Hartsfield Jackson Atlanta International Airport

[Trae]

Originally Posted by cabasse

i'm curious where you heard that, trae - and if it's true, does it have something to do with the laws related to monopolies?

I think so. I'll have to go back and find where I found it, but I know its true. It was in the agreement with NW. I actually think Capt A'wacs here said it. I think it goes something like this: If CO merges with an airline, NWA still has a major share, but if NWA merges with another airline, it completely loses its share.

http://dealbook.blogs.nytimes.com/2008/01/16/northwest-continental-and-the-golden-share/

[STrek777]

Originally Posted by Trae

I think so. I'll have to go back and find where I found it, but I know its true. It was in the agreement with NW. I actually think Capt A'wacs here said it. I think it goes something like this: If CO merges with an airline, NWA still has a major share, but if NWA merges with another airline, it completely loses its share.

http://dealbook.blogs.nytimes.com/2008/01/16/northwest-continental-and-the-golden-share/

While I am still holding out hope for NW the more I think about it I find myself leaning more towards UA.

Talk about unions all you want but DL is what it is today acquiring Western and North East and still plays the game with virtually no unions. We brought in the assets of PanAm and Eastern and still only the pilots are unionized. UA may have epic employee union relation problems and NW may have disgruntled unions but there is no garuntee that that the unions will survive the buyout.

CO is the wild card in this whole mess and DL better choose its partner carefully. The quickest merge may not be the best. Whoever merges with UA will be the largest carrier in the USA... UA/CO or DL/UA. People UA is a massive company that is holding it together by shoestrings and they WILL merege with someone. I am most afraid of CO international market share. Both CO and DL are too closely tied in too many international markets.

Should DL go with NW it would likely be a smooth ride to the finishline and we get the second largest route structure over the Pacific... but then UA can take CO.

A UA/CO merge would give that company the second largest route market to Europe, tied route market to the Middle East, the planes to start competeing with us in Africa, the largest route market to Central and South America, the second largest route market to the Carribbean, and THE LARGEST route market over the Pacific. When the dust settled there would be (in order) UA, DL, AA, WN, US, ... etc. Three Legacy Carriers remain no more mergers would ever be allowed and DL would be stuck in UAs shadow for years to come.

UAs aircraft are far more compatable with DLs. UA also built most of its network to operate west of the Mississippi where as DL clung to the east of the Mississippi. Plus if DL takes UA then we not only get pratically every major city in China but we also get Australia and New Zealand. When the dust settled there would be (in order) DL, CO, AA, WN, US, ... etc. Three Legacy Carriers remain no more mergers would ever be allowed and DL would be the dominat carrier for years to come.

Forget the Star Alliance the new DL would be all SkyTeam and US would be left to run the Star Alliance show state side. As far as unions go... well their eating both companies alive so either way we would have to deal with the issue of how to legally disolve them. The the USA Anti Trust regulators might just allow a DL/UA merge if CO/NW sever their ties with SkyTeam along with a multitude of various other requirements.

[Fiorenza]

I can't see the DL/UA deal...there are too many issues. I see DL/NW coming down the tracks.

[Trae]

I hope the DL/NW happens in CO picks a partner (most likely UA and maybe Alaska). The HQ would definitely stay in Houston, too (just like Atlanta would remain the HQ with a NW merger).

[megalopolis]

Strek777, I think Fiorenza was asking a question, not making a statement: why is Delta not talking to Continental? Is it because DL recognizes that while their fleets have the most compatibility, there is too much overlap in their route structures, and a carrier with a greater presence in the western U.S. and Asia is a better target, even though its fleet may not be as ideal?

If there are regulatory issues with UA merging with Delta, the #2 and #3 carriers, then wouldn’t those some regulatory issues apply with UA and CO, the #2 and #4 carriers, or is there that big of a difference between the size of DL and CO? If UA is to merge with anyone and get the regulatory approval it needs, isn’t the most likely candidate a smaller carrier such as WN or US?

