest, and lose the most money.

 

[North by Northwest]

Right on the money PA18...

This guy "gets it", he is just trying to persuade Joe Public that mergers are good for them. He thinks they are too stupid to realize the impact of no service to their communities or the economic impact of thousands of lossed airline jobs.

It's all about these activist Hedge funds and crooked airline management. Doug Stealin could give a rats $$$ about Northwest or it's employees. And if RAnderson is SO great now (finally finding the airline "I really care about you" religion, it sure has taken him long enough, cause he sure didn't demonstrate it at NWA, where he was leader FAR longer than his 5 minutes at Delta).

This is about a pay off for a few at the top, and screw everybody else...end of story. (but it won't be as easy as they think)

 

[LukeAisleWalker]

I think this is a pipe dream, they really don't know how long and nasty this fight will get. For all those that think Oberstar is just mouth with no power to stop a merger...that's because you don't want to see it.


"In conversations with investors who are increasingly worried about a looming cash crunch, airline executives have begun emphasizing the strength of their balance sheets. Last week in presentations at the JPMorgan conference, senior Northwest, Continental, US Airways and Delta officials all emphasized what they believe to be their companies' more-than-adequate liquidity in light of triple-digit oil prices.

Which is just the opposite they have been saying about the need to merge.

http://www.usatoday.com/money/industries/t...sts_N.htm#chart

I can't wait till they announce it.

NxNW, I understand what you're saying but you have to take that and draw it out in time. In the articles I've read, airlines like NW and DL will start to get into a liquidity crisis by 2009/2010 ,if oil stays where it is now.

 

[LukeAisleWalker]

Another "expert" who just doesn't get it.

The whole point of consolidation and rationalization of capacity is not to result in lower fares, but to allow the industry to finally price its product at a level that will allow it to at least cover its costs of producing that product.

If that means going back to the days when not everybody could afford to fly anywhere -- and felt entitled to fly anywhere for less than it costs to buy a ticket to a NASCAR race -- then so be it. We have become a mobile society. People are accustomed to traveling by air. Families are still going to take their kids to Disney World. College kids are still going to go south on spring break. Those who really want to go will grouse about paying a higher fare, but they will still go. Those who won't really couldn't afford to fly anyway, and shouldn't. And they're the ones whom the airlines actually lose money by transporting, just to sell that last seat for $39.

Of course, any talk of consolidation must include the phrase "lower airfares" to appease the politicians who pander to their 69-dollar-Internet-fare constituents.

If the pols insist on the airlines charging sub-prime airfares so that they can take credit for their constituents' freedom to move about the country, then let them damn well subsidize the airlines, like they do Amtrak.

Oh, Congress and the Administration alway threaten to cut off funding for Amtrak (to have more money for Halliburton); and then Amtrak says, "Okay, Congressman, but that means we'll have to eliminate train service to your district." And Amtrak get its money. Works every time.

Hey, I want a new pickup truck. I'm going to write my congressman and demand that Ford, Chrysler, and GM start selling pickup trucks at way below the cost of manufacture, just because I want one, and I'm entitled to one. And then the Big Three can start a "sticker war", to see who can give its product away the cheapest, and lose the most money.

The BEST post I've ever read here!

 

[North by Northwest]

NxNW, I understand what you're saying but you have to take that and draw it out in time. In the articles I've read, airlines like NW and DL will start to get into a liquidity crisis by 2009/2010 ,if oil stays where it is now.

Luke, if oil stays this high in 09/10...there won't be ANY US airline flying, including the new D/NW. It simply is not possible for an industry that is fuel intensive.

The US gov. could have STOPPED the filling of the Strategic oil reserves at these prices.(but it won't because Bushes pals are quite finished filling their pockets).
They could have regulated the involvement of speculators, whom are directly responsible for this. But they won't because they are huge political donors.

It will all fall squarely upon the shoulders of airline employees....AGAIN.

