For those tired of the Hatfield vs McCoys drama, some thoughts about why a US/DL merger may be a wise move.
There are two scenarios for which Parker may be preparing. First, US has learned that you can make a profit with a few less airplanes. DL's bankruptcy offers the opportunity to reduce airframe count while maintaining service.
There also exists the possibility to add back airframes to expand the LCC model, and increase the total number of cities served, both domestically and internationally. Should Open Skies and full-on cabotage be allowed (and it probably will) there will be a bloodbath in the traditionally high-yield international markets and most if not all of the "Alliances" would dry up and blow away.
This is where a Low Cost competitor with a fully-developed domestic market could be among the only ones to survive. An airline like AA relies too heavily on small RJ's and could see competitors like Lufthansa or Easyjet or Gol operating MIA-DFW (or any other high-freq market). These airlines can operate on much lower cost structures which will only be further lowered when they can expand unchecked throughout a juicy US marketplace. DL alone still relies too heavily on small RJ's and has yet to order ERJ190's which provide enough seats at lower costs.
US can grow independent of DL and I would suspect if 2/1 comes and goes without any movement by the DL creditors, US will find a way to take the $8 billion and use it to crush DL in the international market as soon as it is possible. But buying DL and making it into more than Grinstein ever dreamed is the much more sensible scenario.
There are two scenarios for which Parker may be preparing. First, US has learned that you can make a profit with a few less airplanes. DL's bankruptcy offers the opportunity to reduce airframe count while maintaining service.
There also exists the possibility to add back airframes to expand the LCC model, and increase the total number of cities served, both domestically and internationally. Should Open Skies and full-on cabotage be allowed (and it probably will) there will be a bloodbath in the traditionally high-yield international markets and most if not all of the "Alliances" would dry up and blow away.
This is where a Low Cost competitor with a fully-developed domestic market could be among the only ones to survive. An airline like AA relies too heavily on small RJ's and could see competitors like Lufthansa or Easyjet or Gol operating MIA-DFW (or any other high-freq market). These airlines can operate on much lower cost structures which will only be further lowered when they can expand unchecked throughout a juicy US marketplace. DL alone still relies too heavily on small RJ's and has yet to order ERJ190's which provide enough seats at lower costs.
US can grow independent of DL and I would suspect if 2/1 comes and goes without any movement by the DL creditors, US will find a way to take the $8 billion and use it to crush DL in the international market as soon as it is possible. But buying DL and making it into more than Grinstein ever dreamed is the much more sensible scenario.
Like I have said, "Keep Delta YOUR F'n Delta- we don't want IT!"
