Delta/Northwest deal's dangerous model

[deltawatch]

The ambitious plan to create the world's largest airline increases costs but may not improve revenues.

http://money.cnn.com/2008/04/15/news/compa...rce=yahoo_quote

 

[deltawatch]

Delta, Northwest deal fails to thrill investors, some unions

http://biz.yahoo.com/ap/080415/delta_northwest.html?.v=19

 

[FutureUScapt]

http://money.cnn.com/2008/04/15/news/compa...rce=yahoo_quote

Thanks for posting this. This pretty much sums up my concerns with the merger announcement.

It seems that would be leaving A LOT of synergies on the table by not reducing the fleet count or routes, and in today's industry, I'm not sure that is the wisest choice. I fail to see why they plan to continue to serve (PFN for example, from both MEM and ATL) several of the smaller cities from multiple hubs when they could be served much more efficiently from one.

It will be interesting to see how the other bystanders will react (AA, CO, UA, US) to this announcement. It's going to be an interesting road ahead.

 

[LukeAisleWalker]

Thanks for posting this. This pretty much sums up my concerns with the merger announcement.

It seems that would be leaving A LOT of synergies on the table by not reducing the fleet count or routes, and in today's industry, I'm not sure that is the wisest choice. I fail to see why they plan to continue to serve (PFN for example, from both MEM and ATL) several of the smaller cities from multiple hubs when they could be served much more efficiently from one.

It will be interesting to see how the other bystanders will react (AA, CO, UA, US) to this announcement. It's going to be an interesting road ahead.

OK, people, IMHO, you have to sort of "read between the lines" here. In the interview I saw w/ Anderson today, he said no hub closures are "EXPECTED"...get it? What I take from this is in order to win regulatory approval, they are saying no hub closures, but once DOJ signs off on the deal, then maybe the markets will see these "synergies" implemented. (Hub closures, etc...)
Thoughts?

 

[Ch. 12]

OK, people, IMHO, you have to sort of "read between the lines" here. In the interview I saw w/ Anderson today, he said no hub closures are "EXPECTED"...get it? What I take from this is in order to win regulatory approval, they are saying no hub closures, but once DOJ signs off on the deal, then maybe the markets will see these "synergies" implemented. (Hub closures, etc...)
Thoughts?

I would think that the hubs will remain to the extent of AA in STL. But to respond to FutureUScapt's take that "not getting rid of a hub" also means not changing it...I think that's not a very accurate interpretation. Nothing was said about keeping everything as-is. Of course duplicicities will be removed. Getting rid of MEM-PFN or ATL-PFN doesn't mean that they are getting rid of the hub, though.

 

[Danny Campbell]

That's funny, when I was the President of our NWA FA union, when Anderson took office as our CEO (in April 2001) he said "there were no plans to close any FA domiciles". Two (2) months later, they announced the closing of Chicago.

 

[Ch. 12]

That's funny, when I was the President of our NWA FA union, when Anderson took office as our CEO (in April 2001) he said "there were no plans to close any FA domiciles". Two (2) months later, they announced the closing of Chicago.

Danny...together you and I can BEAT this BEAST of trying to bring the industry back to sustainable profitability and stability. I surely hope that no such evil ever takes over this industry and that we can forever see red ink and looming job losses on the horizon. In fact, we should order up some more planes b/c the industry needs more capacity. Let's get this battle started! Woohoo!

 

[GSEMAN]

That's funny, when I was the President of our NWA FA union, when Anderson took office as our CEO (in April 2001) he said "there were no plans to close any FA domiciles". Two (2) months later, they announced the closing of Chicago.

I guess the FA union didn't do it's job, could have been from lack of leadership.

 

[FutureUScapt]

I would think that the hubs will remain to the extent of AA in STL. But to respond to FutureUScapt's take that "not getting rid of a hub" also means not changing it...I think that's not a very accurate interpretation. Nothing was said about keeping everything as-is. Of course duplicicities will be removed. Getting rid of MEM-PFN or ATL-PFN doesn't mean that they are getting rid of the hub, though.

I understand the whole "facade" that must be put on to garner the support of the communities, DOT, etc, but I'm still surprised/worried by some of the remarks. The US/HP merger and proposed US/DL merger both noted that they would continue to serve all cities while reducing the overlap (domestic ASMs); there seems to be little indication or plans to do that, which is what many view as the primary means for merging in this environment.

This whole "combination through addition" theme would have me worried as an investor. In fact, DLs and NWs stock was down by ~10% today (Yes, I know oil closed up $2 higher but the merger news didn't appear to faze them at all) so investors certainly aren't viewing this as a sure winner, at least not as of now.

 

[MMB]

That's funny, when I was the President of our NWA FA union, when Anderson took office as our CEO (in April 2001) he said "there were no plans to close any FA domiciles". Two (2) months later, they announced the closing of Chicago.

As President of your NWA FA union, why did you allow that?
I thought it would have been your job to protect your members.