What If.......CO + UA .."DO the deal" ?

[NewHampshire Black Bears]

First an Opinion.

I honestly think AA/NW, and to a certain degree DL, Ideally want to remain as "stand alone" carriers !

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But what If UA and CO "do the deal". What does AA do then ?
Would AA and NW STILL remain "stand alone" carrier ?

One would have to think that DL, if they could line up the financing, would LEAP AT THE CHANCE to acquire NW for NW's obvious Asia routes !

AA would certainly have to act, to thwart a move by DL, to acquire NW, (who Does'nt want to "play" with ANYONE) !

(Now it gets "real" interesting)

Assuming AA "stifles"(SP?) DL, and is somewhat forced to acquire NW, What becomes of that beautiful DTW, non congested hub ?(Think ORD)!

Should UA/CO "do the deal", that would mean CLE(CO) "goes bye-bye". Most likely all the CLE flying goes to ORD, and UA grows even MORE in ORD, in UA's "state of the art" terminal(As AA "continues" to stagnate in their OLD ORD terminal) Would Mayor Daly promise AA "the moon" ?(ABSOLUTELY !!!!!)......But what if Detroit promised AA.."2 moons" ??(with THEIR brand new state of the art, non congested terminal)

Hubs would'nt be a problem, because(HYPOTHETICALLY) the "new" AA would have hubs of DFW/DTW/MIA/SJU and NRT.(MEM and IND, would disappear)

At this very moment, this is all hypothetical, BUT assuming UA/CO "consumate", these questions must be considered.

It's no secret that Tilton/UA was brought in to guide UA through BK, AND Merge, or Acquire someone(which is why I believe the Business Week article "has legs") !!

And lets not forget our ol'(retired at the moment) pal Gordon Bethune(and his GOOD management team)(and subsequently, Glen Tilton, and his HORRIBLE management team). Gordo would be a natural to pilot (a potential) UA/CO.

Your thoughts ??

NH/BB's

 

[ThirdSeatHero]

First an Opinion.

I honestly think AA/NW, and to a certain degree DL, Ideally want to remain as "stand alone" carriers !

-------------------------------------------------
But what If UA and CO "do the deal". What does AA do then ?
Would AA and NW STILL remain "stand alone" carrier ?

One would have to think that DL, if they could line up the financing, would LEAP AT THE CHANCE to acquire NW for NW's obvious Asia routes !

AA would certainly have to act, to thwart a move by DL, to acquire NW, (who Does'nt want to "play" with ANYONE) !

(Now it gets "real" interesting)

Assuming AA "stifles"(SP?) DL, and is somewhat forced to acquire NW, What becomes of that beautiful DTW, non congested hub ?(Think ORD)!

Should UA/CO "do the deal", that would mean CLE(CO) "goes bye-bye". Most likely all the CLE flying goes to ORD, and UA grows even MORE in ORD, in UA's "state of the art" terminal(As AA "continues" to stagnate in their OLD ORD terminal) Would Mayor Daly promise AA "the moon" ?(ABSOLUTELY !!!!!)......But what if Detroit promised AA.."2 moons" ??(with THEIR brand new state of the art, non congested terminal)

Hubs would'nt be a problem, because(HYPOTHETICALLY) the "new" AA would have hubs of DFW/DTW/MIA/SJU and NRT.(MEM and IND, would disappear)

At this very moment, this is all hypothetical, BUT assuming UA/CO "consumate", these questions must be considered.

It's no secret that Tilton/UA was brought in to guide UA through BK, AND Merge, or Acquire someone(which is why I believe the Business Week article "has legs") !!

And lets not forget our ol'(retired at the moment) pal Gordon Bethune(and his GOOD management team)(and subsequently, Glen Tilton, and his HORRIBLE management team). Gordo would be a natural to pilot (a potential) UA/CO.

Your thoughts ??

NH/BB's

Speaking on behalf of my former co-workers at UAL, most would love if Gordy and the CAL boys took over. There is little to no trust in UALs current management.

 

[JFK777]

IF CAL & UA goy married, AA should buy NW for Asia. While AA has a respectable presence at NRT, they have nothing in other parts of Asia. Hong Kong, Bangkok, Singapore, Seoul, Peking, Shanghai( AA alreadys flies there), taipei and Others. FOR AA this would also give it early 787 delivery slots. What do you do with old NW airplanes, well there lie some interesting possibilities. 744 & A330 provide some intrigue as to how fleet reshuffling could occur. Could you imagine A330 in Paris and Rome in AA colors or 744 flying to Buenos Aires and Sap Paulo.

 

[NewHampshire Black Bears]

JFK777....ThirdSeatHero,

Thanx for the responce(s)!

As you correctly say, "there are MANY unanswered questions"

As of today(8/14/06)...consolidation has NOT happened !!

However, I believe the Industry is getting "ever so closer" to that day, and these kind of senario's and questions need to be "pondered" SERIOUSLY !!!!!!!!!!