 

[night-ice]

Luke, if oil stays this high in 09/10...there won't be ANY US airline flying, including the new D/NW. It simply is not possible for an industry that is fuel intensive.

The US gov. could have STOPPED the filling of the Strategic oil reserves at these prices.(but it won't because Bushes pals are quite finished filling their pockets).
They could have regulated the involvement of speculators, whom are directly responsible for this. But they won't because they are huge political donors.

It will all fall squarely upon the shoulders of airline employees....AGAIN.

I may have missed it somewhere, but whose name will prevail in this merger?

 

[Coffee_Tea_Or_Me]

I may have missed it somewhere, but whose name will prevail in this merger?

I read somewhere that it would be Delta -- with Delta management and Delta HQ in Atlanta....

 

[CubsFanJohn]

I read somewhere that it would be Delta -- with Delta management and Delta HQ in Atlanta....

I have heard that also, any merger would have to have Delta Management running it they have said. Looks like Doug Steenland gets the good old parachute if this pases.

 

[Borescope]

I read somewhere that it would be Delta -- with Delta management and Delta HQ in Atlanta....

Who Cares. as long as you keep your job.

 

[North by Northwest]

I may have missed it somewhere, but whose name will prevail in this merger?

Oh, I don't think you missed the "fluff" of whose name will prevail. What you have apparently missed is why it's necessary (certainly not out of devotion, or reasons you and Ms. coffee/tea obviously think)

But, frankly...you are getting way ahead of yourselves. The Delta name won't be going on any NW ships for a good long time, if ever.

 

[luv2fly]

But, frankly...you are getting way ahead of yourselves. The Delta name won't be going on any NW ships for a good long time, if ever.

I agree with the getting way ahead statement, but I have a sincere question for you. If the merge does proceed and is approved, what can/will you do then?
I understand the animosity you have as I experienced the same feelings when US attempted its hostile takeover of Delta. The biggest difference there however, was that only the US management side of the house wanted that transaction to happen.

 

[North by Northwest]

I agree with the getting way ahead statement, but I have a sincere question for you. If the merge does proceed and is approved, what can/will you do then?
I understand the animosity you have as I experienced the same feelings when US attempted its hostile takeover of Delta. The biggest difference there however, was that only the US management side of the house wanted that transaction to happen.

I like to think of myself as a realist
.
1. The detached from reality Steenland (caused by the prospect of an est. $19 million parachute) and that useless NW BOD, whom I understand many shareholders outside of Wellington are VERY upset with, are the only ones pushing this.
2. I believe the opposition is going to be tremendous. NW pilots will never give up their hard earned seniority, just as Sen. Delta pilots would never give it up. Besides, why should they when it was their money that helped build this balance sheet. We can all agree that Northwest is one of the few that clearly has one of the brightest futures alone.
3. They STILL haven't said "how" this merger with high oil, will benefit employees of either company with out job cuts.
4. You are wrong, I do not have any animosity towards Delta people, it is towards those pushing this, primarily that garbage running our airline from the BOD to the Hedge Funds (I can only hope that during Congressional hearings, this is brought to light and stopped). Wellington, Pardus, and Fidelity.
5. If it runs it's course and is approved you move on with the new airline or leave if you don't like it, it's really that simple. Change is not difficult for me, in fact, I embrace it. I understand WHY everything has to be under Delta, it would be just plain stupid to walk away from $9.1 billion in tax credits(that is only available under the Delta ownership) just to keep the Northwest name for sentimental reasons, Steenland would have been OUT one way or another. This is just a plan that would allow him to collect.

What people had better realize is, IF there is a new company, it will not be "their" Delta, it will be a NEW Delta. One that is half NWA, run by a former NWA CEO (and I can almost assure you, he will be installing additional NWA people in Atlanta). If this thing ever sees the light of day. So, in closing CHANGE is in store for everyone involved IF it happens...down the road.

