Hartsfield Jackson Atlanta International Airport - Page 40

Fiorenza · #**781** Posted **Jan 12, 2008, 5:04 PM**

Some analyst said, from the point of efficiency the US market can only support three majors and a couple of discounts.

Trae · #**782** Posted **Jan 12, 2008, 7:01 PM**

Quote:

Originally Posted by atlantaguy

Yeah, but if there is a wave of mergers/consolidations like everyone is predicting, they may have no choice.

I haven't seen CO wanting to merge with anyone in a while. They are doing fine, especially with all of these damn awards they keep winning.

And I think the US can support more than three majors.

STrek777 · #**783** Posted **Jan 13, 2008, 9:59 AM**

Quote:

Originally Posted by john3eblover

thats probably the sexiest of the possibilities

Oh how I have dreamed of a DL/CO marriage. This almost happened a while back but the CO got pushy and DL backed out.

However if/when we merge with NW I have a strong feeling CVG and MSP will be dropped like a bad habit. The major hubs will be ATL, JFK, DTW, SLC, and LAX... there may be some wiggle room on this one but we shall see.

Tombstoner · #**784** Posted **Jan 13, 2008, 2:37 PM**

Quote:

Originally Posted by STrek777

Oh how I have dreamed of a DL/CO marriage. This almost happened a while back but the CO got pushy and DL backed out.

However if/when we merge with NW I have a strong feeling CVG and MSP will be dropped like a bad habit. The major hubs will be ATL, JFK, DTW, SLC, and LAX... there may be some wiggle room on this one but we shall see.

It's pretty unlikely MSP would be dropped. MEM on the other hand...

Avian001 · #**785** Posted **Jan 13, 2008, 8:49 PM**

I have a perspective you might be interested in.

There are many, many factors involved before any airline even considers purchasing or merging with Northwest. I used to be an NWA flight attendant and still have several friends there. I am not sure about specific details but from what I always understood, there are several internal things about Northwest that make it different from other US carriers.

One of these issues is that Northwest enjoys a unique relationship with Japan. Northwest was the airline that helped re-build Japan's civil fleet after WWII. JAL owes much of its existence to Northwest. In return, Northwest was granted certain air rights within Japan in perpetuity. For years it was the only US airline allowed to fly into Tokyo and the only one allowed domestic service within the country. While political pressure has permitted other airlines flights there, Northwest still has a very close relationship with the Japanese government and lobbies hard to protect its interests. (Japan does not have an "Open Skies" agreement with the US.) This advantage was structured so that only "Northwest Airlines" is the beneficiary as long as it remains the same company. Any other airline that absorbs Northwest will not have the same advantage in Japan, and would have to start from scratch in negotiations with Tokyo. This arrangement helped NWA build a considerable presence in Asia since Tokyo is its main hub there, and it has a mammoth operation at Narita Airport.

Another factor is that NWA has strong union contracts, despite recent labor problems. Written into those contracts are requirements that any purchase of NWA requires completely new negotiations with its unions. i.e., the contracts cannot be transferred to new owners. This internal protectionism has scared away Delta in the past (Delta is generally non-union). While this is not insurmountable, it doesn't make NWA an attractive target for takeover, but it does make it an attractive buyer.

MSP is the 15th largest airport in the world, and is larger than JFK, Philly, Miami, Detroit, LaGuardia or Dulles, so it's certainly not a minor airport. It's also a "fortress hub" in that NWA accounts for 67% of traffic. As such it is extremely lucrative - one of the most profitable in the US. In negotiations with the state of Minnesota when NWA came out of bankruptcy last summer, all of its contracts with MSP were dependent on retaining MSP as a hub and the Headquarters of NWA. This doesn't mean that these can't be broken, but it does mean considerable re-negotiations with any combined carrier. It's pretty clear that MEM or CVG will likely get the ax due to their proximity to larger NWA & Delta hubs and the smaller market shares each airline has in those hubs.

