DL Holds Key

[chucky]

Delta holds key to shape of US fleets

By Justin Baer in New York
Wednesday Jan 2 2008 15:50
This year could see consolidation in the US airlines industry, with the fate of Delta Air Lines (NYSEAL) likely to prove pivotal, executives, bankers and investors say.

Delta recently emerged from bankruptcy protection unencumbered by financial agreements that restrict some potential deals, and is not as big as, say, American Airlines parent AMR (NYSE:AMR) .

As a result, it features prominently in most consolidation scenarios concocted by industry insiders and shareholders alike.

The Atlanta-based carrier is working with its bankers at Merrill Lynch and Greenhill to review potential mergers. Delta's executives believe a merger would help the combined company save money and weather future downturns. But they are not convinced a deal is worth pursuing at all costs, given the challenges it would pose, from winning the approval of regulators and organised labour to combining complex operations, people familiar with their thinking said






Story

 

[JFK777]

DL has a unique property no one else has, Atlanta. JFK, CVG and other Delta strength's can be copied. DL & UA would make the most sense for DL's lack of Asia and UA's weakness in Europe and South America. This would bring together all the parts of PAN AM sold off over the years with a huge domestic system in Chicago and international gateways at JFK, LAX and SFO.

 

[NewHampshire Black Bears]

To a large degree, DL is FORTUNATE that there is a carrier named UAL, who's willing to "give away the store" to DL.

Since DL(wisely) wants no part of LCC, and forgetting UAL for the moment, DL "might" be in deep doo-doo, if no one else(AA/NW/CO) wanted to "play" with them.

 

[luv2fly]

To a large degree, DL is FORTUNATE that there is a carrier named UAL, who's willing to "give away the store" to DL.

Since DL(wisely) wants no part of LCC, and forgetting UAL for the moment, DL "might" be in deep doo-doo, if no one else(AA/NW/CO) wanted to "play" with them.

Your theory could be applied to all the legacy carriers. If this next round results in industry wide consolidation, any carrier left out will feel the effects, including AA, although I believe they would be least affected. US would most likely suffer the greatest casualties.
Now, if you are speculating that DL is fortunate because they can control their destiny, then I agree with you. I think it is very likely DL will initiate the merger mania you to anxiously await.
My fantasy picks: DL/NW, UA/CO, and AA picks up the necessary DOJ divestitures.

 

[Cosmo]

To a large degree, DL is FORTUNATE that there is a carrier named UAL, who's willing to "give away the store" to DL.

Bears, in the extremely unlikely (IMHO) event that UA would sell its Pacific operation, it wouldn't be a "gift" to DL. There would almost certainly be an auction between DL and AA, and perhaps even CO, probably driving up the price into the $3 billion range. Since UA paid $750 million to PA over 20 years ago for a much smaller operation, plus inflation during that time interval, I don't think that $3 billion is an unreasonable figure -- and it might even be on the low side.

But as I said, a UA sale of its Pacific operation is very, very unlikely. I would view a full merger between DL and UA as a better possibility, yet I believe even that is pretty unlikely. And I agree with luv2fly that DL will probably start the "merger mania", as well as his "fantasy" mergers (DL/NW, UA/CO and AA/DOJ divestitures). But I think in that scenario, US disappears with CLT going to UA/CO, PHX going to AA and PHL really being the biggest loser. But that's JMHO.

 

[NewHampshire Black Bears]

Cosmo,

Forgive me, for not being a lil' clearer.

Your correct..UAL would NEVER "disrespect" it's "Pacific Jewel" !!!!!

My point is, as far as DL is concerned(as it views the other carriers for It's future needs), that LCC is a "no way jose' ", .........AA? ..never in a zillion years. ,...........CO?(IMHO that hook up does'nt help DL that much)
Assuming NW doesn't want to "play with DL", that leaves ONLY UA.

Now in the unlikelihood that UAL doesn't want to deal with DL(and this is my point), DL could find themselves in the short, to mid range time line, in a bit of a Quandary.

