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'Inevitable Mergers'  
User currently offlineMax Q From United States of America, joined May 2001, 4375 posts, RR: 19
Posted (8 years 10 months 1 day 3 hours ago) and read 5100 times:

With many taking the position that Airline consolidation is inevitable, in light of the rumored Delta/Northwest merger, I wonder why Alaska and to a lesser extent Hawaiian airlines have not been put into play.

Alaska has had it's problems, but has a strong franchise and Hawaiian seems to be doing quite well considering, they also both have young and soon to be younger fleets.

Bearing in mind that both of these are 'full service arlines' with predominantly Boeing products, I would have thought they would be ideal merger partners in a three way Continental / Alaska / Hawaiian deal with Continental as the surviving carrier.

Fleet commonality would be good with all of th NG'S destined for Alaska and the 763's with Ha would be mostly common with Cals (even a similar 777 style interior)

The only oddball being the 717 which in which market it is uniquely suited anyway.

Alaska would bring strength, full service and feed on the west coast which is not Cal's greatest strength and a common fleet.

Hawaiian would serve to beef up Cal's Island service and expand to further Pacific destinations, once again, with full service and a modern, common fleet.

If consolidation is inevitable and Cal needs more 'critical mass' I think this coud work very well.

Thought's opinions?


The best contribution to safety is a competent Pilot.
34 replies: All unread, showing first 25:
 
User currently offlineN908AW From United States of America, joined Aug 2005, 922 posts, RR: 1
Reply 1, posted (8 years 10 months 1 day 1 hour ago) and read 4929 times:

I have an idea. Let's combine AS/HA/CO/DL/FL/YX/G4/SY/Pace/WN and form one All-Boeing airline. Then, let's combine NW/UA/US/B6/F9/DH/Spirit/USA3000, forming one All-Airbus airline. If that doesn't work, let's go even further and combine those two!  sarcastic 

Remember, the problem is temporarily high fuel prices and ornery unions, along with arrogant management. The brunt of these problems do not disappear after merging. When a capitalist system works properly, the consumer is the winner. Note that the airlines who are honoring that idea are the ones actually making money.



'Cause you're on ATA again, and on ATA, you're on vacation!
User currently offlineMarshalN From Hong Kong, joined Sep 2005, 1521 posts, RR: 0
Reply 2, posted (8 years 10 months 1 day 1 hour ago) and read 4903 times:

Quoting N908AW (Reply 1):
Remember, the problem is temporarily high fuel prices and ornery unions, along with arrogant management. The brunt of these problems do not disappear after merging. When a capitalist system works properly, the consumer is the winner. Note that the airlines who are honoring that idea are the ones actually making money.

N098AW, I am afraid the high fuel prices are here to stay. This is not the same type of price shock that we suffered in the 70s, when it was mostly a supply shock. A lot of the prices these days are driven by increased demand. Sure, there is the higher prices shock from things like Katrina, but those are generally short term shocks that will adjust quickly. $60 barrels though is probably here to stay for the forseeable future. Given that, I think there needs to be structural adjustments in the airline industry to fix the problem.


User currently offlinePhilSquares From , joined Dec 1969, posts, RR:
Reply 3, posted (8 years 10 months 1 day ago) and read 4883 times:

Quoting N908AW (Reply 1):
Remember, the problem is temporarily high fuel prices and ornery unions, along with arrogant management

Not quite true. One of the biggest problems in the US airline industry is overcapacity. This is exacerbated by the fact that leasing companies have gone to great length to keep carriers operating when perhaps the carriers should have been allowed to fail.

The leasing companies can't run the risk of having a flood of aircraft onto the leasing market. They'd rather have a lower return instead of having the aircraft parked.

One of the legacy carriers could indeed disappear and the US airline industry would keep on going without missing a beat. But, then the leasing companies are on the hook.

