LCC Proposes $8B merger with Delta

[JS]

What happened to your libertarian ideals?

(Or do you just not want to fly US?)

Libertarian means eliminating the micromanagement of airlines such as no smoking, no car seats in the row in front of the exit row, no one in the exit row accompanying someone else on the plane under the age of 15, etc. Let the airlines write their own safety policies other than the obvious, like preventive maintenance.

Libertarian does NOT mean allowing big business to have monopolies. That's almost as bad as a government-run economy.

 

[Travels2mch]

And lets not forget
D on'r
E xpect
L uggage
T o
A rrive

This should fit in well with PHL

A match made in heaven........

Thats not what the Medallion member who walked up to our counter and bought a one way ticket to Pittsburgh yesterday said. She said DL has lost about $3000 in business from her in the last two months. Hmm, sounds kind of familiar around here doesnt it? h34r:

If you use a certain company (any business) long enough, you're going to find something to Bit#$ about, just like we do the same with US. I've heard from several coworkers yesterday who are DL FF's and they bit&$ more about DL than we do about US.

I got pissed at US a while back and for 2 years flew DL 100%. They are very comparable airlines, but I hear now in BK their service has gone downhill (sound familiar??).

Go to the other airline's message boards and you find the same thing. Customers will always find something to complain about, many are justified too. Employees will always complain about their employers. But when one is threatened, we usually stand by who we are closest to.

 

[whlinder]

Libertarian does NOT mean allowing big business to have monopolies. That's almost as bad as a government-run economy.

I guess it depends on how you interpret certain things.

http://www.lp.org/issues/platform_all.shtml#ii

We believe that each person has the right to offer goods and services to others on the free market. Therefore we oppose all intervention by government into the area of economics.

{snip}
Those who best supply a good or service in the market will enjoy natural dominance only as long as they continue to benefit consumers.
{snip}
Genuine crimes committed to create a monopoly, such as blackmail, bribery, fraud, libel or slander are prosecuted as any other crime.

Sorry for taking this OT.

 

[Gilding the Lily]

Yes. The deal has to pass anti-trust hurdles. And they are hurdles because the other legacies will be coming forward to prevent this transaction. Remember July 2001...United and USAirways merger failed the littman test of "not being a monopoly"....and there was no plan B for either carrier...forcing both into BK by 2002.

And if it is decided, and a precedence is set, it will bring a whole slew of consolidations that will limit competition for the consumer. To me, those are quite large hurdles.

I agree that there will be antitrust hurdles; but that they will not be a deal-breaker (they have other problems to worry about, like bankruptcy creditors). Attorneys from the DOJ have said in the past, that if they knew the aftermath of 9/11 before the United/USAirways proposed merger, they would have decided differently. Furthermore, most antitrust attorneys in the private sector agree that consolidation is necessary.

Also, I disagree with your 'precedent analysis'. Antitrust issues are usually not set as 'precedent' within industries because the industry, particularly the airline industry, changes every time a new competitor comes or a competitor goes. For example, the DOJ may think that a merger will help the industry now; but that will not hold true (as precedent) if United wants to merge with the new company next year. Remember, that test you speak of, is a test that is easily molded to fit the DOJ's point of view... and right now the DOJ seems to suggest that they welcome a merger. But if this one goes through, they will not allow another major merger unless more competitors enter the market.

 

[PITbull]

I agree that there will be antitrust hurdles; but that they will not be a deal-breaker (they have other problems to worry about, like bankruptcy creditors). Attorneys from the DOJ have said in the past, that if they knew the aftermath of 9/11 before the United/USAirways proposed merger, they would have decided differently. Furthermore, most antitrust attorneys in the private sector agree that consolidation is necessary.

Also, I disagree with your 'precedent analysis'. Antitrust issues are usually not set as 'precedent' within industries because the industry, particularly the airline industry, changes every time a new competitor comes or a competitor goes. For example, the DOJ may think that a merger will help the industry now; but that will not hold true (as precedent) if United wants to merge with the new company next year. Remember, that test you speak of, is a test that is easily molded to fit the DOJ's point of view... and right now the DOJ seems to suggest that they welcome a merger. But if this one goes through, they will not allow another major merger unless more competitors enter the market.

I disagree with your premise entirely.(well, usually in every instance that you post). This is USAirways No.#5 attempting to merge with Delta No. 2. Potentially becoming THE biggest monopoly on the East corridor.

The point of having oversight and "anti-trust" laws is to ensure that a "monopoly" is not formed. From my research, exposure to mergers and potential mergers being in this industry for a quarter century, and at the "table", the oversight is for the purpose of preventing monopolies from forming. Allowing mergers can often lead to higher prices, reduced availability of goods or services, lower quality of products, and less innovation. Indeed, some mergers create a concentrated market, while others enable a single firm to raise prices.

