DL mentioned as possible UA merger partner.

[artiefufkin1]

First time I've heard DL mentioned. These two really fit nicely. One has Asia, West Coast, premium markets such as ORD, SFO, LHR. The other brings Europe, Latin America, Southeast and strong NYC presence. Only DEN/SLC have overlapping feeder markets.


bloomberg
UAL Corp., the parent company of United Airlines, has brought in Goldman Sachs & Co. to explore options for the company, including possible mergers with other airlines, according to a report in Crain's Chicago Business.


Goldman Sachs reportedly would help United assess the value of its holdings and explore possible partners for a merger. The report says that Houston's Continental Airlines (NYSE: CAL - News) and Atlanta's Delta Air Lines (Pink Sheets: DALRQ - News) are the most likely possibilities for a merger.

United exited Chapter 11 bankruptcy protection on February 1 after an extensive reorganization that saw the airline cut annual costs by $7 billion.

Chicago-based United (NASDAQ: UAUA - News) is the nation's second-largest airline and the No. 2 airline serving Sacramento International Airport, trailing only Southwest Airlines Co. (NYSE: LUV - News).



Another article on UA getting GS involved in possible merger search.

http://biz.yahoo.com/ap/060925/united_banker.html?.v=1


I can't see any bean counters wanting to give up CHI as a corporate headquarters. So would that entail IAH or ATL HDQ being leveled? Very touchy.

 

[NewHampshire Black Bears]

Because ATL and ORD ARE so large, It's one reason that it WON'T be DL + UAL !!

Plus IAD and ATL are too close together.
I feel that CO is the "partner of choice" for UAL, though DL will get a "look" by Goldman Sachs !!

I'm not "picking" on DL, seriously, just going with my gut feeling. I've felt all along that DL will be left without a date, for the big dance.

AA will (for a while) stand "pat", until DL makes a "play" for NW. There is'nt enough room, for 3 legacy's, to co-exist in Asia, from the US. Europe, yes, to a lesser degree. If DL is sucessful to Europe, from ATL and JFK(which I feel they will), plus AA does'nt seem to be overly worrying about expanding from JFK/Europe, It's quite possible that DL, and perhaps with US, would do just fine ruling Europe, and being second best to AA, in the Carribean, and SA.
(A lone route from ATL/NRT excluded, and perhaps a ATL to china, say 5 years down the road.

???????????

NH/BB's

 

[chucky]

While I would love to see Delta remain a stand alone carrier (and I pray to the airline Gods that they do),
the only two combinations I see good for DL are NW or
Alaska Air.
As far as American, I don't see them involved this time around. They may purchase some assets that may become available with a UA/CO merger, but that is all.
The TWA merger was a failure and AA will likely grow from within rather than combining workforces.

IMO

 

[artiefufkin1]

If you have CO/UA, then DL/NW is almost a sure thing. MEM and CVG are downgraded and assets moved elswhere. Back into DFW? They just might have the scale compared to AA to make it happen. DFW always gave a level of protection to Delta's SE markets in the past. Geographically with their hub locations, DL/NW would have inland markets East of the Mississippi in their pocket.

It's not as nice has having ORD/LHR/West Coast but close.


But what's to stop AA/HP if mergers start to happen? Their combination would not be much larger than DL/NW.

 

[Nor'Easta]

Well, first of all do you remember AirCal? AA took them over to get those West Coast routes. What happened to those? Then AA bought Reno Air for those West Coast routes. What happened to those? AA dropped they routes and gave some to Eagle.

What good would it do for AA to merge with US/HP? They again get those West Coats routes and once again, they drop them. AA would gain PHX, LAS, CLT and PHL hubs. But, would they keep any of them?

The next few months will be very interesting.

 

[artiefufkin1]

Well let's keep to to ourselves but 95% of mergers are not in the interest of the traveling public.

What would AA gain? No other airline would have a size advantage. Sometimes an airline can leverage their size compared to yours in order to gain market share.

Also they would pick up all that CLT/PHX/LAS demand routed via their own Intl gateways, while at the same time reducing the competition. One good things about the TWA merger is that it completely knocked off a airline that was trashing yields all over the country. AA took them out and it helped the entire industry.

 

[FWAAA]

As far as American, I don't see them involved this time around. They may purchase some assets that may become available with a UA/CO merger, but that is all.
The TWA merger was a failure and AA will likely grow from within rather than combining workforces.

