Merger with LCC in the spring

[WorldTraveler]

I had to check in to take the pulse and was pleased to find the banter is still in full swing.

First, consider the possibility that DL really wants NW but is wanting to talk to UA in order to force CO/UA to fork over some prime LHR slots, about the only real asset that DL/NW doesn't have and can't duplicate (because such slots aren't for sale). DL could also want to go after NW in order to prevent AA from getting a piece of Asia via UA (much harder to imagine AA being a part of a carveup of UA and AA certainly can't have UA as a whole).

Second, DL probably really doesn't want UA in its entirety. All of UA is alot to digest and DL knows biting it all off is not necessary. DEN and IAD aren't necessary and neither are all 3 pieces of UA's Pacific system (ORD and SFO hubs plus NRT beyond rights - yes I know LAX and IAD also have routes that overfly Japan too). But DL doesn't need all of UA and it may well be that UA is worth more in pieces than whole. UA mgmt and stockholders will cut up UA if that yields the greatest returns.

Third, I'm in total agreement that UA and US won't merge. In fact, US is roadkill in consolidation. That's why they tried to go after DL - and US has fallen financially since then and its labor situation is not improved in the least. Cosmo is right that IAD is far more valuable.

Fourth, DL is undoubtedly being given the green light buy investors to pursue mergers because it is largely non-union and has a proven track record of integrating labor groups in mergers - converting thousands of union jobs into nonunion jobs overnight. The last thing that investors in the airline industry want (and it is a pretty small group of high powered financial institutions) is to allow labor to regain its strength as bankruptcy moves further back in the rear view mirror. DL is the chosen instrument of consolidation and CO is probably the second place runner up.

Fifth, CO is not comparable with DL, NW, or UA in financial results. THey have lost many of the benefits of BK and now have upper tier costs and lower tier profit margins, including being the only US carrier that is consistently unprofitable in the domestic system. It is not at all a given that Wall Street will rush to throw assets at CO when they have failed to maintain the top tier performance that is needed to ensure investors that any mergers will actually work.

Sixth, alliances are a secondary consideration in mergers. IF anything, Air France (which does fly to PHL, BTW) would love to replace NW with UA which is a much larger carrier. So there could be gamesmanship in the whole process. LH just gets screwed if UA gets pulled over to Skyteam or carved up. NW won't remain independent and if AA gts their hands on NW, then Oneworld and Skyteam suddenly are vastly more valuable that Star over the Atlantic, regardless of what happens to CO or US.

It will be interesting ahead..... I could honestly be happy to have my Skymiles account enhanced by either NW or UA's operation but my preference is still for UA.

Nonetheless, I'll apparently be having the last laugh for those of you who thought DL was dead 18 months ago and even moreso from those of you who thought I was insane for talking about DL acquriing another carrier, esp. UA.

 

[767jetz]

I had to check in to take the pulse and was pleased to find the banter is still in full swing.

I actually agree with much of your post...

... except the part of UA being "carved up" or "acquired" by DL. I think you should throttle back on your delusions of grandeur in that department. The capital market is not exactly eager to throw money at M&A, so any combination in this round will most likely be a stock trade type of transaction and not an acquisition, fragmentation, or "carve up" as you put it. ( I know you can't resist the opportunity to "tweak" some of the UA posters, so it was taken with a grain of salt.)

Just like Pardus Capital said last year when they made their case to the board of directors, a merger of DL and UA makes sense with oil flirting with $100/barrel. Besides, the remaining entity will still probably be called United and headquartered in Chicago with much of DL's management team at the helm. (IMO)

 

[nostradamus]

I actually agree with much of your post...

... except the part of UA being "carved up" or "acquired" by DL. I think you should throttle back on your delusions of grandeur in that department. The capital market is not exactly eager to throw money at M&A, so any combination in this round will most likely be a stock trade type of transaction and not an acquisition, fragmentation, or "carve up" as you put it. ( I know you can't resist the opportunity to "tweak" some of the UA posters, so it was taken with a grain of salt.)

Just like Pardus Capital said last year when they made their case to the board of directors, a merger of DL and UA makes sense with oil flirting with $100/barrel. Besides, the remaining entity will still probably be called United and headquartered in Chicago with much of DL's management team at the helm. (IMO)

Delta pilots reaction to merger with United. Investors beware.

Delta pilots will strike over this

 

[donttouchthebeauty]

Delta pilots reaction to merger with United. Investors beware.

