USAirways tests Delta's interest in a Merger

[Borescope]

CHICAGO, July 29 (Reuters) - US Airways Group Inc.'s (LCC.N: Quote, Profile, Research) chief executive called Delta Air Lines Inc.'s (DALRQ.PK: Quote, Profile, Research) CEO this summer to gauge his interest in a possible merger, the Wall Street Journal reported on Saturday, citing people familiar with the situation.

Delta CEO Gerald Grinstein told his counterpart at US Airways, Doug Parker, that Delta wasn't interest in starting merger talks because the Atlanta-based airline plans to exit bankruptcy-court protection next spring as a stand-alone carrier, the Journal reported.

Delta did not immediately return a call seeking comment. A US Airways representative could not immediately be reached.


The newspaper said that no subsequent discussions have occurred between the two airlines. The Journal said a Delta spokeswoman would not confirm or deny the conversation between Parker and Grinstein.

 

[artiefufkin1]

That would have really presented some market dominance issues on the East Coast. The DOT would have probably taken issue with HP/DL.

I'll bet Grinstein would have straightened up in his chair if United had called...LOL.

 

[WorldTraveler]

Doug Parker is just looking for a way out of the continual decline in USAirways performance. While US was quite profitable, the fundamentals of its business including market share and customer service continue to deteriorate as real LFCs grow in US' markets.

Dougie needs to focus as much attention on running an airline as he is in coming up with impressive financial deals. There is no doubt that US and HP would both be very different if he hadn't managed to convince a bunch of investors that Dougie had a great idea to bring 2 low cost airlines together. Problem is that US has costs that are on the upper end of the network carrier segment, customer service is on the bottom end, and LFCs continue to grow in every US major market.

I suspect that if he called NW, he might have a different reception - at least NW wouldn't present the antitrust issues that DL and US would present. But even NW recognizes that a merger could not deliver as much value to its creditors as would occur if NW emerged independently. The reason HP and US attracted financing was because neither of them had a very sure future as separate companies. Perhaps they still don't have a future as a merger company either and thus Doug is looking for a partner to bail him out.

 

[artiefufkin1]

Well WT I don't know what good it does to look at one side of their business when they just recorded as a whole the highest net margin in the industry, exlusive of hedging/special charges. So whatever the East is lacking is more than made up by the West.

And really if you have LUV maxed out in two of your three biggest hubs already, what does it matter that the will grow in PHL? It seem like HP already deals with this problem in LAS/PHX and made a killing this Quarter. Surely Parker can lower costs in the East as well. This thing is still not had time to fully intergrate.

That being said the two route systems don't bring in much synergy together.

 

[WorldTraveler]

I agree with you that US is doing some good things but East is still very much under assault from LFCs, seconded only by UA. And I read far more things from US passengers who just hate flying them than those who enjoy the experience. Not a good position for a service business to be in. I'm not sure how you get costs at US any lower - the folks already make poverty wages - and I'm sure you saw the press release that the natives (pilots) are getting a little restless with their pitiful wages and the company's inability. Remember that US has been through BK twice in the past 5 years; they should be making some money or they would have been shut down a long time ago. I also don't think LFC expansion in US' backyard is through. LFCs are just getting warmed up in PIT and CLT. There is no explanation for Dougie's urge to merge other than he thinks he can get a few more suckers to invest in his business so he can keep the gravy train going longer.

 

[artiefufkin1]

I don't put much value in customer service indicators these days. I watched for years Airtran operate with dingy gates, dingy planes, staff that just got off some sort of criminal probation, and cops on stand by at their ticket counter to quell small riots, and customers such as real live hookers on their way to LAS conventions...LOL. Yet here they are making money. It's a commodity these days.

 

[UPNAWAY]

And I read far more things from US passengers who just hate flying them than those who enjoy the experience. Not a good position for a service business to be in.


WT your just wrong on the CS front.
US was #1 for OTP through May, has now slipped to number two for the year after June & July numbers. Bag problems are down 50% YOY and a new systems is coming to PHL in Sept.. Cust compliants (a lagging indicator) have improved each month since the merger. US service was very bad during the last 2 BKs. A real turnaround is happening. You cannot challange the finacials either second only to LUV!

 

[Walmartgreeter]

Dougie needs to focus as much attention on running an airline as he is in coming up with impressive financial deals.


Bingo!!! And he could also start tucking in his shirt tail everytime he meets with the employees.....that little routine is wearing thin. PHL is NOT working, and is due another meltdown any day now.


Your friend, Greeter.

 

[superG]

Dougie needs to focus as much attention on running an airline as he is in coming up with impressive financial deals.
Bingo!!! And he could also start tucking in his shirt tail everytime he meets with the employees.....that little routine is wearing thin. PHL is NOT working, and is due another meltdown any day now.


Your friend, Greeter.

A fleet incompatibility nightmare.....try NWA instead.

 

[FlyUs]

I don't think the call to Delta was made with the intention of merging with US. IMO, Parker was just checking things out. Delta and US overlap over 50%. Not a lot to be gained here. The best fit for US would be UA then NW. AA would also work.

 

[NewHampshire Black Bears]

I don't think the call to Delta was made with the intention of merging with US. IMO, Parker was just checking things out. Delta and US overlap over 50%. Not a lot to be gained here. The best fit for US would be UA then NW. AA would also work.

===========================================================

AA ???

Arpey would'nt even answer the phone

NH/BB's

 

[FlyUs]

===========================================================

AA ???

Arpey would'nt even answer the phone

NH/BB's

Arpey will be the one making the call.

 

[Borescope]

Arpey will be the one making the call.

Be carful what you wish for. You could end up like TWA

 

[FlyUs]

Be carful what you wish for. You could end up like TWA

Who said anything about a wish? If there's one thing I feel certain about, it's further consolidation throughout the industry. AA doesn't strike me as the type of carrier that will sit on the sidelines while UA and maybe even US get bigger and leaner with future mergers.

 

[FA Mikey]

Who said anything about a wish? If there's one thing I feel certain about, it's further consolidation throughout the industry. AA doesn't strike me as the type of carrier that will sit on the sidelines while UA and maybe even US get bigger and leaner with future mergers.

I think except for getting a pacific rim operation, AA has no desire to grow further. There is a certain market saturation. How many hub operations does a carrier really need? They seems to be tightening up there operation and growing their strengths.