NH/BB's

 

[1AA]

Well if Carty was still at the helm he would buy Delta or Northwest just to keep the title of the worlds biggest airline. Thank goodness he is gone.

 

[jimntx]

As has been said before, AA/DL brings nothing to either airline that they don't already have or could have by simply starting a few new routes. There is way too mucy overlap between AA and DL.

With AA having $5.5 billion in the bank, there is no way that DL outbids AA for NW. The only thing NW has that AA needs is the Orient and the airplanes to fly there (current or on order). After all, think of the number of pilots and flight attendants that we still have on furlough!

With that said, as a nAAtive who thinks that the former TW employees got a bad deal from AA, I would hate to see us turn around and do something similar to the NW employees. If we must purchase any or all of NW, I would almost rather it be at a Chapter 7 yard sale of an airline already out of business. (And no, I am not hoping that NW goes Chapter 7.)

 

[Hopeful]

As has been said before, AA/DL brings nothing to either airline that they don't already have or could have by simply starting a few new routes. There is way too mucy overlap between AA and DL.

With AA having $5.5 billion in the bank, there is no way that DL outbids AA for NW. The only thing NW has that AA needs is the Orient and the airplanes to fly there (current or on order). After all, think of the number of pilots and flight attendants that we still have on furlough!

With that said, as a nAAtive who thinks that the former TW employees got a bad deal from AA, I would hate to see us turn around and do something similar to the NW employees. If we must purchase any or all of NW, I would almost rather it be at a Chapter 7 yard sale of an airline already out of business. (And no, I am not hoping that NW goes Chapter 7.)

I'm not saying that AA would not be that crazy to buy another airline, especially after the moral busting purchase of TWA.

The only thing AA would gain form NWA is the Asian connection. And since NWA's main money maker is Asia, AA would have to buy all of NWA, lock stock and barrel!

 

[777 fixer]

IF CAL & UA goy married, AA should buy NW for Asia. While AA has a respectable presence at NRT, they have nothing in other parts of Asia. Hong Kong, Bangkok, Singapore, Seoul, Peking, Shanghai( AA alreadys flies there), taipei and Others. FOR AA this would also give it early 787 delivery slots. What do you do with old NW airplanes, well there lie some interesting possibilities. 744 & A330 provide some intrigue as to how fleet reshuffling could occur. Could you imagine A330 in Paris and Rome in AA colors or 744 flying to Buenos Aires and Sap Paulo.

Bob Crandall had it right when he swore off airline mergers. When you look at the fleet differences and the labor problems at NWA it's really not worth it. If UA and CAL were to merge they can have the title of "worlds biggest airline".

 

[jimntx]

The only thing AA would gain form NWA is the Asian connection. And since NWA's main money maker is Asia, AA would have to buy all of NWA, lock stock and barrel!

Well, no. If, God forbid, NW should go Chapter 7, then the assets would be up for sale, period. No one would have to buy everything in order to get a particular piece. I imagine the government would step in to auction off the Asian routes and make sure that UAL didn't get them--monopoly, anti-trust, and all that.

The rest of the assets would be dealt with in a fancy yard sale. One could buy the 744s without having to also buy the DC-9s.

In Chapter 7, the court's only concern is to get maximum return for the creditors from the sale of the assets. Forcing someone to buy the whole thing would not maximize the return. No one is going to pay top dollar for a 744 if they have to take a DC-9 with it.

 

[flyhigh]

UA couldn't simply "shift" CLE flying to ORD. They, along with AA, agreed to reduce the amount of flights at ORD just this year. If they tried to increase, AA would be allowed to break the deal as well. Even if they did take that course of action, it's not that many flights anyway. CLE would simply close. As for AA's terminal, I actually prefer it to UA's. Most of my co-workers who split time on the two agree. But, it's a matter of opinion. Nobody flies an airline for the terminal...WN was able to grow quite well in MDW before the terminal was renovated.

IF AA were to buy all or parts of NW, they would at the very least maintain strong presences in both MSP & DTW. They are good markets overall, but they're aren't as big as Chicago.

I think DL would like to buy the DTW or MSP hubs from AA in such a deal actually. Much like UA's attemt to buy USAirways in 2000, it could end up as a three way deal...

 

[NewHampshire Black Bears]

As has been said before, AA/DL brings nothing to either airline that they don't already have or could have by simply starting a few new routes. There is way too mucy overlap between AA and DL.

With AA having $5.5 billion in the bank, there is no way that DL outbids AA for NW. The only thing NW has that AA needs is the Orient and the airplanes to fly there (current or on order). After all, think of the number of pilots and flight attendants that we still have on furlough!

With that said, as a nAAtive who thinks that the former TW employees got a bad deal from AA, I would hate to see us turn around and do something similar to the NW employees. If we must purchase any or all of NW, I would almost rather it be at a Chapter 7 yard sale of an airline already out of business. (And no, I am not hoping that NW goes Chapter 7.)

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OK, jimntx, I hear what your saying !