Delta pilots will strike over this

Well, I saw where it talked about a merger in general but not about UAL specific.. DAL pilots don't really have a say so in this, DAL is not that strong of a company, and that is why they are in play... They have a few new start up routes that dont have a proven track record of profitablility... Just in the few short months after BK they are flirting at $12 - $15 dollar range stock.. I do think that DAL and NWA would be much easier to combine than UAL and DAL, however I think UAL and DAL would be a fantastic fit... IF DAL does dance with NWA, I guess it will shut out AMRs hopes of getting their paws on ASIA... IT will be UAL and DAL territory..

 

[Rubble]

Whats up with the DL pilots and a merger? Did they get an exclusive right to oppose a merger during the last bankruptcy? If not, I don't see how a strike will help them? It might just make consolidation easier.

 

[NewHampshire Black Bears]

We ALL know the ol' saying;..............."The MORE you stir Sh!t...The MORE it STINKS" !! , but please believe me, THAT is NOT my Intention here, as I add these points to this discussion.

First off,
(IMHO), Given the VERY strong relationship between Richard Anderson, Doug Steenland and the NW BOD's, Betting against a DL/NW "hook up", is akin to betting that neither the NE Patriots, or the Indy Colts will win the AFC title !!!!!!!!!!

Assuming that I am correct, I'm somewhat amused that NO One has considered "this" possible scenario(though my common sense is telling me that (perhaps) COSMO has "ran it through his super computer"),
That being said,....When DL and NW "do the dance", AA will NOT sit Idly by ! (Obviously I'm NOT talking AA/UA, and forget LCC.........their situation is similar to SMALLPOX.)
What I'm talking here is a better than 50/50 chance that AA goes after(drum roll please)..Continental !

Not the absolute best combo, I will admit,..BUT..with the "LONE" exception of UAL's wise move on PA's Asian routes, AA never gets "upstaged" by UA(or by anyone else for that matter) !

CO....loaded with Boeings(757/767/"737-800's")
CO, with a healthy 787 order on the books.
CO, with a NON-UNION workforce of Ramp and Agents.
The FEDS demanding that JFK/EWR have less activity(certainly wouldn't be difficult if AA is running the JFK/EWR show)

Good Lord. The mere thought of American Airlines totally running the "NY show", is BETTER than a Hot Kosher Corned Beef Sandwich at the Carnegie Deli.(And thats REALLY sayin' somethin') !


Gentlemen,..Of the few points I've offered here,..NONE is stronger than my prediction that AA WILL NOT sit Idly by, during these BAD, and (progressively) getting WORSE Times upon us !!!

Did I mention the 5/6 $Billion in "greenbacks" ??


Cosmo ?????

 

[767jetz]

Whats up with the DL pilots and a merger?

Activating the SPC is just a formality and it serves several purposes if you read the article posted by Nostradamus. The UAL MEC Merger Committee and SPC is already active.

For one thing it sends a message to management... Don't try to shove this down our throats. You better make us part of the process or we will flex our collective strength. Secondly, if a merger happens, section 6 contract negotiations will reopen. So being spooled up ahead of time is prudent. Thirdly, as the article says, the SPC can also mobilize to support a merger under the right conditions.

Nostradamus is just trying to stir the pot. He is bitter that his dreams of flying DL's or UA's 777's will never happen, and he is stuck in a civil war his group started at US while his less-than-stellar career flush down the proverbial toilet.

 

[FrugalFlyerv2.0]

First, consider the possibility that DL really wants NW but is wanting to talk to UA in order to force CO/UA to fork over some prime LHR slots, about the only real asset that DL/NW doesn't have and can't duplicate (because such slots aren't for sale).

How many more LHR slots would DL-NW really need? A combined DL-NW would probably reduce (or eliminate) CVG, SLC, MEM, so that leaves MSP, DTW, ATL, JFK. DL-NW could use a couple slots to add frequencies to LHR from the aforementioned cities - so lets say 4-6 pairs. I think it will be easier (and cheaper) to get LHR slots from AF/KL (especially now that they will control Alitalia) then trying to pry slots from UA (or UA-CO). Also, what makes you think that UA-CO would be forced to surrender LHR slots?

Second, DL probably really doesn't want UA in its entirety. All of UA is alot to digest and DL knows biting it all off is not necessary. DEN and IAD aren't necessary and neither are all 3 pieces of UA's Pacific system (ORD and SFO hubs plus NRT beyond rights - yes I know LAX and IAD also have routes that overfly Japan too). But DL doesn't need all of UA and it may well be that UA is worth more in pieces than whole. UA mgmt and stockholders will cut up UA if that yields the greatest returns.

If there is a DL-UA, I would think they would keep most of IAD. It would nicely compliment JFK. What is the logic of closing DEN instead of SLC?