If UA is twice the value of DL, I just don’t see how DL would be the one in the driver’s seat in a merger of the two (keeping the Delta name and the Atlanta headquarters). So is that really a realistic option?

Why is there no talk of AA merging with anyone? You think if DL merged with NW and UA merged with CO that they wouldn’t let AA merge with anyone too, such as WN or US?

[EuphoricOctopus]

Originally Posted by Trae

I hope the DL/NW happens in CO picks a partner (most likely UA and maybe Alaska). The HQ would definitely stay in Houston, too (just like Atlanta would remain the HQ with a NW merger).

it would be pretty close if delta/united were to merge - i'd see it going to chicago even if that ga senator has been told otherwise. the same would proabably go for continental, or probably whoever else might merge with united.

[STrek777]

Originally Posted by megalopolis

Strek777, I think Fiorenza was asking a question, not making a statement: why is Delta not talking to Continental? Is it because DL recognizes that while their fleets have the most compatibility, there is too much overlap in their route structures, and a carrier with a greater presence in the western U.S. and Asia is a better target, even though its fleet may not be as ideal?

If there are regulatory issues with UA merging with Delta, the #2 and #3 carriers, then wouldn’t those some regulatory issues apply with UA and CO, the #2 and #4 carriers, or is there that big of a difference between the size of DL and CO? If UA is to merge with anyone and get the regulatory approval it needs, isn’t the most likely candidate a smaller carrier such as WN or US?

If UA is twice the value of DL, I just don’t see how DL would be the one in the driver’s seat in a merger of the two (keeping the Delta name and the Atlanta headquarters). So is that really a realistic option?

Why is there no talk of AA merging with anyone? You think if DL merged with NW and UA merged with CO that they wouldn’t let AA merge with anyone too, such as WN or US?

WOW holy mosses maybe Fiorenza was asking a question but I don’t know how you inferred all that from one sentence. Hehehe All the same let me take this one at a time.

1) Why is Delta not talking to Continental?

Quite simply CO does not want us. We could try a hostile takeover but that would make us look like US and we would never want to look as bad as they did trying to take over us.

2) Is it because DL recognizes that while their fleets have the most compatibility, there is too much overlap in their route structures, and a carrier with a greater presence in the western U.S. and Asia is a better target, even though its fleet may not be as ideal?

A carrier with a greater presence in the western U.S. and Asia is a better target, even though the fleets may not be as ideal. NW by far would be the easiest deal but UA would probably yield the greatest return.

3) If there are regulatory issues with UA merging with Delta, the #2 and #3 carriers, then wouldn’t those some regulatory issues apply with UA and CO, the #2 and #4 carriers, or is there that big of a difference between the size of DL and CO?

The pecking order for the Legacy Carriers in order of fleet size is: AA, UA, DL, NW, CO. On this scale any possible combination will birth the largest carrier in the USA. No mater how you cut the cheese there will be huge regulatory hurdles to clear with any combo.

4) If UA is to merge with anyone and get the regulatory approval it needs, isn’t the most likely candidate a smaller carrier such as WN or US?

UA has won awards for having the most comprehensive Trans-Con route network. UA is to big to play in the same sand box as WN and WN has nothing that UA would need to survive a recession. At this point US is like a loud smelly dog. No one wants to touch it or play with it every one wants it to go away but doesn’t want to get to close to do anything about it. The merge between HP and US has gotten so much negative press that any airline that seriously plays with them run the risk of having the same negativity thrown at them by association.

5) If UA is twice the value of DL, I just don’t see how DL would be the one in the driver’s seat in a merger of the two (keeping the Delta name and the Atlanta headquarters). So is that really a realistic option?