But who knows? maybe NWA and Delta will merge and move its HQ to Omaha for all we know.

Trae · #**786** Posted **Jan 13, 2008, 9:08 PM**

I'm glad a CO/Delta merger won't happen because CO is just too valuable (most out of the top 5 world airlines). A Delta/United merger though would make it the largest airline in the world I believe. United is a mess though. If a Delta/NW merger happens, NW's large stock in CO would be gone, which would be a good thing, and then CO could merge with Alaska Airlines, putting a large stake on the West Coast (hub airports like Seattle, Portland, and LAX).

STrek777 · #**787** Posted **Jan 14, 2008, 5:10 AM**

Quote:

Originally Posted by Trae

I'm glad a CO/Delta merger won't happen because CO is just too valuable (most out of the top 5 world airlines). A Delta/United merger though would make it the largest airline in the world I believe. United is a mess though. If a Delta/NW merger happens, NW's large stock in CO would be gone, which would be a good thing, and then CO could merge with Alaska Airlines, putting a large stake on the West Coast (hub airports like Seattle, Portland, and LAX).

Trae you bring up a good point but I find it unlikely that if DL bought NW it would give up the Golden Nugget in the process. Guys I just got done with a conference and let me tell you DL is out for blood. Our new CEO is no joke, he used to be a trial lawyer in a previous life as well as the CEO of United Health Care. I also can't imagine NW union contracts scaring him to much as he was the former CEO of NW and saw many of those provisions written... if there is a back door he will know about it.

Next. I never said MSP wasn't a big beautiful airport and there are some pretty big companies that are headquartered there. I do see the hub being right-sized (do ya'll remember that little phrase from CVG)

We'll have to wait and see what happens.

Dragonheart8588 · #**788** Posted **Jan 14, 2008, 8:31 PM**

STrek777,

Aren't you glad I haven't say anything about Delta?

STrek777 · #**789** Posted **Jan 14, 2008, 9:57 PM**

Quote:

Originally Posted by Dragonheart8588

STrek777,

Aren't you glad I haven't say anything about Delta?

Hey there you are I was wondering how long you were going to let me run rampant on this thread?!

Speaking of I wish you would comment it might be nice to have a "devil's advocate" around here.

A merge on this level could change the face of the industry and no one is debating it just talking about it.

They have muttled the rumors with facts and for all the screaming I have done about facts in the past I kinda miss the good ole days before them.

So if you have anything Dragonheart let's hear it. please!

Dragonheart8588 · #**790** Posted **Jan 15, 2008, 2:55 AM**

Quote:

Originally Posted by STrek777

Hey there you are I was wondering how long you were going to let me run rampant on this thread?!

Speaking of I wish you would comment it might be nice to have a "devil's advocate" around here.

A merge on this level could change the face of the industry and no one is debating it just talking about it.

They have muttled the rumors with facts and for all the screaming I have done about facts in the past I kinda miss the good ole days before them.

So if you have anything Dragonheart let's hear it. please!

As much as Delta have disappointed me in the past, I would prefer to have them stay headquarter and continue their business. I think it would hurt the economy of Georgia and the airport. However, I could careless for the Delta's ghetto(i.e. Peachtree City).

STrek777 · #**791** Posted **Jan 15, 2008, 5:14 PM**

Quote:

Originally Posted by Dragonheart8588

As much as Delta have disappointed me in the past, I would prefer to have them stay headquarter and continue their business. I think it would hurt the economy of Georgia and the airport. However, I could careless for the Delta's ghetto(i.e. Peachtree City).

Delta Aims for Swift Merger
With Northwest or United
By PAULO PRADA, SUSAN CAREY and DENNIS K. BERMAN
January 15, 2008; Page A8
Delta Air Lines Inc. has opened merger negotiations with both UAL Corp.'s United Airlines and Northwest Airlines Corp., and hopes to negotiate a merger agreement with one of the airlines over the next two weeks, according to people familiar with the situation.

