Is a NWA, Delta merger a wise move at this time?

The front page of the Detroit Free Press today was about a planned Northwest, Delta merger and, being a “local paper”, the subhead said that Metro Detroit likey to gain more flights from deal.

What does Northwest project the value of the merger at? How does Delta know the merged airline will not close any hubs?
Digging deeper, I checked Google news and found this dissenting opinion.

I keep thinking that DElta + norThwEST = DETEST.

I can’t see that it matters much. Companies merge all the time. It might position the company to serve more destinations better. The opening up of Europe will change how Delta operates.

Well, Easy-E is dead, although that might make for an easier merger seeing how he and Dr. Dre were at each others throats. Still, they’d make for an interesting flight crew.

It may be a wise move for the institutional shareholders. It may be a wise move for the investment bankers. It may be a wise move for the respective airline executives with golden parachutes. Then again, what about the customers? What about the employees? What about the employee’s pension plans? What about the suppliers?

That this proposed merger is occurring now, before the new administration that would fight it is a telling point. There is talk a Continental-United merger deal is only weeks away for the same reason.

Isn’t this the typical business model? Maximize profits. Cut costs. It’s nothing personal. It’s business.

But it will be a bad move for both the flight crew and passengers. Remember the cancellations just last week, and the cancellations Northwest experienced in 2007? And fuel prices are going up the roof!

Do they think that a merger will strengthen the industry?

I just came here for the rap jokes, though I shudder to think what the merger will mean for travelers.

I am still upset that I only found out Easy-E is dead about a month ago even though I listen to NWA all the time. I still can’t see any of them doing well in the airline industry in any case though although Kareem Abdul-Jabbar made a successful co-pilot in the movie Airplane! but I don’t think you can directly compare black sports stars with gangsta rappers. The business mentality isn’t nearly as similar. Still, I hope that NWA does well no matter what they decide to branch into.

Not mentioning Ice Cube in this discussion is a tacit crime against hip-hop in general, and humanity in particular, sir.

Some people do, yes. The sense I get from Wall Street is that some people believe there’s oversupply in the airline business now and these mergers will help bring that supply down.

I was just thinking that this move might be some cross-branding genius. Who the fuck is going to try to hijack one of these NWA branded planes? The flight “attendants” will be 300 lb black guys with ample gold on display? The pilots will talk to you over the intercom like the bitch you are and dance music will keep the cabin constantly hoppin’. Mohammed Jr. wouldn’t know where to begin when confronted with a sealed vessel of Compton moving through the sky.

And let us please not forget the complimentary Remy and Cokes that will be imbibed and enjoyed by all.
“Oh you want gin and juice? Fuck you, you Long Beach motherfucker!”

Three small carriers went out of business last month and then we have a huge merger. Gotta eliminate some of that competition, It drives down prices and profits. Get it is the range of oil companies 5 or 6 huge companies and prices and profits will rise. Wall Street should love it. It is the customers who will not.

I’m kind of skeptical that they truly will keep all their hubs in the long run (or even in the intermediate-term, for that matter). Does it make sense to have hubs in both Detroit and Cincinnati? Both Atlanta and Memphis?

Ed

Yes. The merger will strengthen the industry. Taking 2 carriers who are struggling and combining them allows the merging company to liquidate the less fuel efficient aircraft from both companies and reduce the fleet to a productive level. Instead of competing to see which company goes under they can take the best of both and move on. And yes, the little guy will take the hit.

The downside to this is the level of compatability between the companies. They would be better off taking the most efficient company and just absorbing the assets of the other. Dual computer systems (the heart of a company) shold not be run independent of each other.

Merging doesn’t reduce the fuel consumption of the aircraft, which is the main problem. Both airlines have ageing fleets, and because they are both unprofitable, have prblems buying newer aircraft.
I am wondering about the impact of advanced, Web-based business conference systems. seems to me the MOST profitable market is the business traveler-who will move away from physical travel, once you can have a business meeting with full video capability. Like the post office with emails.

To be fair, Dr. Dre made a song on The Chronic, 2001 called “What’s the Difference?” where he basically apologized to Eazy and reminded him they were still homies.

Judging by the crowdedness of planes, there isn’t an oversupply of seats, thought there is a perceived oversupply of airline companies. On Marketplace it was noted that business travelers like lots of flights to choose from, so this will help - and it means the number of flights won’t be cut (or the number of hubs.) They also mentioned that airline costs were primarily people and fuel, so since the number of people have already been cut to inside the bone, this isn’t going to lead to any efficiencies.

That the airlines feel they can start charging $50 for a second checked bag shows beyond a doubt that there isn’t too much competition.

Merging allows the culling of the less efficient aircraft. Each company has a mix of efficient aircraft and merging them into a smaller fleet would create an immediate increase in fuel economy as well as maintenance.

Delta has a fleet of 737-700’s and 800’s. they are much more efficient and carry more people than Northwest’s fleet of DC9-30’s and 40’s. The DC9 aircraft would be the fazed out over time. There is excess passenger capacity between the 2 companies so a combined company would be smaller and more efficient.

This would work if they had overlapping markets, but they don’t. Each airline right now, generally speaking, serves different markets. If they wish to liquidate fuel inefficient aircraft, they will have to cut back on the number of flights, reduce airports served, or both.