Ok there is a difference between market value and stock value. I really should have specified earlier. Even though DL was in bankruptcy we still had a higher market value than US but US had a higher stock value than DL. They were offering to buy the company partly in cash and partly in stock. Since what they were offering was a premium to what the value of our stock was at the time we really did become dangerously close to being bought by US. DL market value is actually higher than UA but our stock value is roughly half of theirs. The uphill battle would be with the banks and convincing the creditors of UA to let us buy them out even though our stock is valued less even when our company’s value is more.

6) Why is there no talk of AA merging with anyone?

They didn’t go into bankruptcy, they aren’t embroiled in epic battles with their unions, and their market value on average reflects their stock value. Exactly what angle would they use in trying to convince creditors that they need to merge to survive? If they wanted to merge at one point… it’s too late now. They have done a very good job previously of convincing everyone that they will be just fine all on their own.

7) You think if DL merged with NW and UA merged with CO that they wouldn’t let AA merge with anyone too, such as WN or US?

AA is stuck where they are at for a while.

[megalopolis]

So if CO doesn't want to merge with DL, then does it also not wish to merge with UA? In which case, if UA does not merge with DL, then will they have to attempt a hostile takeover of CO?

[Trae]

UA can't take over CO. The other way around.

[megalopolis]

Originally Posted by Trae

UA can't take over CO. The other way around.

Why is that, Trae? United has a market cap of $3.96 billion ($35 per share) and Continental has a market cap of $2.42 billion ($25 per share). Incidentally, Delta's market cap is $4.24 billion ($16 per share) and Northwest's market cap is $4.00 billion ($17 per share).

[whoDean]

Apparently the head of an important commitee that would decide if a merger would pass muster in Congress is from Minnesota, probably meaning that he would block a combined Northwestern/Delta based in Atlanta.

[megalopolis]

Congress doesn't decide whether or not mergers pass muster, do they? Isn't it the Justice Department, and the DOT advises them? I'm sure Congress can apply political pressure, but they don't get a vote.

[STrek777]

Originally Posted by megalopolis

Congress doesn't decide whether or not mergers pass muster, do they? Isn't it the Justice Department, and the DOT advises them? I'm sure Congress can apply political pressure, but they don't get a vote.

You are absolutly right. I mean you definatly want them on your side because they pull in DC but they don't get the final final say so.

They will hold senate hearings to hear the yea or nay of the situation to form an opinion or to gain an understanding of what exactly is going on. Win congress over and they can use their political weight to help push your deal through.

[Trae]

Originally Posted by megalopolis

Why is that, Trae? United has a market cap of $3.96 billion ($35 per share) and Continental has a market cap of $2.42 billion ($25 per share). Incidentally, Delta's market cap is $4.24 billion ($16 per share) and Northwest's market cap is $4.00 billion ($17 per share).

Look in the Delta/United merger thread in transportation for your answers. Start on page 4.

[STrek777]

Originally Posted by Trae

Look in the Delta/United merger thread in transportation for your answers. Start on page 4.

I think that's Trae's very nice way of saying take the off topic discussion here...

http://forum.skyscraperpage.com/showthread.php?p=3289571&posted=1#post3289571

See everyone on the flip side!

[megalopolis]

Interesting, I didn't even know that thread existed. From everything I read though, it appears as though opinion is split on who would acquire who in a UA/CO merger. I was merely disputing Trae's comment that UA can't take over CO. It seemed so absolute.

[Atlriser]

While it is true the head of the transportation team is from MN, Georgia has a stronger overall congressional delegation. In addition, if Delta combined with NW, that would leave United as dominant and independent for the time being in the midwest. That's likely to make the IL delegation push for such a merger leaving United in Chicago. It bodes well for GA in the long run because I thing most feel that United would try and acquire CO and being the larger airline it would stay HQed in Chicago (ignoring market caps).