Delta's board gave permission to Chief Executive Richard Anderson on Friday to begin simultaneous talks with both carriers, those people said. Either scenario would create the largest airline in the U.S.

Delta executives, who completed a round of preliminary discussions with United and Northwest before seeking board permission for formal talks, plan to move swiftly and present the preferred partner to Delta directors when they next meet in early February. A deal could be announced as early as mid-February, according to those people.

A spokeswoman for Atlanta-based Delta declined to comment.
Of the two other airlines, Northwest, based in Eagan, Minn., is considered the more likely of the two partners, according to people involved in the matter. Mr. Anderson is the former chief executive of Northwest and remains close to Douglas M. Steenland, his successor there. Tammy Lee, a spokeswoman for Northwest, declined to comment.

Also, a combination with Northwest, the fifth-largest U.S. airline by passenger traffic, is less likely to run afoul of regulators, who are certain to judge any merger for its impact on fares and competition. United is the second-largest airline by traffic, and Delta ranks third.

At the same time, UAL CEO Glenn F. Tilton has been among the most outspoken advocates for consolidation in the airline industry. Jean Medina, a United spokeswoman, declined to comment.

Many airline executives believe consolidation in the industry is necessary, especially in light of oil's rapid rise. They also believe merger talks must happen quickly because such deals are more likely to be approved by federal regulators under the current Republican administration, though completing a merger agreement in just two weeks is viewed as unrealistic by some industry analysts. Analysts predict that once one major merger occurs in the U.S., a wave of other tie-ups will quickly follow.

In addition to competitive hurdles, other issues that will be discussed include labor structures, route networks, and the broader airline alliances that already exist among major U.S. and foreign carriers.

Write to Paulo Prada at [email protected], Susan Carey at [email protected] and Dennis K. Berman at [email protected]

megalopolis · #**792** Posted **Jan 16, 2008, 3:42 PM**

Isakson: Atlanta would keep Delta HQ in any merger

The Atlanta Journal-Constitution
Published on: 01/15/08

Delta Air Lines' headquarters isn't going anywhere, even if Delta merges with another carrier.

That's what a U.S. senator says Delta's top executive has assured him amid swirling reports of merger negotiations with Northwest and United airlines.

Sen. Johnny Isakson (R-Ga.) said Tuesday that he talked with Delta CEO Richard Anderson after reports late last week that Anderson wanted the carrier's board to let him open formal merger talks with Northwest and United.

"He reiterated to me the commitment he made in my office shortly after he became CEO," Isakson said. "That is, if Delta does a deal, it will be Delta Air Lines headquartered in Atlanta that's the survivor."

Isakson's account of the conversation followed a fresh report Tuesday that Delta's board gave Anderson permission to move forward with talks. That report, which cited unidentified people familiar with the situation, appeared in The Wall Street Journal.

Northwest is based outside Minneapolis, while United is based in Chicago. A Delta merger with either raises the possibility that the surviving mega-airline â€” the world's largest â€” would be based somewhere other than Atlanta. That has raised majors concerns in Georgia, where Delta employs about 25,000 people, mostly in metro Atlanta. A substantial chunk are headquarters employees.

Isakson, who has been a key player in aviation issues in Congress, said he had a brief but cordial telephone chat with Anderson on Friday.

Isakson said it wasn't the first time he discussed the topic with Anderson, who has declined to comment publicly since the latest merger rumors surfaced.

The senator said that in September, shortly after Anderson was hired at Delta, they had a conversation about last year's battle to fend off a US Airways hostile takeover that would likely have moved the airline's headquarters to Arizona.

"I told him ... Richard, you've got to understand something. I didn't fight for the 91,000 retirees and employees at Delta for y'all to haul off and move to some other state.

"And he [Anderson] said: 'Just a minute. There are competitive pressures out there, and obviously Delta's going to be competitive. But anything I do will be predicated on Delta remaining Delta and remaining headquartered in Atlanta.' "

Isakson said he and Anderson did not discuss the specifics of any Delta board considerations in their chat Friday. Isakson said he could neither confirm nor deny the report of merger talks moving forward.