Couple more questions for you: what makes you think UA will be carved up? I know that UA has the 'For Sale' sign, but I seriously doubt they're that stupid, to sell pieces of UA to competitors? Or are they? I would hope they realize that once UA sells off any portion of its Pacific network, the remainder of the airline is more or less worthless. DL (or anybody) would have to throw some serious $$$ to get just portions of UA.

And finally, here is another question for you: although DL wants to talk merger with NW and UA, and UA has stated that they want to be involved in industry consodilation, what makes you think that UA wants DL? What does DL bring to the table that UA really really really wants? SLC - no. CVG - no. JFK - has some value, but there is the matter of the POS DL terminal that will require $$$, as well as congestion and Jetblue. ATL - maybe, but there is AirTran to consider. ATL-South America, may be of some value. But every UA-DL hub city would have LCCs to contend with, which could do damage to the new company while management focuses on integration of the 2 companies.

The only benefits that I see is that a UA-DL could reduce domestic capacity quite a bit, leading temporarly to higher prices (and profits). I wrote temporarily because LCC's would add capacity back in a couple years anyways.

 

[nostradamus]

For one thing it sends a message to management... Don't try to shove this down our throats. You better make us part of the process or we will flex our collective strength. Secondly, if a merger happens, section 6 contract negotiations will reopen. So being spooled up ahead of time is prudent.

Nostradamus is just trying to stir the pot. He is bitter that his dreams of flying DL's or UA's 777's will never happen, and he is stuck in a civil war his group started at US while his less-than-stellar career flush down the proverbial toilet.

Here is 767's pilots idea of this message they are sending to management, I disagree with her in this matter. If you post a fact that she does not like she tries to character assassinate instead of an educated rebuttal.

Click here for the United Pilots Summer of Hell

 

[back2CLT]

The only benefits that I see is that a UA-DL could reduce domestic capacity quite a bit, leading temporarly to higher prices (and profits). I wrote temporarily because LCC's would add capacity back in a couple years anyways.

Exactly....but it's always about the short term...unfortunately.

 

[back2CLT]

.... In fact, US is roadkill in consolidation. That's why they tried to go after DL - and US has fallen financially since then and its labor situation is not improved in the least.....

Actually, US would gain a lot from a DL/UA merger assuming the new airline was Skyteam aligned....in fact this would be a dream come true, as they would finally be internationally relevant, among the many other reasons they should want this transaction to occur.

DL/NW.....not as big of a deal...the impact on US would be minor. Yeilds would improve, and the future impact of low-cost carriers would be less important as they aren't as like to take an interest in whatever is discarded.

 

[767jetz]

Here is 767's pilots idea of this message they are sending to management, I disagree with her in this matter. If you post a fact that she does not like she tries to character assassinate instead of an educated rebuttal.

Click here for the United Pilots Summer of Hell

Blah, blah, blah... Waste your time if you must, Nos. No one is taking your Bait here.

To all others: Just ignore Nos. IT likes to post garbage links about garbage that is irrelevant in order to stir the pot. Then IT will twist your words and call you names if you hit a nerve. Such a sad creature IT is. :wacko:

 

[nostradamus]

To all others: Just ignore Nos. IT likes to post garbage links about garbage that is irrelevant in order to stir the pot. Then IT will twist your words and call you names if you hit a nerve. Such a sad creature IT is. :wacko:

“The truth is incontrovertible, malice may attack it, ignorance may deride it, but in the end; there it is.â€￾

Winston Churchill

 

[UAL_TECH]

Blah, blah, blah... Waste your time if you must, Nos. No one is taking your Bait here.

To all others: Just ignore Nos. IT likes to post garbage links about garbage that is irrelevant in order to stir the pot. Then IT will twist your words and call you names if you hit a nerve. Such a sad creature IT is. :wacko:

Not to worry as I take all of you huff-n-puffers with a grain of salt.
😛

 

[NewHampshire Black Bears]

Just as an FYI,...........A good point was made on the DL board regarding the following;

Whomever DL 'hooks up with", DL wants to be the survivor, AND relocate to ATL .

THAT dear friends will bring a HOWL from the chairman of the Aviation sub committee, Jim Oberstar(D-MN), who IS a VERY formidable FOE.

He will FIGHT to the Death, to keep NW, and Especially MSP intact.

So now I'm thinking that THAT may be why DL has UA involved.(A plan B if you will)
The Illinois delegation would have a difficult time saying that the ORD area, would be negatively Impacted, what with AA, and WN in town......and if the "new" DL/UA kept flights from ORD to the small outlying communities .

Hmmm.