 

[luv2fly]

4. You are wrong, I do not have any animosity towards Delta people, it is towards those pushing this, primarily that garbage running our airline from the BOD to the Hedge Funds (I can only hope that during Congressional hearings, this is brought to light and stopped). Wellington, Pardus, and Fidelity.

I don't recall ever saying your animosity was directed at Delta people. Perhaps you misunderstood my statement.

5. If it runs it's course and is approved you move on with the new airline or leave if you don't like it, it's really that simple. Change is not difficult for me, in fact, I embrace it. I understand WHY everything has to be under Delta, it would be just plain stupid to walk away from $9.1 billion in tax credits(that is only available under the Delta ownership) just to keep the Northwest name for sentimental reasons, Steenland would have been OUT one way or another. This is just a plan that would allow him to collect.

I appreciate the candor of your answer. That is all I was curious about.

What people had better realize is, IF there is a new company, it will not be "their" Delta, it will be a NEW Delta. One that is half NWA, run by a former NWA CEO (and I can almost assure you, he will be installing additional NWA people in Atlanta). If this thing ever sees the light of day. So, in closing CHANGE is in store for everyone involved IF it happens...down the road.

I don't think that has ever really been in dispute.

 

[North by Northwest]

I certainly would find the size of the New Delta Unions a force to be reckoned with for demanding industry leading contracts (NOT just pay) or STRIKE while the iron is hot! (which means with in the first year of approval of merger)


But a Delta-Northwest deal, even if agreed to by both managements, is not certain to take place.

United Airlines parent UAL Corp. (UAUA, Fortune 500) failed in its attempt to complete its purchase of US Airways that was announced in 2000. Concerns about the impact on passengers and airfares is likely to bring intense scrutiny of this deal from both Congress and antitrust regulators here and in Europe.

Delta and Northwest also could run into trouble with the pilot unions for both companies even though the airlines do not necessarily need the approval of these unions for a deal to go through.

Delta and Northwest both filed for bankruptcy court protection at almost the same moment in September 2005, and used that process to significantly reduce their capacity and labor costs.

Delta had to fend off a hostile takeover attempt by US Airways (LCC, Fortune 500) in late 2006 and early 2007, just before it emerged from bankruptcy in April 2007. But since that battle, its management has said it was open to the right combination.

Delta posted 5% growth in the number of miles flown by paying passengers last year, which is better than the industry average. In fact, it is the No. 3 carrier by that measure, behind only United and AMR Corp.'s (AMR, Fortune 500) American Airlines.

Still, after making money in its first six months out of bankruptcy, it returned to a loss of $70 million in the fourth quarter in the face of high fuel prices, and it has said it expects to lose money in the current quarter as well.

Northwest, which emerged from bankruptcy in May 2007, is the nation's No. 5 carrier. It had flat traffic last year and essentially broke even in the fourth quarter, posting an $8 million net loss after two quarters of profit. It is forecast to see a bigger loss in the first quarter though.

Northwest was the No. 4 airline in the country when it entered bankruptcy, but it has shaved capacity enough to fall to No. 5, just barely ahead of Southwest Airlines (LUV, Fortune 500), the carrier that has helped reshape the industry by devising a lower-cost business model than the traditional hub-and-spoke system used by more established carriers.

A deal announcement could open the way for No. 4 Continental Airlines (CAL, Fortune 500) to hold its own merger discussions. Northwest has held a so-called "golden share" of Continental, which allows it to block a deal for its codeshare partner. But it loses that veto by entering its own combination. There are rumors that United and Continental are eyeing their own combination.

Consolidation would come at a tumultuous time for the industry. Earlier this month, low-cost airline ATA filed for bankruptcy and said it would cease operations. Last week, Frontier Airlines also filed for bankruptcy protection but said it would continue flying during its reorganization.

Also this past week, American was forced to cancel thousands of flights due to safety inspections of its MD-80 jets.

- CNN contributed to this report. To top of page http://money.cnn.com/2008/04/13/news/compa...sion=2008041407