 

[donttouchthebeauty]

Cosmo,

Forgive me, for not being a lil' clearer.

Your correct..UAL would NEVER "disrespect" it's "Pacific Jewel" !!!!!

My point is, as far as DL is concerned(as it views the other carriers for It's future needs), that LCC is a "no way jose' ", .........AA? ..never in a zillion years. ,...........CO?(IMHO that hook up does'nt help DL that much)
Assuming NW doesn't want to "play with DL", that leaves ONLY UA.

Now in the unlikelihood that UAL doesn't want to deal with DL(and this is my point), DL could find themselves in the short, to mid range time line, in a bit of a Quandary.

THis is true, DAL is way over valued, as we all knew this... The problem is this, We have too many airlines... If the unions banned together and we all demanded the same pay or we all strike, therefore ticket prices would rise, otherwise the airlines will be dirving farther and farther to the bottom line to stay in business, merge or buy, lets get this over with, lets all demand the same pay or shut the U.S. skies down... The only way to have bargaining power is in numbers across the board.. Hopefully no one has to file BK again, but until the employees smarten up and band together then this will be a cycle forever...

 

[North by Northwest]

DL has a unique property no one else has, Atlanta. JFK, CVG and other Delta strength's can be copied. DL & UA would make the most sense for DL's lack of Asia and UA's weakness in Europe and South America. This would bring together all the parts of PAN AM sold off over the years with a huge domestic system in Chicago and international gateways at JFK, LAX and SFO.

It will not have Pan Am's hugely profitable Inter-German op., nor will it have the Inter-Continental Hotel conglomeration, nor it's PAA World services. The airline was involved in creating a missile-tracking range in the South Atlantic, and in operating a nuclear-engine testing laboratory in Nevada.

It's huge shoes continued to this day...to go empty. It will bring together once again the largest group of Pan Am employees since Pan Am. (with the 3rd largest group@ Northwest)

"Pan Am was well regarded for its state-of-the-art aircraft and the destinations it served in as many as 100 nations.The airline was respected for the experience and professionalism of its crews; cabin staff were multilingual and usually college graduates, along with expert technicians. During this period Pan Am's onboard service and cuisine, inspired by Maxim's de Paris, were delivered "with a personal flair that has rarely been equaled." (Sky Gods)

Pan Am continues to be unrivalled in aviation history.

 

[JAMAKE1]

I hate to burst your bubble NBNW, but your romanticizing of Pan Am is being done so from a rather microscopic view of history, when the airline operated in a pre-deregulated era. Of course the IGS was "hugely" profitable, because Pan Am faced little market competition during the time they operated IGS. Truth be told, Pan Am didn't survive long enough to have to face the likes of Easyjet, Ryanair, and Germanwings that exist in the marketplace today.

Furthermore, your contention that Pan Am operated "state-of-the-art" aircraft is perhaps partially accurate at best, at a time when the airline took delivery of brand new 747's, which was during the early 1970's. I fly with many former Pan Amer's who came over to United at Pac Day in 1986. I have heard from many of them that United's international fleet was in far better shape and that United provided better service tools than Pan Am provided them at the time. Their words. Not mine. The reality is, is that by the mid 1980's Pan Am was well on its way into financial descent and its operations and aircraft fleet had started to reflect that decline.

For sure, Pan Am does have its place in aviation history for pioneering many of the air routes throughout the world and for being an early innovator, but I do sense that you're looking back through rose-colored glasses as you reflect on Pan Am. I would also argue that some of the emerging airlines from the Persian Gulf region such as Emirates, Etihad, Qatar Airways, and even Singapore Airlines are clearly rivaling Pan Am when it comes to product innovation, in-flight service standards, and "state-of-the-art" aircraft fleet.

At the end of the day, Pan Am was unsuccessful in adapting to and learning to be competitive in a deregulated marketplace. Furthermore, the company made some poor strategic decisions that contributed to their demise, so from a financial standpoint, Pan Am's performance wasn't all that enviable...

