US Next Step if DL Merger Fails?

[USA320Pilot]

Gilding the Lily,

Your analysis is well thought out and I agree with your comments.

Another important point is that Northwest hired I believe Evercore a few week's ago to advise the airline on "strategic alternatives".

The question remains that if "it is a signal that NW anticipates that something big (beyond a potential US/DL deal) is going to occur that would partially impact the details contained in the Disclosure Statement," but what is Northwest's objective? Furthermore, with the uncertainty surrounding the Delta - US Airways deal could Northwest be hedging their bet?

They certainly do not want to be left out of the M&A game; however, an important question is do they want to be acquired or does management want to see the business enterprise survive?

Options:

1. If US Airways is unsuccessful in its attempt to acquire Delta then merger with the Atlanta-based company. In this scenario I suspect Delta management would want to run the combined company.

2. Be acquired by American.

3. Merge with Continental. The two companies already have a broad interest/relationship with one another.

One point that I find interesting was the leak to the WSJ that Delta and Northwest are talking. Could Delta have leaked the information to the WSJ to make its creditors believe there is another M&A option, regardless of the depth of talks with Northwest, to help influence their desire to remain a standalone company? If nothing else I believe the timing is suspect.

Regards,

USA320Pilot

 

[FWAAA]

Whatever happened to "homegrown" companies? Why can't the company enlarge through internal growth? Hey, if US can get 5 billion in cash to pony up for another airline; you'd like to think they could get half that amount for a large aircraft order. There are a lot of airplanes sitting around it's time to think outside the merger box.

Later,
Eye

If Southwest and JetBlue didn't have hundreds of planes on order and IF a major airline or two had gone out of business in the past five years, then I'd agree with you. But the pool of higher-yield passengers simply isn't growing very fast (if at all). It may actually be shrinking. So who, exactly, is gonna fill (on a paid basis) the front cabins of that hypothetical "large aircraft order?"

Makes a lot of sense to try to capture the higher-yield customer base of DL (or another troubled legacy airline) and THEN focus on internal growth (if the pool of profitable passengers appears to be growing).

 

[cltflyguy]

Do that and the balance sheet gets stronger and the growth opportunitees will come over time. If an opportunity to aquire a smaller carrier like AirTran, Midwest or Spirit then go for it. Otherwise build the business the old fashioned way, one happy customer at a time, one route at a time.

Enough with the arbitrage and nickel & dimeing, run the airline, it's a pretty simple concept.

Well said! However, it appears the lack of desire to make something of this company and to run it alone has been missing for a few years now. :down:

With the merger of america west, this company could do so much right now!!! We now have more of a presence on the west and we still (as of right now) have a good presence on the east side. But as we all know. Actions speak louder than words and well. Hell ive seen more action in a phone booth!

This company has never been one to stand its ground. We run and hide first! :down:

 

[LGA Fleet Service]

Whatever happened to "homegrown" companies? Why can't the company enlarge through internal growth?

For some reason it's easier to convince the money lenders to sport you five billion to buy a competitor than it is to calm the market were you making those kinds of captial expenditures off of your own balance sheet.


Buying someone else and slapping your paint and logo on their equipment (In addition to a million other details) is viewed as somehow "Less expensive" than doing it yourself via organic growth.


It must be the "New Math"... :blink:

 

[AstroLounge]

I still say IT DOESN'T HAPPEN! "Keep Delta and their problems AT DELTA"......we have more than enough of our own issues to deal with: there are more closets to remove, a website that needs to be blown UP, a new flavor of Calzone to taste test and Lord only knows what else that "MAKES ME FLY". Tempe/OZ/NeverNeverland>

 

[chevyman]

My thoughts are:

1.Merger with Delta occurs which creates mass consolidation which the DOJ,congress and public does not want,low probability of occurrence.

2. If merger with Delta doesn't go through then try to merge with NW. Better chance of DOJ approval, but still stuck with DOJ mass consolidation concerns,slightly higher probability of success though.

