Potential '08 Merger

[Dave]

Well heck,

Since no one has any clue what is really going on, I might as well throw my two cents in and come up with a really interesting senario for everybody to laugh at.

United and Delta merge. United sells it's west coast maintenance operation and uses assets from sale to help boost Delta's maintenance program. United sells off mileage plus program that Bear Sterns believes is worth north of $15 billion. Delta sells off Comair.

Now with a war chest in hand, the new carrier buys the remaining 80% of Jetblue for around a billion dollars. With Lufthansa controlling 20%, and they all move into a shiny new terminal at JFK.

They now have U.S. hubs in JFK/LGA, IAD, ATL, ORD, DEN, SLC, SFO and with the combined assets, LAX and BOS. Internationally, combined with Lufthansa and the Star Alliance, they'd have a huge presence at Heathrow and Narita.

Could be interesting.

 

[TechBoy]

DL absolutely is out to boost the position of Skyteam and both sides of the Atlantic have realized having 2 separate carriers in the US won't work. NW is fine for DL as long as they get some of UA's assets, several prime time LHR slot and potentially a China frequency (note that only the most recent routes have restrictions about being transferred). There are clearly a few other places in the world where DL wants a bigger presence and where UA has assets (like Brazil frequencies) that DL needs to have in order to believe that a CO/UA combination doesn't eclipse DL/NW.

What on earth makes you think that UA (or a merged UA/CO) would sell any assets to a combined DL/NW? Never gonna happen.

I suspect that a DL/NW deal would be easier to integrate, particularly with respect to alliances. But UA would be the better partner in the long run. UA has better hubs, a better fleet, a strong western presence that both DL and NW lack, a larger and more comprehensive international network (OZ, SA), and a much stronger alliance. DL/NW is stuck with Skyteam, the leftover alliance. DL/UA could go with Star, which would produce better results. (Going with Star would also probably cause Star to kick US out, further marginalizing them to the benefit of DL/UA.)

I also wonder whether AA will let NW go without making a run at its last chance for a comprehensive Asian network . . .

 

[flyingcat]

Now with a war chest in hand, the new carrier buys the remaining 80% of Jetblue for around a billion dollars. With Lufthansa controlling 20%, and they all move into a shiny new terminal at JFK.

The new B6 terminal is too small to acommodate all of DL's operation. The gates are designed for narrowbodies and there is not even a custom facility. DL will still have to build a new facility from scratch.

 

[RowUnderDCA]

So, no big deal... operate out of Terminal 3, until you can demolish and build an international Terminal 6. It dovetails right into Terminal 5 and Terminal 6 has to go anyway.

 

[DCaf]

Well, good luck everyone. This merger, all mergers coming up, are going to be messy. It may be a blessing NOT to be involved. How many aircraft will be desert-bound?, with the ensuing cutbacks, transfers, etc. In the middle of a recession, too. Again, good luck.

 

[DalMD88]

What on earth makes you think that UA (or a merged UA/CO) would sell any assets to a combined DL/NW? Never gonna happen.

Speculation, NWA has the golden bullet to stop any CO buy out. UA has to give NWA something in exchange for this. Some here have reasoned this is the real purpose behind the DL/UA talks. Also UA agrees not to cry to congress over a DL/NWA merger the UA/CO deal gets no disput from DL. I liken it to the carving up of Europe after WWI. I know that didn't work out very well.

 

[ual777fan]

What on earth makes you think that UA (or a merged UA/CO) would sell any assets to a combined DL/NW? Never gonna happen.

I suspect that a DL/NW deal would be easier to integrate, particularly with respect to alliances. But UA would be the better partner in the long run. UA has better hubs, a better fleet, a strong western presence that both DL and NW lack, a larger and more comprehensive international network (OZ, SA), and a much stronger alliance. DL/NW is stuck with Skyteam, the leftover alliance. DL/UA could go with Star, which would produce better results. (Going with Star would also probably cause Star to kick US out, further marginalizing them to the benefit of DL/UA.)

I also wonder whether AA will let NW go without making a run at its last chance for a comprehensive Asian network . . .

I really doubt that AA is going to let NWA go without some sort of bidding war, at least to force the price up. American has wanted into Asia badly since United bought PanAm's operation right under their nose back in 1985. Crandall wanted those routes badly and I have no reason to think that Arpey doesn't feel the same way.

 

[jimntx]

Speculation, NWA has the golden bullet to stop any CO buy out. UA has to give NWA something in exchange for this. Some here have reasoned this is the real purpose behind the DL/UA talks. Also UA agrees not to cry to congress over a DL/NWA merger the UA/CO deal gets no disput from DL. I liken it to the carving up of Europe after WWI. I know that didn't work out very well.

It is my understanding that there is an escape clause in the NW-CO relationship that is basically "if NWA is acquired/merged/liquidated, the CO control does NOT pass to the successor/buyer."