BUT, if UA + CO "consummate" AND then DL make's the NW stockholders an offer that they can almost NOT refuse, what does AA do then ????????????????????
(Also keep in mind that NW(Initially) DOES'NT want to "dance" with anyone)

Someone mentioned a "3 way deal"...........FINE, But all "3" would be fighting over Asia.
THEN WHAT (AA) ??????????????

NH/BB's

 

[Fly]

I believe that the investors who would like to see the UA/CAL deal happen, would be aware of the 'golden share' that NWA holds over CAL. I would guess they'd have to offer a lot of $$$ to NWA, enough to help NWA over the financial hump of BK, to allow the UAL/CAL deal to go through.

It would be a big win for UAL/CAL and a big win for NWA to stay afloat without having to lose their real money maker...ASIA.

 

[WorldTraveler]

First, no US network carriers NEED to merge right now. They are all stable and they all made money in the past quarter, although to varying degrees. Because no one is in immediate distress of failing, the hurdle to overcome in getting gov’t approval is much higher. TW and US got bought because both were very much on the ropes. That is not the case for any current airline. Asset acquisitions are obviously the best choice for any airline but those only happen when things are so bad that there is no hope of salvaging anything any other way.

While UA plus CO or DL has few overlaps, no one in gov’t is interested in seeing competition diminished or, more importantly, some of these smaller cities losing hub status, even if they are small today. Ohio is just one state that could lose significantly in industry consolidation and will fight tooth and nail to prevent consolidation.

AA’s biggest hurdle to overcome in any merger or acquisition is its unbroken post-deregulation reputation of buying airlines only to dismantle them. No amount of money in AA’s bank accounts can overcome legislative resistance to AA dismantling the economies of a couple states. There is no way legislators and regulators will support an AA acquisition of any other big six carrier because they don’t want to see thousands of jobs lost while dozens of routes are cancelled or downgraded, even though AA might be able to make some very strong arguments why it has done what it did. The only way AA would likely be able to acquire NW is if they guaranteed that they would keep certain levels of flying in NW’s major domestic cities which of course makes the Pacific much less attractive.

After years of letting the Pacific dwindle because of a lack of aircraft, NW Is on the verge of having the resources to begin overflying Japan. DL has said it intends to begin rebuilding its position in Asia with 777LRs as soon as 2008 and possibly sooner with existing aircraft. CO already has a good start on Asia and will get even more chances to grow its presence there in the next couple years. AA is still trying to find itself in Asia but has the aircraft and reputation to develop Asia if it wanted to. Only US has no plans to play in Asia in the near future. Asia is on the verge of seeing significant growth from all US carriers not unlike what occurred to Europe in the 80s and 90s with the advent of the 767. Airlines can try to leapfrog one another by buying each other but all players except for US will have a position in Asia and any acquisitions by one carrier are not going to stop another.

It is noteworthy that UA’s employees want a merger because they do not want to be lead by their current management group – the same mantra we have heard from UA employees for about 20 years now. At the same time, CO finds itself in the position of finally having a challenger to its position of dominance in the NYC int’l market with DL’s aggressive expansion – one that will continue for at least 2-3 more years based on the number of aircraft DL can deploy to Europe. DL just posted a higher operating margin for the last quarter than either CO or UA meaning DL is obviously becoming a threat to CO.

It is very possible that CO could turn to a merger to restore its threatened position in NYC. But if UA and CO do merge it will be messy and the carrier that chooses not to merge or waits to do things on its own terms may well end up in better shape than the carrier that rushes into a merger only to find out how difficult mergers are in the airline industry.

 

[eolesen]

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BUT, if UA + CO "consummate" AND then DL make's the NW stockholders an offer that they can almost NOT refuse, what does AA do then ????????????????????

Stay on the sidelines and take advantage of the fact that the other large carriers' management is distracted with merger activity?

I'm more worried about my dog hotwiring the truck and going joyriding than I am about the long-term competitive threat that either merger would pose.

DL management has proven time and time again that they're inept, and NW's management is only marginally better. Sort of a new management team being part of the merger, they'll self-destruct on their own.

CO/UA is a little less clear. There's a definite network synergy, although fleet incompatabilities could get complicated (CO is all Boeing, UA has a huge A320 fleet; UA uses Pratts on everything Boeing except for the 737s, while CO uses GE on their widebodies and RR on their 757s).

I didn't think Doug Parker could pull off US/HP, but that seems to be moving along somewhat well. The difference here, though, is that US management was pretty much gutted before the merger was announced, so there was no mistaking who was really in control post-merger. That's not as clear with CO/UA.

And no, I wouldn't expect Bethune to return to CO anymore than I would have expected Crandall to return to AA when Carty resigned (although the latter was a lot more likely...)

 

[Fly]

Only difference is that Bethune has shown interest in doing just that. Tilton was hired to guide UAL through bk, which he did. I doubt he'd be interested in staying or even that he would be invited to stay on. I would guess that the whole operation would be run mainly by the CAL side of the fence.

All speculation at this point but the recent events of selling rights to DL and leaked merger talks sound to me as if this merger is quite possible.