Airline management hasn't helped. The simple fact is if you look at the legacy carriers, you will find a business model that is simply out of touch with reality. The overhead at the legacy carriers is simply killing them. If you compare SWA with the legacy carriers, you'll find that revenue/employee is almost 4 times what the legacy carriers are generating.

Unions, they haven't helped the situation, but labor costs aren't the major issue. Look at the SWA pilot's pay, it's the highest among the US passenger airlines. The real issue is productivity. That's the issue the unions need to address.


User currently offlineDLKAPA From , joined Dec 1969, posts, RR:
Reply 4, posted (8 years 10 months 1 day ago) and read 4827 times:

Quoting PhilSquares (Reply 3):

Not quite true. One of the biggest problems in the US airline industry is overcapacity.

I disagree. Some markets maybe, but overall the capacity issue really isn't a big one. UA, DL, NW, AA, and CO have all managed operational profits in the last 2 quarters, AA and CO even making net profits. If the problem is in overcapacity, common sense would dictate that less than half the seats flying are filled, and in order for airlines to be making even an operating profit, fares would be in the 1 grand range for even the domestic hops. That's just not the case. The problem isn't even high fuel costs, but rather UNSTABLE fuel costs. Once the price of fuel stabilizes, airlines can manage their business plan around the cost of fuel and even with high fuel cost they can reorganize themselves into money making units. Right now with fuel very unpredictable, it's anybody's ballgame. Oh and I don't expect WN to be in the black for very long, they've hedged their fuel at $40 a barrel prices and structured their business plan around that. When the hedge runs out and they're paying $80 a barrel on a business plan that only works at $40, they're gonna hurt.


User currently offlineJetdeltamsy From United States of America, joined Nov 2000, 2987 posts, RR: 8
Reply 5, posted (8 years 10 months 1 day ago) and read 4792 times:

Quoting Max Q (Thread starter):
I wonder why Alaska and to a lesser extent Hawaiian airlines have not been put into play.

Alaska still has a significant market cap of about $800 million, making it a very expensive airline to acquire at this time. United, USAir or Delta could probably be acquired for the same or even less money.

Quoting Max Q (Thread starter):
Bearing in mind that both of these are 'full service airlines'

Alaska is as much a vendor airline (flying codeshare for nearly everybody, like Comair, ASA, Mesaba, Pinnacle, AirWis, etc...) as it is a stand-alone full-service airline. Much of their traffic comes through these code-shares.



Tired of airline bankruptcies....EA/PA/TW and finally DL.
User currently offlinePhilSquares From , joined Dec 1969, posts, RR:
Reply 6, posted (8 years 10 months 22 hours ago) and read 4711 times:

Quoting DLKAPA (Reply 4):
If the problem is in overcapacity, common sense would dictate that less than half the seats flying are filled, and in order for airlines to be making even an operating profit, fares would be in the 1 grand range for even the domestic hops.

Again, load factors are not an indication of profitability. What is happening now is you have airlines selling their product below cost to maintain or gain market share. That can't continue.

Remember the demand curve for air travel, especially in the US is very elastic. A small change in price has a large impact on demand.

Quoting DLKAPA (Reply 4):
UA, DL, NW, AA, and CO have all managed operational profits in the last 2 quarters,

I do know AA and CO had some operational profits, but none of the others have. CO has warned about substantially larger losses than anticipated and AA is coming back to all the employees for more cuts.

The basic issue is the carriers want to maintain market share and are willing to sell their product below cost. If there was a reduction in capacity and the seats were off the market on a permanent basis, you would see a rise in RASM and a decrease in passenger travel. There has to be, as some point, a rationalization of the US domestic market.


User currently offlineNonRevKing From , joined Dec 1969, posts, RR:
Reply 7, posted (8 years 10 months 22 hours ago) and read 4645 times:

Quoting Max Q (Thread starter):
in light of the rumored Delta/Northwest merger

That's not happening, end of story, stop talking about it.

