NW-CO-DL Sign Alliance Agreement - Seek SkyTeam

[AirplaneFan]

I would be shocked if Feds turned down U-UAL codeshare, with what justification could they do that if they had already approved CO-NW.

Likewise, I would be shocked if Feds would approve DAL-CO-NW. You have to have some competition in the airline industry and you can't allow 3 airlines to jointly sell 40% of the tickets in the U.S. Feds will tell DAL to choose one carrier, but not two to codeshare with.

If I was to guess who carried the most Washington pols, its probably a good guess that it would be U, as they have the largest marketshare in the airport closest to their offices. I would think that DAL might be closer to last than first for the 7 major airlines. DAL has very few nonstop cities from Washington area; SW, U, UAL have many more nonstops to various locations.

 

[gogogadget]

Chip,

Unfortunately, the bad thing about this whole mess is that some carriers were undully hurt by 9/11. But one should not blame 9/11 for the mess U is in now. Only bad management can account for having a short route structure on the east coast and only management can explain why most of U's eggs were so heavily dependant on DCA! C'mon, wake up! Lets see, out of all the carriers in the US, DCA was not the sole cause of any ATSB loan. AA had aircraft used in cowardly act and a base in DCA, UAL did also with a base in IAD, that excuse is just playing on the emotions of the traveling public that doesnt understand airline politics.

While I feel for U and hate anyone losing jobs, it is unfair that some carriers use BK and ATSB loans to better themselves at the expense of the employees at other companies that lent U the money in the first place!

Unfortunately, this is the ugly side of what makes America such a great place to live! Spock said it best! "The good of the many outweighs the good of the few!"

Live long and prosper! U, Iguess

 

[1ab]

well if DL/NW/CO get their code share agreement OK'd and they 'merge' skyteam alliance with NW alliance...maybe U should kiss and make up with AA and BA and then they can 'merge' one world and star alliance and then that would be a real thorn in old Mullins arse would it not [:devil:]

 

[chipmunn]

Hi Blue:

Blue, NW was on the verge of bankruptcy back in the early 90's after the LBO and Gulf War crisis. I specifically remember within the halls of ALPA when the deal was completed just hours before the NW Legal Department was prepared to submit formal reorganization papers to the Clerk of Courts.

It was a super event that the airline avoided the risks of Chapter 11, but that is not the point of this thread. The point is the competitive issues of corporate combinations, in particular the two code share proposals now in front of the DOT, and its affects on consumer interests and competition.

In addition, I take exception to your comment regarding September 11.

In fact, today US Airways chairman Stephen Wolf said, "The indisputable fact, however, is that US Airways suffered disproportionately as a result of the events of last September, both because of its significant presence in the northeastern United States and because Washington's Reagan National Airport, a keystone of the US Airways system, was closed for a prolonged time."

"It was precisely for such reasons that the stabilization loan program was established. Moreover, the members of the loan board and their independent financial rating agency -- all clear-eyed financial experts -- have been stringent in their demands that companies seeking loans present viable, long-term financial plans and meet certain conditions before receiving publicly backed funds." he said.

"US Airways is well on the way to meeting those conditions and will not receive one dime until it does. But when those conditions are met -- and they will be -- US Airways will be well positioned to provide vibrant competition far into the future," said Wolf.

Chip

 

[luv2fly]

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On 8/24/2002 11:06:04 AM

I believe the timing of the DL-NW-CO three-way alliance is designed to disrupt the UA-US accord.

10 days ago Siegel told me on one of our flights he was confident the DOT would permit the UA-US alliance to proceed. I suspect the government understands the importance of two failing carriers using their alliance to prop each other up.

However, in my opinion the story is different for the three financially strongest U.S. hub and spoke airlines combining, which will enable this group to have nearly 36 percent of the domestic traffic and 40 percent of all U.S. traffic.

The DOT extended its UA-US review by only thirty days, but could have done so for 150 days, which is a good sign for the agreement proceeding. There are signals that the federal political view of US is changing with the 91-4 Senate vote to not alter the loan guarantee program and the conditional loan guarantee approval.

Meanwhile, another important point is that UA, a carrier who one could argue has more government pull than other airlines, was told "no way" to their current loan guarantee application by the ATSB. This point sheds a different view of UA versus US within the confines and hallways of the ATSB.

Mullin is clearly trying to "kill off US" and does not want a lower cost, viable carrier on the East Coast with access to UA's world-wide network. Mullin's motives are transparent and he is hoping to fix his company's financial problems by leading the charge for the failure of US.

Even though US has been somewhat snake bit in the past by the government, the airline has two recent government victories and a management team trying to fix its mess.

I'm very optimistic the US-UA code share will proceed, I suspect that eventually there will be some kind of UA-US combination (I suspect so does UAL ALPA or why would they have included pre-nuptial seniority language into their ERP concessionairie agreement?), and the three-way alliance will be killed.