 

[North by Northwest]

A bubble can be only be burst with real knowledge of the facts..not third party chit chat from a jump seat.

Pan Am was prevented by the US government from establishing a domestic presence right up until they decided "oh let's change the rules". (that was not the case when others wanted to fly international with their huge Domestic networks) Pan Am made the drastic, idotic mistake of buying National (while greasing the palms of those involved) when it could have bought AA or Eastern. Pan Am was hit twice as hard by the 70's oil embargo (twice as many Jumbos on long haul routes). Or the fact that the US government paid foreign carriers TWICE as much to fly US mail as it would Pan Am.

I can understand your third party info...however, I was THERE, so I know exactly what was going on. It wouldn't take a rocket scientist to know that Pan Am was facing serious issues. Otherwise, you wouldn't be flying the Pacific right now. P.S. "United's international fleet" in 1985 was 5 airplanes? Your international was, what? Gatwick? Don't kid yourself. Ual was non existent on the international scene in 1985. We invented it.

"Pan Am employees published an ad in the New York Times to register their disagreement over federal policies which they felt were harming the financial viability of their employer.[18] The ad cited discrepancies in airport landing fees, such as Pan Am paying $4,200 to land a plane in Sydney, Australia, while the Australian carrier, Qantas, paid only $178 to land a jet in Los Angeles. The ad also contended that the U.S. Postal Service was paying foreign airlines five times as much to carry U.S. mail in comparison to Pan Am. Finally, the ad questioned why the Export-Import Bank of the United States loaned money to Japan, France, and Saudi Arabia at six percent interest while Pan Am paid 12%."

In the words of my friend, the late great Mr. Stanly Gerwirtz: "What could go wrong did. No one who followed Juan Trippe had the foresight to do something strongly positive … it was the most astonishing example of Murphy's law in extremis. The sale of Pan Am's profitable parts was inevitable to the company's destruction. There were not enough pieces to build on."
—Stanley Gerwitz

To remain competitive with other airlines, Pan Am began trying to make inroads in the U.S. domestic market. After several failed attempts to win approval for domestic routes, the enactment of airline deregulation finally allowed Pan Am to begin domestic flights between its U.S. hubs in 1979. On the other hand, deregulation hurt Pan Am since the airline did not have a domestic route system beforehand, a result of Juan Trippe's focus on dominating the overseas market. Meanwhile, airlines with domestic routes were now competing with Pan Am on international routes as well.[19]

Lufthansa bought Pan Am's German operation and has done quite well (as one of the most profitable in the world) against ALL low cost airlines.

"At the end of the day, Pan Am was unsuccessful in adapting to and learning to be competitive in a deregulated marketplace (by being forced into a situation that NO OTHER American Carrier had to confront, on top of being the NUMBER 1 symbol of America for foreign terrorist. Your analogy would have done wonders for United..prior to being saved by taxpayer money AND bankruptcy). Furthermore, the company made some poor strategic decisions that contributed to their demise (would that be what caused UNITED's bankruptcy, then "helped" with a cash bail out from the US taxpayer?), so from a financial standpoint, Pan Am's performance wasn't all that enviable...(although United had EVERY Star in the Universe to it's disposal with ALL of Pan Am's money makers, AND a vast Domestic network, it's decent into financial abyss was because of?) United couldn't make it with 1/10th as much adversity, and arguably the best Domestic network, Pan Am's Pacific Div, Latin American Div. AND Heathrow Hub... as did Pan American. So, let's get real here.

Finally, the airline began to fall apart following the 1986 hijacking of Pan Am Flight 73 in Pakistan, in which 20 passengers and crew were killed with 120 more injured, and the 1988 bombing of Pan Am Flight 103 (Clipper Maid of the Seas) above Lockerbie, Scotland, which resulted in 270 fatalities. Many travelers avoided booking on Pan Am as they had begun to associate the airline with danger. (Just in time for the Persian Gulf War). Faced with a $300 million lawsuit filed by more than 100 families of the PA103 victims, the airline subpoenaed records of six U.S. government agencies, including the CIA, the Drug Enforcement Administration, and the State Department. Though the records suggested that the U.S. government was aware of warnings of a bombing and failed to pass the information to the airline.