I respectfully disagree. The TWA purchase was an abject failure for the ex-TWA flight attendants and many of the pilots - but it was a resounding success for AA.

How? Why? AA captured a good number of TWA elites and continues to hold them to this day. And that's what the next round of consolidation is gonna be all about.

Airlines won't consolidate just to grow or get bigger - this next round of airline consolidation will be about trying to capture the ever shrinking pool of pax willing to pay more than B6 or WN demands.

Everyone likes to say that nobody cares about legacy airline perks anymore and nobody will pay a dollar more, but that's just not true. AA and other legacies still sell plenty of First Class and Business Class tickets, especially to international destinations. The group of pax willing to pay a premium for all that is smaller than it used to be and may still be shrinking. But if our six hub and spoke legacies combined into 3 or 4, each one might just have a large enough concentration of the higher-yielding pax to thrive a few more years. And that's probably the best they can all hope for.

AA has no real need to "grow from within" like you mentioned. It's already huge. With Eagle, over 1,000 airplanes. What it needs is more access to the far east and more higher-yielding passengers to take there and elsewhere. Buying NW (or a large part of it) would likely do both. Same for UAL; a purchase of DL or CO would give UAL a bunch of higher-yielding pax and easy access to established markets where UA currently has almost no presence.

One good things about the TWA merger is that it completely knocked off a airline that was trashing yields all over the country. AA took them out and it helped the entire industry.

E X A C T L Y!!

Not all airline mergers and acquistions are about getting bigger. AA deserves some credit from other airlines for funding the execution of the Karabu agreement that allowed Icahn to undercut all airlines. Sometimes you get more value if you simply buy out a competitor and kill it.

Yields must increase or all legacy airlines are doomed. And one good way to increase those yields is to reduce capacity. A great time to do that is when the acquired airlines are in Ch 11.

 

[ohcaptainron]

DL looks to be the easiest and best deal to do.

DL in Bk offers many advantages, maybe the most compelling is the fact DL meets the DOJ criteria for failing carrier status.
Decreasing substantially the anti- trust concerns. If carve outs are to be made it is much easier to sell assets in the BK process. DL will likely be easier to finance as a result. All redundant aircraft (non compatible) are easier to deal with as well.
Remember that in the late 90s both companies worked very hard at a possible merger or code share.

CAL would work but more expensive, problems with the NWA golden chair issue, and no Southeast hub. Plus Tilton dislikes the CAL management, in particular trailer trash Gordo.

DL fills in nicely with UA,DL: BOS,JFK,ATL and the shuttle, DLs Europe point to point out of JFK and UAs Heathrow access seems pretty compelling. Possible carve out's yea but not much.

Jamie Sprayehagen(SP) the lead BK lawyer in UAs restructuring has left Kirkland and Ellis and now with Goldman and is involved with the DL restructuring.

Could be CAL, I would put my money on DAL.

 

[MCI transplant]

While I would love to see Delta remain a stand alone carrier (and I pray to the airline Gods that they do),
the only two combinations I see good for DL are NW or
Alaska Air.
As far as American, I don't see them involved this time around. They may purchase some assets that may become available with a UA/CO merger, but that is all.
The TWA merger was a failure and AA will likely grow from within rather than combining workforces.

IMO

<_< -----"The TWA /aa merger a failure!" Now way would you say a thing like that? aa got what they wanted out of TWA! And through away the rest!---- :angry:

 

[NewHampshire Black Bears]

If you have CO/UA, then DL/NW is almost a sure thing. MEM and CVG are downgraded and assets moved elswhere. Back into DFW? They just might have the scale compared to AA to make it happen. DFW always gave a level of protection to Delta's SE markets in the past. Geographically with their hub locations, DL/NW would have inland markets East of the Mississippi in their pocket.

It's not as nice has having ORD/LHR/West Coast but close.
But what's to stop AA/HP if mergers start to happen? Their combination would not be much larger than DL/NW.

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"artie",

The ONLY way DL gets into Asia is IF UAL "courts" them, instead of CO.(the awarding of a single china route, 5 years from now, notwithstanding)

Allow me (please) to explain.
If it turns out to be UAL/CO, so be it .