Chip


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Chip,

While I certainly understand your desire and need for the U/UA codeshare deal, it appears to me that you are asking the DOT to make a biased decision. You state that Mullin as well as other CEO's pressed Congress for immediate finacial assistance after the events of 9-11. Those immediate funds were dispersed proportionately. The assistance requested by U and UA go above and beyond that provided to other carriers such as DL,NW,CO, and AA. In addition, you are asking to recieve such funds un BK protection. On top of that, you are requesting the ability to codeshare with UA, and at the same time expect the DOT to deny a CO,NW,DL deal. Realistically, how did you expect DL to act? You have stated on numerous occasions that the events of 9-11 placed more of a financial strain on certain airlines. Specifically you claim U suffered extreme hardship due to the closure of DCA. Wasn't Delta affected by that closure as well? Last time I checked we had a significant operation in the NE. After all DL is your biggest competitor isn't it?
I applaud you optimism, but question your ethics.
If the DOT allows the U/UA codeshare, and subsequenlty denies the CO/NW/DL deal, it will only serve to demonstrate the bias of the ATSB and DOT.

 

[a320av8r]

Don't forget, if the DL/NW/CO deal is so transparent to us the DOT folks see it too. The DOT guys are professionals and I think the "muddying of the waters" by the other carriers may backfire on them. If I were DOT I would be insulted by Delta's proposal and thinking it would be that easy to derail.

 

[Blueskies/400 UpperDeck]

Chip, some clarification. NWA was no doubt on the door of BK at one time. However, we got there BECAUSE of the massive debt that comes with LBO's Billions borrowed against ones own unencumbered assets and cash. In 1989 with the leveraged buyout of Northwest Airlines . An investor group(Checchi, Wilson, KLM) mounted a bid for the airline found an eager equity partner in the Netherlands' national flag carrier KLM Royal Dutch Airlines. KLM was the world's twelfth largest carrier but was operating from a country with only 16 million people and was therefore under strong pressure to link up with another carrier in order to strengthen its position in Europe. Checchi, Wilson, $40million total, while KLM provided $400 million as part of the leveraged buyout of NW worth $3.7 billion. The foreign ownership aspects became controversial as the KLM/NW deal and the financial weakness of US carriers threatened to kick off a wave of such buyouts with the participation of foreign carriers. To dampen concern about foreign takeovers and fears that the debt burdens associated with leveraged buyouts would compromise safety, US regulators announced that the United States would remain open to foreign investment but would closely monitor cross-border deals for evidence of foreign control. Thus, this is why NWA was the ONLY healthy airline to suffer the LBO fate. This debt had to be repaid of course. So, because of the insane screwed-up laws of business in this country at the time, which have been changed, that is the ONLY reason we got screwed. Remember the same thing almost caught UAL. You will find that NWA is one of only a few airlines that have a Poison Pill in it's corperate gov. Once burned, twice deserved. I keep hearing all of these great expectations that the government is absolutly NOT going to allow any airline to fail. It has happened BEFORE to far GREATER Carriers...many times. And, I am afraid it WILL happen again. Good fortune to all. One airline analyst, Michael Boyd in Evergreen, Colo., said the latest partnership "sounds like a home run."

"The Northwest and Continental alliance has been one typified by increased customer convenience and options, with no reduced competition," Mr. Boyd said. "Depending on how this is done, and I assume they'll do it in the same manner, everyone wins."

 

[chipmunn]

Recently Reuters reported analysts criticized the (DL-NW-CO) pact and said that throwing Delta into the mix would create redundancies in the three airlines' route coverage and potentially prompt increased regulatory scrutiny.

"Delta has made it clear that it feels threatened by the proposed United and US Airways alliance," said JP Morgan airline analyst Jamie Baker.

"Given the level of domestic concentration that would result from the proposed three-way code share, we would not be surprised it if draws intense scrutiny from the Department of Transportation," Merrill Lynch analyst Michael Linenberg said.

OBSTACLES IN VIEW

In what might present another hurdle ahead of the deal's completion, Delta said it and Northwest will need their unionized pilots to agree to changes in their contracts and then approve the deal.

Delta's pilots will get a proposal from management on Tuesday, which they'll analyze to see whether one airline might grow at the expense of another and hurt pilots' interests, Air Line Pilots Association spokeswoman Karen Miller said.

"We haven't really seen this before -- this is a new evolution in the airline industry," Miller said. "But certainly, it's not unexpected."

 

[chipmunn]

In a statement regarding the announcement, US Airways said: “At first glance, the three-way alliance between Continental, Delta and Northwest appears to be a much more complex transaction for both U.S. and European regulators. Government officials on both sides of the Atlantic will obviously be reviewing this agreement, but in the meantime, we remain hopeful of an expeditious review of our proposed marketing alliance with United, which remains unaffected by this announcement.”