Pan Am's reach around the globe has YET to be match by any carrier on earth...plain and simple. Had it not had it's own government working against it, it may have continued to this day. I dare say, NO US air carrier would be flying today had they had the cards (including the US gov.) stacked against it as did Pan Am.

I don't use rose colored glasses, I prefer clear ones when looking at facts, they are much better then peering through cracked ones.

 

[DLFlyer31]

A bubble can be only be burst with real knowledge of the facts..not third party chit chat from a jump seat.

Pan Am was prevented by the US government from establishing a domestic presence right up until they decided "oh let's change the rules".

If Pan Am had really wanted a domestic presence, they could have had one. Juan Trippe just wasn't interested. As your quote says "he wanted to dominate the international" market." It was much easier to grease the palms of the politicians to get international routes with little or NO competition, then go after domestic routes where competition would be stronger. This was a strategic choice by Pan Am that blew up in their face.

Pan Am's reach around the globe has YET to be match by any carrier on earth...plain and simple. Had it not had it's own government working against it, it may have continued to this day. I dare say, NO US air carrier would be flying today had they had the cards (including the US gov.) stacked against it as did Pan Am.

While Pan Am's reach was extensive, it's not nearly as grandiose as you make it seem. Many destinations were served simply for glamour's sake and were money losers. Many other destinations were served only as fuel stops on the way to bigger destinations.

And while Pan Am faced adversity, they also were able to grow for decades with almost no adversity. Pan Am flourished because they had little competition. The company's success was based largely on being a monopoly. Once the monopoly status was gone, Pan Am struggled to survive.

 

[North by Northwest]

Obviously, your knowledge of pre deregulation era US aviation law is limited. Further, it appears that limited range extends to your insight on Pan Am's competitors..i.e. Northwest Airlines, TWA, Braniff, AOA.


"grandiose"?
(That seems an understatement..)


Pan Am owned its famous New York Building at 200 Park Avenue (built as the largest office building in the world), the Inter-Continental Hotel chain, Pan Am World Services (that conducted launches at Cape Canaveral), the insurance company, a 50 percent stake in Falcon Jet (the private executive jet builder), the Atlantic Division, the Pacific Division, the Latin American Division, Pan Africa, the Internal German Services (Pan Am was the only U.S. airline to fly the IGS with Lufthansa between a divided East and West Germany during the existence of the Berlin Wall), and later the East Coast Shuttle (flown between New York-Boston-and Washington's "power corridor"), Pan Am Express (the commuter airline feeder).

I think it is more than qualified at being referred to as "Grand".

 

[JAMAKE1]

NBNW:

Your are mistaken. The tax payer didn't bail out United. United filed for bankruptcy just as your previous employer Pan Am, and your current one, Northwest have done. To date, the US tax payer does not fund the PBGC. The US Government did provide a bail-out to every US airline after the events of 9/11 when the nation's air transportation system came to a stand-still...is that what you're referring to? Had Pan Am survived that long, they too would have received the same "bail-out."

And for the record, my knowledge doesn't come from some third party chat from a jumpseat. Most of the legacies did not penetrate Pan Am's vast network until the early 1990's...about the time Pan Am succumbed in Bankruptcy. UA and AA began their European services in 1991. Pan Am's competitors to South America remained a single US carrier: First Braniff, which sold its routes to Eastern in 1982. Eastern in turn, sold them to AA during the late 1980's (again, very near the time of Pan Am's demise). Your contention that the US legacies swooned Pan Am's routes after deregulation is historically inaccurate.