Quick question and my thoughts as well on DL and NW combining:

I know NW has the older fleet and more Airbus planes; however, here's some thoughts.....given NW already is more dominant to Asia and Delta to Europe/Africa....could the structure of the combined networks be leveraged where the long range Boeing planes be used internationally and the Airbus be used and based out of existing domestic hubs of NW. Thus the Boeing planes would be utilitzed from existing Delta hubs and international flights. The airline would immediately begin eliminating the older MD's as Delta has already done because we know some planes would go immediately. Would this not somewhat solve the fleet issue and as new planes enter the Airbus are phased out hub by hub on the existing NW system over time? Thus you would limit the training costs to existing facilities using Airbus vs Boeing planes and with time consolidate to all one type of fleet eventually.

It occurs to me also that the industry should have learned by now that bigger isn't best. A combination of Delta/United would create the largest but would create a huge operational nightmare allowing existing carriers to swoop in and erode that lead quickly as has happened with US Air in some of its markets. I think it'd actually lead to more union issues as well since the percentages/sizes of the unions with a combined DL/UA would be enough to make ops a nightmare for a longer time period then combining DL/NW would.

[Unity77]

Originally Posted by Trae

I hope the DL/NW happens in CO picks a partner (most likely UA and maybe Alaska). The HQ would definitely stay in Houston, too (just like Atlanta would remain the HQ with a NW merger).

As I stated elsewhere, don't be so sure that Atlanta will remain the headquarters of a newly, merged airline. Delta's CEO has backed off his initial statement that Delta's headquarters will remain in Atlanta.

http://www.duluthnewstribune.com/ap/...w&id=D8U78ON84

Also Wednesday, Sen. Johnny Isakson, R-Ga., said Delta CEO Richard Anderson confirmed in a phone conversation Friday that "as far as he was concerned" Delta would merge only if it keeps its name and maintains its current presence in Atlanta, where it is headquartered.

"He said that unequivocally," said Isakson, who called Anderson after reading reports of merger talks. But it has not been clear whether Anderson would be willing to move Delta's headquarters as part of a combination with another carrier.

A headquarters move for Northwest could prove expensive.

IMO, this sounds like Anderson is more concerned about keeping more of the operations in Atlanta than its headquarters.

Also, if MPLS-STPL loses its headquarters due to a merger, the newly formed airline will lose $215 million a year until 2020 in rebates and discounts at MPLS-STPL International if it doesn't live up to written commitments to keep a hub and headquarters in the Twin Cities.

[Unity77]

Furthermore:

Northwest owes the Metropolitan Airports Commission more than $245 million in bond repayments, and the airline's lease agreement and bond covenants with the commission require the airline or its successor to maintain its hub and headquarters in Minnesota. If Northwest didn't live up to those terms of the deal, the MAC could potentially declare Northwest in default and demand payment.

http://www.twincities.com/business/ci_7991989

[Atlriser]

I posted this in other thread as well to throw out a new debate and thoughts:

How about a new debate? Throw out the idea: Since NWA controls over CO merging, that Delta/NWA/CO all reach an agreement where by Delta acquires NW. As part of the agreement CO gets some assests thus creating a larger western presence and giving it a chance to stay independent without merging. Thus NWA gets something from CO for it giving up the control of destiny over CO and CO purchases some western presence. Don't forget Comair and Delta using it as a bargaining chip either. While it's a minor asset in a combined Delta/NWA, it has an extensive western presence in smaller non hub markets that could be used to build a hub for CO in the west. All three airlines would gain in some sort of arrangement and leave the remaining Delta and CO stronger in all markets and thus possibly limiting any more consolidation within the next 2 years making Congress, Democrats and the regulators happy for now.


Thought outside above comments:
Regarding Delta acquiring NW, the HQ would be in ATL. That I have NO doubt and if ML/SP called default it could end up in court for years or the new Delta could add ops there that would cause the clause to be washed....I honestly feel that and I think most airline analyst would back that. A stronger Delta would try and attack United more through building a stronger hub at ML/SP and creating another midwest international gateway giving Delta 4 international gateways in the US.