3. Delta and NW merge which drives massive consolidation. DOJ is OK with that as long as large amounts of assets are divested to everyone. This is where USAir picks and choses routes and assets at great prices and thus creating an airline with extensive reach all over the world, 2nd most likely outcome.

4. Everything remains the same,which is what most everyone wants,including congress,this is most likely outcome.

5. Gotta remember very low oil prices,good economy, and great outlook for airline industry which doesn't bode well for consolidation angle of struggling carrier syndrome merger justification.

 

[rsv4ever]

What do you think US Airways next step will be if the Delta merger fails to happen? Go at it alone and hope the rest of the majors don't consolidate? Or, would it be too late to go after Northwest in order to break up a DL/NW deal if the Delta creditors think that would be a better solution then a US/DL deal?

US could always go after SEPTA's R1 airport line. our f/a's could punch tickets. i better be quiet before i give management an idea!!! lololol. Do you think that would make our emergency manual even bigger? :blink:

 

[AAviator]

In my opinion, and I have no information on this, if US Airways does not complete the Delta merger Doug Parker will go to Plan "B" - Northwest Airlines.

US Airways' "executive suite" sees value in merging with a bankrupt carrier because of the financial flexibility available while an airline is operating under court protection in a "formal reorganization".

The Delta and Northwest merger's would be once in a lifetime opportunities to remove fixed costs that otherwise would not be available during a merger between two solvent companies.

I too thought Northwest would be a better fit, but after talking to Doug Parker and listening to Scott Kirby speak I now know the Delta combination would be the best fit. Parker's team began working on the Delta merger immediately after the US Airways "corporate transaction" was complete on September 27, 2005 because management believes it would provide the greatest profit potential (highest cost cuts, revenue gains, and economies of scale) and growth opportunity.

Regards,

USA320Pilot

If NW was plan B, then UAL was plan C, does the next attempt make AA plan D or are there some in there we've all has missed?

Good thing the alphabet has 26 letters! How awesome is that?

 

[700UW]

US is going to merge with:

Mesa, American Eagle, PSA, Piedmont, Skywest, Comair, Republic, Colgan, Pinnacle, Mesaba, and every other regional jet carrier and become the largest RJ Express airline in the world!

 

[WorldTraveler]

Interesting to go back and look at what was said not too long ago... and recognize that some people did get it pretty right.
Also worth noting that DL and NW divested virtually nothing and managed to get fairly speedy DOJ approval - the slot swap took FAR longer.

And then there is this phrase which proves why consolidation continues to be an issue in the US airline industry...

5. Gotta remember very low oil prices,good economy, and great outlook for airline industry which doesn't bode well for consolidation angle of struggling carrier syndrome merger justification.

fuel is high and going higher, the economy in the US is not great and it is even worse elsewhere... and the combination of these two only make it easier to argue that fewer carriers can survive as demand is consolidated across a smaller industry. In Europe, airlines are just plain going out of business... no mergers or rescues are even possible.
.
THAT is Parker's worst fear regarding US.

 

[wings396]

US is what it is due to a lack of vision from the top. You can't blaim the employees, as they have never had any control of this issue. I don't blame Parker either, as he came along years after US was mismanaged. We went thru a handful of CEOs that were short sighted, with most of them focused on selling the airline. Parker is trying to do what he can with what he has. I think that he has done a decent job keeping the company alive thru rough times, and I give him credit for trying to solidify the company and employees jobs with his merger efforts. We could have somebody that does nothing, and just let the company fade away in due time.

 

[Move2CLT]

Maybe it's time for the MEC to make some noise?

Ask USAPA how its done.

 

[Harry Callahan]

Ask USAPA how its done.

Damn now that makes me

 

[wings396]

And the pilot scuffle hijackes yet another thread...
Pathetic..

 

[Beancounter]

And the pilot scuffle hijackes yet another thread...
Pathetic..

You have to realize, we may only constitute 15% of the employee group, but we have 90% of the entire groups ego.