In a concentrated market, where there are only a few firms. The danger is that they may find it easier to lessen competition by colluding. For example, they may agree on the prices they will charge consumers. The collusion could be in an explicit agreement, or in a more subtle form -- known as tacit coordination or coordinated interaction. Firms may prefer to cooperate tacitly rather than explicitly because tacit agreements are more difficult to detect, and some explicit agreements may be subject to criminal prosecution. When a merger enables a single firm to increase prices without coordinating with its competitors, it has created a unilateral effect. A firm might be able to increase prices unilaterally if it has a large enough share of the market, if the merger removes its closest competitor, and if the other firms in the market can’t provide substantial competition. That's what I view in this instance.

Generally, at least two conditions are necessary for a merger to have a likely anticompetitive effect: The market must be substantially concentrated after the merger; and it must be difficult for new firms to enter the market in the near term and provide effective competition. The reason for the second condition is that firms are less likely to raise prices to anticompetitive levels if it is fairly easy for new competitors to enter the market and drive prices down.

What you imply is that this merger has a great chance of passing with little or no objection from the DOJ. That's wishful thinking. I can't understand why you think you have some pre-destined knowledge that the DOJ will undoubtely welcome this without a blink just because we are post 9/11. When a monopoly exists, it is very difficult for smaller companies to offer the same service and pricing and last as long as a huge conglomerant, thus not existing long enough to have a competitive effect.

Its like putting a Lemondade stand in front of the Coca Cola company hoping that folks choose lemonade for cheaper price and drive Coca Cola's business and pricing down.

And Jesus man, what leads you to believe that if the US/United deal would have gone through, and 9/11 ocurred with this merger that Bankruptcies, furloughs, shrinkage would not have happened anyway. What makes you think that US/UAL merger would somehow withstand the devestating effects from those post 9/11 years????? I believe the whole entity would have gone over the cliff quicker together vs. being solo and emerging solo. Retrospective, US/UAL were not the best fit.

Bigger does not mean better, stronger sustaining power, more resiliant to a down turn. Just a harder, faster, widespread disaster going down when the tides turn, as they usually do.

 

[RowUnderDCA]

I agree that there will be antitrust hurdles; but that they will not be a deal-breaker (they have other problems to worry about, like bankruptcy creditors). Attorneys from the DOJ have said in the past, that if they knew the aftermath of 9/11 before the United/USAirways proposed merger, they would have decided differently. Furthermore, most antitrust attorneys in the private sector agree that consolidation is necessary.

Also, I disagree with your 'precedent analysis'. Antitrust issues are usually not set as 'precedent' within industries because the industry, particularly the airline industry, changes every time a new competitor comes or a competitor goes. For example, the DOJ may think that a merger will help the industry now; but that will not hold true (as precedent) if United wants to merge with the new company next year. Remember, that test you speak of, is a test that is easily molded to fit the DOJ's point of view... and right now the DOJ seems to suggest that they welcome a merger. But if this one goes through, they will not allow another major merger unless more competitors enter the market.

I agree, but the hurdles are going to include (at the least) enough gates for WN at CLT to have a BWI type operation.... or enough gates at CLT to mimic an AirTran type hub, or a bit smaller.

 

[skyguy]

Yes. The deal has to pass anti-trust hurdles. And they are hurdles because the other legacies will be coming forward to prevent this transaction. Remember July 2001...United and USAirways merger failed the littman test of "not being a monopoly"....and there was no plan B for either carrier...forcing both into BK by 2002.

And if it is decided, and a precedence is set, it will bring a whole slew of consolidations that will limit competition for the consumer. To me, those are quite large hurdles.

PITBULL -

That's the biggest load of crap you've ever posted.

Several other things pushed US and UAL in to bankruptcy - not a failed merger. Maybe you're unionized head has already forgotten 9/11? A war with Irag? Rising fuel prices?

Maybe the Pittsburgh smog has finally corrupted what little brain you ever had.

 

[N924PS]

Yes. The deal has to pass anti-trust hurdles. And they are hurdles because the other legacies will be coming forward to prevent this transaction. Remember July 2001...United and USAirways merger failed the littman test of "not being a monopoly"....and there was no plan B for either carrier...forcing both into BK by 2002.

And if it is decided, and a precedence is set, it will bring a whole slew of consolidations that will limit competition for the consumer. To me, those are quite large hurdles.

Just for your info, I know what you meant, but it's actually a "litmus" test.

 

[pilot]

PITBULL -

That's the biggest load of crap you've ever posted.

Several other things pushed US and UAL in to bankruptcy - not a failed merger. Maybe you're unionized head has already forgotten 9/11? A war with Irag? Rising fuel prices?

Maybe the Pittsburgh smog has finally corrupted what little brain you ever had.

What pushed U to BK and the brink of collapse was, pure and simple, incompetent, arrogant and totally foolish management.

9/11, fuel, and a war didn't cause Southwest to fail. Or AMR. Or JetBlue. Or...... I could go on.

Management is where the buck stops. They are responsible for the success or failure of any company. The mitigating circumstances are to be dealt with. Some managements can. Some cannnot.

pilot

 

[stoopidute442]

Hmmm....... maybe they'll up the ante on some more buy-outs!