I feel reasonably certain, AA "stands pat", and due to their Quirky Nature, NW "stands pat" as well.
Now "enter" DL into the mix. ......If DL "courts" NW(which I feel they will) that forces AA's hand, to "come alive"

AA shot themselves in the foot, via Inaction, back in the mid '80's. ... Couple that with the awarding of the next China route to UAL(which, again, In my opinion only) I think will happen, THAT will DEFINITLY put AA, on "RED ALERT", as far as Asia goes !!

Short of AA driving up (on purpose) the price of NW to DL, to an ASTRONOMICAL $$$ figure, AA will NOT be denied Asia again(IMHO).

AA needs(only)..."A-A-A" !!! ASIA/AUSTRALIA/ALASKA.

They're not the least bit concerned(or so they seem) about Europe, from JFK. .... They seem quite content to let DL fly to "robust" destinations like Tibet/Siberia, or the Balkans, from JFK(I'm being a bit facetious)

AA's into INDIA now, and has NO desire to fly into the Middle east, which leaves ..ASIA..ASIA..ASIA !!!!!!!!!

NH/BB's

 

[artiefufkin1]

That makes sense but the hubs don't fit. DTW/ORD overlap each other. DFW/MEM draw from the same regions as well. So it loses alot of it's appeal right there. And I disagree that NW would not want a partner if UA/CO happens. DL sure would. The CEO at HP was on the phone to Delta when he heard rumours about possible mergers. NW's Asia service would be very threatend by UA/CO, they would need to bolster US market share to compete with that.

But we're most likely talking a year down the road. Why would AA be more appealing to NW than Delta? They both will have good cash resereves (aa slightly more for size) and Delta should have slightly higher margins and less debt for size.

 

[NewHampshire Black Bears]

That makes sense but the hubs don't fit. DTW/ORD overlap each other. DFW/MEM draw from the same regions as well. So it loses alot of it's appeal right there. And I disagree that NW would not want a partner if UA/CO happens. DL sure would. The CEO at HP was on the phone to Delta when he heard rumours about possible mergers. NW's Asia service would be very threatend by UA/CO, they would need to bolster US market share to compete with that.

But we're most likely talking a year down the road. Why would AA be more appealing to NW than Delta? They both will have good cash resereves (aa slightly more for size) and Delta should have slightly higher margins and less debt for size.

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I agree with you on AA/NW hubs.

UA/CO, or no UA/CO, "BIG RED" has been making a LOT of money with their NRT operation.
NW also is an EXTREMELY independent airline, and Ideally wants to be "left alone".

In a "hard core" bidding War, AA will not be denied !!!!

(But again, It's just "one lone opinion")

NH/BB's

 

[superG]

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"
AA needs(only)..."A-A-A" !!! ASIA/AUSTRALIA/ALASKA.

They're not the least bit concerned(or so they seem) about Europe, from JFK. .... They seem quite content to let DL fly to "robust" destinations like Tibet/Siberia, or the Balkans, from JFK(I'm being a bit facetious)

AA's into INDIA now, and has NO desire to fly into the Middle east, which leaves ..ASIA..ASIA..ASIA !!!!!!!!!

NH/BB's

Maybe when Emirates invades DFW/ORD, things will change at AA. As for India, UA,DL,NW been there, done that. I believe that AA retreated from Australia some years ago, and now open skies, so what's the hold up? Even little ole HA flies there.

 

[NewHampshire Black Bears]

Maybe when Emirates invades DFW/ORD, things will change at AA. As for India, UA,DL,NW been there, done that. I believe that AA retreated from Australia some years ago, and now open skies, so what's the hold up? Even little ole HA flies there.

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Interesting ... superG, that all 4 of the airlines YOU mentioned have "visited" BK-11

NH/BB's

 

[Fly]

Between CO or DL, I hope DL is the merging partner in this. United seems intent on merging so I'd guess that's exactly what will happen. Perhaps they sold the JFK/LON slot because they really weren't selling anything at all....hmmmmm.

We'll all find out eventually but the NW golden share holds a lot of power that may not make it worth the time. Maybe this is why US approached DL a couple months ago about merging, just to see if they could be part of the merge too.

One things for sure, this industry is never boring.

Let's just merge all the legacies and make ourselves into one giant powerhouse flagship carrier? We can have a running race to determine our seniority. First one to the lav truck and back is #1........right down the line. (that would certainly scramble up who holds the best lines and shifts)