"Last Friday, when he called, he simply reiterated what he had said before [in September], without any caveats," Isakson said.

"We did not get into details."

Delta maintained its no-comment stance Tuesday.

"Our position continues to be that the board is actively looking at all the potential scenarios to make certain that Delta remains a leader in the industry," Delta spokesman Kent Landers said.

Delta shares rose 68 cents, or 4.4 percent, to $15.98 on Tuesday, bucking the market's broad decline.

Standard & Poor's, in a report, said if Delta reaches a deal, other airline mergers will follow.

"We believe it is likely that an announced merger agreement between Delta and either Northwest or United would trigger negotiations between the remaining airline and Continental Airlines," the debt rating agency said.

Landers noted that Delta's board last fall set up a committee to look at strategic alternatives and continues to "consider all options," which could include a merger, strategic alliances with other airlines or some other form of consolidation in the financially battered industry.

Delta's pilots union declined to comment Tuesday.

Some analysts believe Delta aims to present a preferred partner when its board next meets in early February, with a deal announcement coming as early as mid-February.

Some say Delta wants to complete any deal before the Bush administration leaves office.

Former Delta Chief Executive Gerald Grinstein said he has no knowledge about the reported merger negotiations.

Grinstein, reached at his Seattle home, said both regulatory and political factors could affect whether any deal is approved.

"Don't leave out Congress. While they may not have the power of approval, they can weigh in," Grinstein said.

He said the head of the House Transportation Committee, Rep. James Oberstar (D-Minn.), is skeptical of mergers. Northwest is based in the Oberstar's district, and he has indicated he'll work to maintain the airline's presence there.

"There are still a lot of potholes that could be in the way," Grinstein said.

Still, high fuel costs and a shaky economic outlook have put new financial pressure on big airlines, and a merger could enable them to cut costs and excess capacity.

United has been a vocal proponent of consolidation, and Northwest's CEO last week told workers the airline is open to the right deal.

While Delta under Grinstein fought off the takeover attempt by US Airways, its top execs have also said they are open to a deal on their terms.

Rajeev Dhawan, director of the Economic Forecasting Center at Georgia State University, said the headquarters issue is a major question for the cities and states involved.

"If the headquarters moves away, there will be a lot of job losses," he said. "You can't have two CEOs. You can't have two CFOs. You will definitely have to have some job losses."

Analysts say it would be easier for Delta to keep its name and Atlanta headquarters in a deal with Northwest, which is smaller than Delta. United, based in Chicago, is larger and arguably a better-known brand, so it might have more leverage in dictating the name and hometown.

But even if an agreement on a deal is reached, a merger would likely face an obstacle course of regulatory and political concerns. Closing any deal could take several months.

megalopolis · #**793** Posted **Jan 16, 2008, 3:47 PM**

Quote:

Originally Posted by STrek777

Oh how I have dreamed of a DL/CO marriage. This almost happened a while back but the CO got pushy and DL backed out.

Just curious, what makes a DL/CO merger better than a DL/UA or a DL/NW merger? The AJC article above states that many industry experts say there is no better match on paper than DL/UA.

Why do they say that Delta's fleet is a better match with United's versus Northwest's?

john3eblover · #**794** Posted **Jan 16, 2008, 4:25 PM**

Quote:

Originally Posted by megalopolis

Just curious, what makes a DL/CO merger better than a DL/UA or a DL/NW merger? The AJC article above states that many industry experts say there is no better match on paper than DL/UA.

Why do they say that Delta's fleet is a better match with United's versus Northwest's?

Well, Delta and United have similar aircraft in the 777, 767, 757, and 737. They have lots and lots of all of those. The only aircraft differences that they have are the large amount of A320/A319s and Delta's MD88s.

