US Ups Delta Offer

[ClueByFour]

Well I think we might see an economic Darwinism with this Delta Deal.

I really don't think US ever wanted all of Delta, I think the goal was to kick start consildation and get everyone in play and then each of the pack chew up the carcass of Delta.

I disagree. Dougie wants it all, because the "use BK to reduce capacity and slaughter employee costs" model is all he really knows.

 

[Rico]

Using your logic then, why wasn't the UA/US merge approved? I mean if Wall Street wanted it,which they did, why didn't it happen?

The DOJ sat on that "decision" until that deal was already dead, only then did they come out and declare it a "no-go".

Because that's just what they were told to do by those that have the power to tell them.

 

[High Iron]

No, it's not working the way he thought it would.

Here is the thing: on vastly reduced capacity, and increased fares, LCC has made a few quarters of money. What nobody who is pro-merger or who thinks Parker is a genius will admit is that the lion's share of said profits come from what was US-East. Those profits came about because the bankruptcy court allowed the US-East management to slaughter employee wages/benefits/pensions and screw creditors, not as a result of any management acumen on Tempe's part. But herein lies the problem: what to do when one cannot reduce capacity anymore?

Parker's answer is to buy Delta, use the bankruptcy court to further abuse creditors and leaseholders and employees, and continue to reduce capacity.

But in a year or two, even that move will begin to fade, and then they will have to start running the airline. Here is where is gets tricky. If you look at any of the big stuff, US/HP are basically still two airlines and the stuff they have tried to combine (website, notably) has been a complete and utter charlie fox.

By upping the offer, Doogie is basically mortgaging the assets that will be acquired to the hilt, which means an outrageous debt load. What remains unsaid is that many of the creditors who are going to get some of the pie may very well be the one's whose assets are being mortgaged. And, given the fact that an antitrust review will take a year, plus whatever time is spent in bankruptcy, it means that the creditors won't see their cash for awhile. More importantly, it means they won't see their stock for awhile--the latter is important, because if Doogie's crew can't get it together operationally, the stock is in trouble in the long term.

This is all about a quick financial hit, and has very little to do with creating a viable airline moving forward. DL/NW and DL/UA make much more sense that US/DL. UA/US makes sense. UA/DL makes somewhat less sense. DL/NW makes sense from a network standpoint and little else. DL/US only makes sense if the intention is to yank down capacity and completely gouge the east coast (which is why Doogie has such a hard-on for DL). It's not about running the airline 5 years from now. They've had two years, and have done operationally squat to integrate the two existing airlines. Paint looks good, though.

Couldn't agree more. "Same old, same old"

 

[qwerty]

As an FYI--airline routes have absolutely no effect (in and of themselves) on the economy of an area, without preexisting business demand in said area. Zero.
Keep 'em coming, genius.

So you are saying the new PEK-IAD flight United is about to start will have zero impact on the local Virginia economy?

 

[ClueByFour]

So you are saying the new PEK-IAD flight United is about to start will have zero impact on the local Virginia economy?

It'll be negligible. People who had to go from capital to capital were already doing it, people who had to get product from place to place were already doing it. It'll cut a day (if that) out of certain supply lines and shorten the trip for some. But it's not going to be measurable in any meaningful way.

Question for you. Does he have the savvy to pull the DL rabbit out of the hat?

Financially? Sure.

Of course, if they do the DL deal, everyone else will follow, and the combined UA/CO and AA/NW will both demolish US/DL. Better route networks, larger, and they (particularly UA/CO) are going to basically own all premium traffic.

And when the day comes where Doogie actually has to operate an airline instead of having a finance exercise, the bovine fecal matter will hit the rotating cooling device with excessive force--because he's proven he can't run a big airline.

 

[RowUnderDCA]

you guys really talk alot of s#it. it makes me laugh .

Well, if Clue would just drain his posts of this obsessive hatefulness and obnoxious personality, you might be convinced that he has some points.

I think it is likely that if Parker's main goal is to acquire and merge DL then he's think one or both of the following:

1) basically Clue's scenario (I'd be a bit kinder and suggest that Parker fully intends to manage the resulting carrier for operational success)

2) a 'next generation,' totally revamped legacy, hub-spoke carrier structure. This would presuppose three of four full service, world-wide, code-sharing network carriers. Parker would prefer to be operating in that environment from stronger markets, to reduce costs by operating larger aircraft and have a higher ratio of non-stop, higher yield passengers. The class and income structure of the states is changing. With Very Light Jets and the coming air taxi industry, operating a hub and spoke out of secondary markets will mean even fewer non-stop higher yield pax. It's a lot harder to compete with hubs like CLT and PIT. ATL, PHX and PHL with LGA, BOS, DCA and LAX etc are much more attractive, it would seem to me. Operate the secondary markets like a mini hub or major O and D with right-sized aircraft.

 

[PITbull]

Well, if Clue would just drain his posts of this obsessive hatefulness and obnoxious personality, you might be convinced that he has some points.

I've been posting here for 5 years. From what I've veiwed, Clue is a straight shooter and knows this industry and all the players. He gets it right ALL the time, not some of the time.

 

[hublablebla]

--because he's proven he can't run a big airline.

That's not true- He has proven he can't run a small airline. If we buy Delta then he can prove he can't run a big one.