Yeah...you must be an HP employee.....you know what we call a buy-out on the east coast????? A layoff!

 

[Gilding the Lily]

I disagree with your premise entirely.(well, usually in every instance that you post). This is USAirways No.#5 attempting to merge with Delta No. 2. Potentially becoming THE biggest monopoly on the East corridor.

The point of having oversight and "anti-trust" laws is to ensure that a "monopoly" is not formed. From my research, exposure to mergers and potential mergers being in this industry for a quarter century, and at the "table", the oversight is for the purpose of preventing monopolies from forming. Allowing mergers can often lead to higher prices, reduced availability of goods or services, lower quality of products, and less innovation. Indeed, some mergers create a concentrated market, while others enable a single firm to raise prices.

In a concentrated market, where there are only a few firms. The danger is that they may find it easier to lessen competition by colluding. For example, they may agree on the prices they will charge consumers. The collusion could be in an explicit agreement, or in a more subtle form -- known as tacit coordination or coordinated interaction. Firms may prefer to cooperate tacitly rather than explicitly because tacit agreements are more difficult to detect, and some explicit agreements may be subject to criminal prosecution. When a merger enables a single firm to increase prices without coordinating with its competitors, it has created a unilateral effect. A firm might be able to increase prices unilaterally if it has a large enough share of the market, if the merger removes its closest competitor, and if the other firms in the market can’t provide substantial competition. That's what I view in this instance.

Generally, at least two conditions are necessary for a merger to have a likely anticompetitive effect: The market must be substantially concentrated after the merger; and it must be difficult for new firms to enter the market in the near term and provide effective competition. The reason for the second condition is that firms are less likely to raise prices to anticompetitive levels if it is fairly easy for new competitors to enter the market and drive prices down.

What you imply is that this merger has a great chance of passing with little or no objection from the DOJ. That's wishful thinking. I can't understand why you think you have some pre-destined knowledge that the DOJ will undoubtely welcome this without a blink just because we are post 9/11. When a monopoly exists, it is very difficult for smaller companies to offer the same service and pricing and last as long as a huge conglomerant, thus not existing long enough to have a competitive effect.

Its like putting a Lemondade stand in front of the Coca Cola company hoping that folks choose lemonade for cheaper price and drive Coca Cola's business and pricing down.

And Jesus man, what leads you to believe that if the US/United deal would have gone through, and 9/11 ocurred with this merger that Bankruptcies, furloughs, shrinkage would not have happened anyway. What makes you think that US/UAL merger would somehow withstand the devestating effects from those post 9/11 years????? I believe the whole entity would have gone over the cliff quicker together vs. being solo and emerging solo. Retrospective, US/UAL were not the best fit.

Bigger does not mean better, stronger sustaining power, more resiliant to a down turn. Just a harder, faster, widespread disaster going down when the tides turn, as they usually do.

I agree with a couple of your paragraphs; perhaps that is because you copied and pasted those paragraphs from a FEDERAL TRADE COMMISSION REPORT. But you failed to apply those paragraphs of great analysis regarding mergers and monopolies to the facts at hand.

Again, as I stated ealier, I think that Antitrust issues will be a hurdle to overcome; I just think that the hurdle will be ankle high... as opposed to the hurdle you believe will be as tall as the Sear's Tower.

 

[longing4piedmont]

I haven't followed much to be honest since I spent the better part of yesterday flying with two very nice West flight crews both in first and in coach.

As to your side question the answer is YES! The group Save Sky Miles is still around and their symbol is/was a large rat. and the accronym was

Driving
Every
Loyal
Traveler
Away

They were very active and two of their member live pretty close to me. They generally had more resources or at least were willing to spend them. No committment to the DL employees at all.

Piney, your out of your realm here. I was a member of the "rat" pack and was one of the ones who helped pay for the newspaper ads that ran and the billboard at the stock holders meeting.

You have no idea what was discussed with management and therefor you really should not comment on things you know nothing about.

 

[TechBoy]

I agree, but the hurdles are going to include (at the least) enough gates for WN at CLT to have a BWI type operation.... or enough gates at CLT to mimic an AirTran type hub, or a bit smaller.

I suspect that 10 gates will be enough. I doubt that WN or B6 want more than 5 gates in CLT.

 

[longing4piedmont]

I have a better idea than you might think as I was corresponding with the 2 folks near me and we shared a great deal of info including my media contacts. This may or may not be prior to your involvement.

I know they raised and spent more money than FFOCUS ever did.

I also can't recall any mention publicly any discussion of employees ever. Bruce did send me two "Rat" buttons which I still have.

That explains alot. Bruce is not the type to be warm and fuzzy about the employees. Just simply not his personality. Want to send me one of those buttons.....my are long gone.

 

[Art at ISP]

Bob and L4PI,

Y'all two play nice now.....

The more I think about this deal, the more I am convinced it is a smokescreen for something else---NW. It just makes more sense. For whatever reason, DP needed the stock to go up, and this definitely accomplished that.

But who knows? I am after all just a dumb customer.....