B


User currently offlineMax Q From United States of America, joined May 2001, 4375 posts, RR: 19
Reply 8, posted (8 years 10 months 21 hours ago) and read 4582 times:

I would never say never to anything in this business, anything is possible and has proven so in the past.


The best contribution to safety is a competent Pilot.
User currently offlineFlydl2atl From United States of America, joined Aug 2005, 119 posts, RR: 0
Reply 9, posted (8 years 10 months 21 hours ago) and read 4576 times:

I don't think overcapacity is the issue per se. If there is 1 issue that is causing the carriers to lose money, it's not fuel...not overhead but rather the inability to raise fares. UPS and FED-EX aren't losing money...they have been able to pass on fuel costs to the consumer. Airlines have not been able to do that. The LCC's are using their competitive structures to keep prices artifically low. Their business plan is to charge low fares until some of the legacies go out of business (which is funny because that's never going to happen). Not only that, but they are adding planes to their fleets which will further keep prices down. Despite the fuel costs, AirTran, JetBlue, and SouthWest have opted to NOT raise fares (well ok SW by $2). This would be ok if they were making tons of money, but their current business models are barely viable (as evidenced by their poor credit ratings...with somewhat of an exception for SW). In a nutshell, the current state of the airline industry is a direct result of the presence of LCC's.

User currently offlineNonRevKing From , joined Dec 1969, posts, RR:
Reply 10, posted (8 years 10 months 21 hours ago) and read 4570 times:

Quoting Max Q (Reply 8):
I would never say never to anything in this business, anything is possible and has proven so in the past.

Ok, rumor has it Jetblue will be getting DC10's. Will they use them for their rumored BOI-PEK service?  Wink

B


User currently offlineMariner From New Zealand, joined Nov 2001, 25008 posts, RR: 85
Reply 11, posted (8 years 10 months 21 hours ago) and read 4561 times:
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Quoting N908AW (Reply 1):
the problem is temporarily high fuel prices and ornery unions

Which "ornery unions" did you have in mind?

To date, with one exception, the unions have taken it all up the butt - loss of pensions, cuts in pay, loss of jobs - without any lube. They may have yelled and screamed, but in the end, they did nothing.

The one exception was AMFA at Northwest, the only one with the balls to go on strike.

So how are all these "ornery unions" a problem?

mriner



aeternum nauta
User currently offlineAA777223ER From United States of America, joined Feb 2004, 220 posts, RR: 2
Reply 12, posted (8 years 10 months 21 hours ago) and read 4509 times:

Quoting PhilSquares (Reply 6):
AA is coming back to all the employees for more cuts.

What is your source for this statement? I work at AA, and as of today, no one has asked me for another pay cut.

Regards,

AA777223ER



time flies, seize the day
User currently offlineN328KF From United States of America, joined May 2004, 6483 posts, RR: 3
Reply 13, posted (8 years 10 months 20 hours ago) and read 4445 times:

F9 and B6...that one is inevitable.


When they call the roll in the Senate, the Senators do not know whether to answer 'Present' or 'Not guilty.' T.Roosevelt
User currently offlineNonRevKing From , joined Dec 1969, posts, RR:
Reply 14, posted (8 years 10 months 20 hours ago) and read 4443 times:

Quoting N328KF (Reply 13):
F9 and B6...that one is inevitable.

Oh of course! They both have direct TV!  Wink

B


User currently offlineFCYTravis From United States of America, joined Sep 2005, 1191 posts, RR: 6
Reply 15, posted (8 years 10 months 20 hours ago) and read 4387 times:

But what about the much-ballyhooed "Mad Dog Merger" of AA, DL, NW and Spirit?

For fleet commonality and simplification reasons, the merged airline planes to get rid of all aircraft except the DC-9 series, DC-9-10 through DC-9-83.