Furthermore, for the record, United has never served Gatwick. The airline served two international routes at the time of the Pan Am Pacific route purchase: SEA-HKG and SEA-NRT. That's it. I never said that United was a major international player. My point was, that by 1986, Pan Am was not so "state-of-the-art", and the company wasn't quite so "unrivaled" as you contend. In fact, it was well on its way toward financial decline and I have merely echoed what the former Pan Amer's have told me from their own experience in working for Pan Am in a post-deregulated era.

I have to let you know too, that your tone is rather condescending, not just on this thread, but the others in which post. We can debate the merits of history without you having to to inject such a bitter, condescending, and arrogant tone. You sound awfully c**ty when you do that...and you do it regularly. You've already IM'd once apologizing for your poor behavior, yet you continue to behave accordingly. You lose credibility and respect when you behave in such a way.

I do think that it is a bit arrogant of you to suggest that we should all thank Pan Am for having airline jobs today. That's just not the case, and I am calling you on it...but go ahead and enjoy your rose-colored view of history...and your new uniform...which I still find unattractive.

 

[yoyodyne]

" G R A N D I O S E "

I guess dinosaurs could have also been considered grandiose, but since they couldn't adapt to their changing environment they went extinct; they lost to a bunch to a new furry creatures called mammals. All we have left of dinosaurs are fossils, you draw the conclusion!

This might make you feel better, have a look:

Nostalgia

Best of Luck

Dom

 

[North by Northwest]

Am I mistaken in that United shared in the handout with the rest of the industry after 9/11? And for the record, your "jump seat" chit chat came from your own words...from former PAA on "pac day" no? Don't brag about "international service and planes if you didn't have them. "I have heard from many of them that United's international "fleet" (with TWO routes) was in far better shape and that United provided better service tools than Pan Am provided them at the time. Their words. Not mine"

"Your contention that the US legacies swooned Pan Am's routes after deregulation is historically inaccurate." Not only is that inaccurate, it is ridiculous. US carriers had been seeking expanded international routes for decades...United was the only completely shut out. FYI, AA was well ahead of Ual, had been international since the 1940's. And it was you that seemed to pine the 1986 date, as that is when Ual was given a chance on the international scene.

I have to let you know too, that your tone is rather condescending, not just on this thread, but the others in which post. We can debate the merits of history without you having to to inject such a bitter, condescending, and arrogant tone. You sound awfully c**ty when you do that...and you do it regularly. You've already IM'd once apologizing for your poor behavior, yet you continue to behave accordingly. You lose credibility and respect when you behave in such a way.

If you feel I am condescending..don't read my reply. People like you usually can't handle a taste of directness. I don't send IM's so your memory is about as good as your knowledge of jump seat chat. I publicly apologized for responding strongly to your nazi fashionista insults.

Now, let me give you some kind advice. Your use of the word "c**ty" speaks volumes about your gutter life in the alley. No wonder you find me condescending, looking up from where you are, you must find most people condescending. I can show you something far in excess of that...but I won't. You have the bizarre notion to speak of credibility after using a word like that? (As a man it wouldn't apply) You, nor any other airline employee owes Pan Am or it's employees anything, but don't go pissing around like you are the cat's meow when you weren't even on the scene until late...VERY late. You have no idea just how far in that direction I can go.

"I do think that it is a bit arrogant of you to suggest that we should all thank Pan Am for having airline jobs today" Now that sounds like a sad attempt to make it appear as a "us against them" usually a sign of desperation. IF, the history of Pan American and it's achievements disturbs you, that is an issue that you will have to deal with, cause you will never erase history.

Now kiss my grits...and enjoy your little silly yellow spin dress (I would be worried if you did like my new uniform).

And NEVER forget...United/ Delta are where they are BECAUSE of our demise. That is not their fault nor a bad thing, it was a twist of fate...and the way the cookie crumbles. But don't ever forget who created it. That may be too big for you to swallow all at once...so I suggest you take it in tiny bites...over your life time. Till it's completely digested.