Northwest on the other hand has A330s, as well as A320/A319, and lots and lots of OLD DC-9s.

Both have a few 747s, but we can only hope that some day they make it into Delta colors!!!

So basically it looks like NW's fleet being slightly more airbus than UA's fleet is less comptable than NW's..to me anyway.

STrek777 · #**795** Posted **Jan 16, 2008, 9:25 PM**

Quote:

Originally Posted by john3eblover

Well, Delta and United have similar aircraft in the 777, 767, 757, and 737. They have lots and lots of all of those. The only aircraft differences that they have are the large amount of A320/A319s and Delta's MD88s.

Northwest on the other hand has A330s, as well as A320/A319, and lots and lots of OLD DC-9s.

Both have a few 747s, but we can only hope that some day they make it into Delta colors!!!

So basically it looks like NW's fleet being slightly more airbus than UA's fleet is less comptable than NW's..to me anyway.

I couldn’t have said it better myself. On paper UA is the best option but trying to buy out UA would be a very difficult. UA is still valued at about twice as much as DL. A proper analogy would be: DL buying UA would be as difficult as US trying to buy DL. The value of DL and NW dance around in the same sand box with NW leading the dance some and DL leading the dance some. DL buying NW would be an easier sell but nearly all of their fleet is incompatible with ours.

Now CO on the other hand has ALL of the same aircraft as we do, a similar work ethic, similar employee morale, similar business model, and similar rout structure. They have some 30 777s, quite a few 767s, 757s, and 737s. Their international to domestic is 60% - 40% respectively where DL is 40% - 60% respectively. Our CASM is better than theirs but their debt is lower than ours. The cost to buy them out would be more than NW but less than UA. The downside is that both CO and DL overlap on well over 50% of all routes flown. Think of Europe, Central America, South America, India, the Caribbean, and don't forget all the domestic routes. They have EWR we have JFK... they have CLE we have CVG. In reality only the hubs in ATL and IAH set us apart. Merging DL and CO would be the best fit but you would see a capacity drop of right at or just over 50%.

So here are the cliff notes:

DL / NW
- Easier purchase but only compatible with the 767, 757. Bonus second most 747s of any domestic carrier that could easily be refinanced into 777s and they have the second largest order of 787s on the way. They also have the second largest Trans-Pacific rout structure in the world.
- Major Hubs: JFK, ATL, DTW, LAX
- Right-sized Hubs: MSP, SLC

DL / UA
- Difficult purchase and compatible with the 777, 767, 757, 737. Bonus most 747s of any domestic carrier that could easily be refinanced into 777LRs or 787s. They have the largest Trans-Pacific rout structure in the world.
- Major Hubs: JFK, ATL, ORD, DEN, SFO
- Right-sized Hubs: IAD, SLC, LAX

DL / CO
- Easier to purchase than UA and compatible with the 777, 767, 757, 737, md-80, md-90. Bonus no 747s to deal with and has the largest domestic order for 787s. They are neck and neck with us in the Europe, Central America, South America, India, and the Caribbean. They have PEK and we have PVG. We are the leading USA carrier into Africa but they have a hub in GUM. Combining with CO would give us extraordinary pricing power in nearly every market.
- Major Hubs: JFK, ATL, CVG, IAH, SLC, LAX
- Right-sized Hubs: EWR

Any questions?

Fiorenza · #**796** Posted **Jan 16, 2008, 9:49 PM**

The Delta board gave permission to talk to NW and UA, but not CO?

Harry Cane · #**797** Posted **Jan 16, 2008, 10:05 PM**

DL only wanted to talk to UA and NW, not CO. One reason is DL is looking for Asia expansion and both those airlines would give them a turnkey operation. CO would not. UA would also give them west coast hubs, but would be more difficult to achieve for various reasons: labor issues, alliance issues, size issues (it does matter to the DOJ).

CO is not an option for another reason. NW holds a golden share of CO that gives it a say if it wants to merge with another airline.