busdrivr,
I'm not proposing that UA would combine w/ HP/US, but merely mention it as one of the possibilities.
I don't disagree that a DL/UA merger is a distinct possibility but I think you are jumping the gun just a bit if you think that UA will be the surviving entity. DL hasn't even filed for BK but they already have lower costs; they should not only be able to get rid of alot more costs in BK but also get rid of alot of debt. The United brand probably has more worldwide equity than Delta's so I would guess it would be kept. If both companies go through bankruptcy before a combination happens, I don't see that there is anything great in saying which company is the surviving company since the new company is completely recapitalized and the employees have all given up huge amounts. As long as my frequent flyer miles are kept from both companies, I don't really care whether DL or UA is the survivor since I have significant balances with both airlines. In order to survive, the combined entity needs to be run with the employee and customer focus that was Delta in its heyday but with the marketing and strategic focus that is characteristic of American or Continental (since I don't think either DL or UA has had the sharpest strategic thinkers or managers).
DL-UA would be the strongest airline in the US and perhaps the world; DL has much more potential to develop Latin America, esp. from NYC and Florida while DL's continental Europe focus blends very well with UA's LHR focus. UA's weakness is in the east where DL would add a considerable amount of strength without triggering the anticompetition concerns that UA-US caused (since DL isn't as dominant in any NE market as US is). UA could add a number of new routes to Asia from NYC given the additional strength DL has there.
bulscu,
You have a very CO-centered view of the world and one which is probably not in touch w/ reality. Yes, CO can probably buy another entity without consulting shareholders but a merger of large companies almost certainly involves an exchange of ownership which does require votes by the shareholders in both the acquired and acquiring companies. The owners of the acquired will not simply give up the their ownership without significantly larger amounts of cash, something CO could not afford to do. NW may have screwed itself by trying to control CO's outcome and may actually drive DL and UA together which is certainly not a scenario NW would want.
You are also sorely optimistic if you think that huge amounts of capacity can be removed from the air transportation system and not be replaced by upstart or LCC airlines and that employee wages will return to much higher levels. The legacy carriers do almost exclusively control capacity that is used for connecting passengers since most of the LCCs have that as a fairly small part of their business model; that connecting capacity will be pulled down and you can expect that DL and NW will probably lead the charge since they probably carry the most connecting passengers and have several medium to small hubs. All carriers have aircraft that are not economical to operate given current fuel prices and are at or near the end of their economic life; that capacity will come out of the system. Markets that are served on a connecing basis will end up being much more expensive than nonstop markets and that's the way it should be.
Wages won't go up for a good long time, if ever. We are currently at the peak of the business cyle in terms of traffic yet yields are low and costs are high. The restructuring of the industry has to shift into very high gear now or the industry faces certain implosion when traffic starts to fall off.
While the industry may be headed toward evenutal consolidation the final phase is only just beginning. While some would like to argue that one carrier or another will be the surviving carrier because of their "strength" every airline will be struggling just to survive and certainly won't have money laying around for investments. Consolidation will be driven by investors and creditors who want to protect their investments. Most of it not all of the legacy airlines will be owned by creditors and investors who were burned through the bankruptcies that were started by UA and US and which will undoubtedly spread to at least the majority of the remaining legacies.
Given that every legacy airline will be reduced to financial ruin, the surviving airlines will be those that can develop the most compelling business cases and can attract financing. There are investors that will be able to make money because of airline restructuring but in most cases they will be companies that are already invested in or exposed to the airline industry now.
Over the next couple years, there will undoubtedly be a considerable amount of pain for all airline employees and alot of cities as they lose service.
Sadly, we will have spent almost thirty years growing alot of airlines and their capacity that could never be profitable given expected very high fuel prices and low yields. In many respects, all deregulation will have accomplished is to have consoidated the legacy segment into a couple larger global carriers and allowed a couple of well-run LCCs to grow up with a business model that is focused solely on nonstop markets. Make no mistake about it, though, costs at all large airlines (LCC and legacy) are about to come very close together. And, of course, the biggest impact from deregulation will be that airline employees will have gone from being compensated above the average American worker and unionized to being at or below average compensated with ineffective unions at best.
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