the 'liquidate comair' theory for LCC/DAL was the best-case argument for the merger. It may not have been limited to that, plus a minimal amount of mainline contraction.... it probably would have been more.
But that brings me to some thoughts about airline consolidation theory, namely:
merger type 1: market extension
merger type 2: market constriction
They both may be similar in that they both are mergers or some type of consolidation and they may occur with some involvement of bankruptcy court and gov. regulation.
BUT, they really are completely differnet economically for the participants. So, if your in the exec suite of LCC and you want to consolidate because your markets are relatively weaker and more vulnerable to major demand contractions for connecting, legacy airline service (which I believe LCC to be) and your sick of compensating for this fact by paying your employees less and providing crappy service, then you may think: we need to merge to obtain stronger market presence. So you look and say, 'hey we can do merger type 1 or merger type 2.'
If so, and the competitive environment is such as it is now, with a limited number of legacy carriers and pretty easily mapped out strategic motivations of those carriers (two of them in bankruptcy), then you might conclude the following:
merger type 1: really boils down to DL. Going after DL while it is bankruptcy is a good bet, because either LCC will be successful and be able to use DL's bankruptcy proceeding to somewhat more cheaply reduce capacity and nudge LCC into larger more sustainable markets. After consolidation, growth into other markets would likely be on the agenda after rationalizing the new system. Again, here bk court is helpful, not just for costs, but on the strategic side as well, since bk court is likely to involve creditors that are going to demand better performance from DL's restrucutring then might have otherwise been expected (I dont' know if this turned out to be true) Also, it isn't all that bad if another carrier comes in and takes DL, because capacity reduction would likely occur anyway. This strategy really requires bk court.
merger type 2: obviously NW is the focus, but isn't necessarily the only option. However, if NW is the target, bk court isn't really that beneficial and might even be strategically less appealing because other carriers interested in consolidation would be MORE interested in mergine with NW while it is in bk. LCC merging with NW doesn't put LCC in the BEST position, because I think it will still be the weak sister as far as strong domestic market presence. On the other hand, operationally it appears to the uneducated, to be less problematic. Since I believe that there wouldn't be a huge pressing need to liquidate MEM, I'm not sure how helpful BK court would be. Seems like I keep hearing that the NW's DC9s are not leveraged so there is no benefit to getting rid of them in court (maybe I'm wong).
I'm not making any predictions or wishes, I'm just noting that I kind oof suspect that finance guys and airline ops guys would really see tthese two types of combos LCC/DL and LCC/NW as competely different types of endeavors.
I won't be responding after this for awhile.. I'll be able to read but not respond, so be kind.