For international flights, they will retrofit some of AA's Super 80s with wing drop tanks and a cargo-belly tank. Carry-on luggage only to LHRBig grin



USAir A321 service now departing for SFO with fuel stops in CAK, COS and RNO. Enjoy your flight.
User currently offlineDb373 From United States of America, joined Sep 2005, 237 posts, RR: 1
Reply 16, posted (8 years 10 months 19 hours ago) and read 4354 times:

Quoting PhilSquares (Reply 3):
Airline management hasn't helped. The simple fact is if you look at the legacy carriers, you will find a business model that is simply out of touch with reality. The overhead at the legacy carriers is simply killing them. If you compare SWA with the legacy carriers, you'll find that revenue/employee is almost 4 times what the legacy carriers are generating.

So then why are the legacy carriers catching hell when they have to cut pay and employee benefits to meet the standard that LCC have created?



Keep Delta My Delta
User currently offlineODwyerPW From Mexico, joined Dec 2004, 840 posts, RR: 2
Reply 17, posted (8 years 10 months 19 hours ago) and read 4339 times:

JetBlue and Frontier would be complimentary wouldn't it?

However, both are stong airlines and don't need to merge to compete in a game of last man standing.



Quiero una vida simple en Mexico. Nada mas.
User currently offlineN908AW From United States of America, joined Aug 2005, 922 posts, RR: 1
Reply 18, posted (8 years 10 months 19 hours ago) and read 4327 times:

Quoting Mariner (Reply 11):

Which "ornery unions" did you have in mind?

To date, with one exception, the unions have taken it all up the butt - loss of pensions, cuts in pay, loss of jobs - without any lube. They may have yelled and screamed, but in the end, they did nothing.

The one exception was AMFA at Northwest, the only one with the balls to go on strike.

So how are all these "ornery unions" a problem?

I understand the 'taking the butt' idea, but unfortunately there is not many other options for cutting costs to offset fuel right now.
Cutting cities=systemwide load factor decreases usually, thereby keeping costs relative
Cutting planes=less flights to be done, generally lower yields, less cities (see above)
Cutting jobs for good=less personnel availabe, have to cut planes (see above)
Cutting fuel=it's too late for that.



'Cause you're on ATA again, and on ATA, you're on vacation!
User currently offlineStirling From Italy, joined Jun 2004, 3943 posts, RR: 21
Reply 19, posted (8 years 10 months 19 hours ago) and read 4327 times:

Quoting N908AW (Reply 1):
I have an idea. Let's combine AS/HA/CO/DL/FL/YX/G4/SY/Pace/WN and form one All-Boeing airline. Then, let's combine NW/UA/US/B6/F9/DH/Spirit/USA3000, forming one All-Airbus airline. If that doesn't work, let's go even further and combine those two!

I have nothing of substance to add, except; THAT IS HELLA FUNNY!

As you were....



Delete this User
User currently offlineMariner From New Zealand, joined Nov 2001, 25008 posts, RR: 85
Reply 20, posted (8 years 10 months 19 hours ago) and read 4302 times:
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Quoting N908AW (Reply 18):
I understand the 'taking the butt' idea

That's not quite it. You said that "ornery unions" wree a major probloem (together with fuel).

The unions have protested, but they have accepted. So - how are they a problem?

cheers

mariner



aeternum nauta
User currently offlineDLKAPA From , joined Dec 1969, posts, RR:
Reply 21, posted (8 years 10 months 19 hours ago) and read 4280 times:

Quoting N908AW (Reply 18):
Cutting planes=less flights to be done, generally lower yields, less cities (see above)

Or, if they were smart, cutting planes and keeping cities would bring a/c utilization up.


User currently offlineYanksn4 From United States of America, joined Dec 2003, 1404 posts, RR: 12
Reply 22, posted (8 years 10 months 19 hours ago) and read 4274 times:

Quoting Max Q (Thread starter):
Fleet commonality would be good with all of th NG'S destined for Alaska and the 763's with Ha would be mostly common with Cals (even a similar 777 style interior)

I think what Max Q has suggested is not a bad plan at all. Continental and Alaskan make tons of sense from the outside and could maybe work. I don't see the need for Hawiian to get in on it. I believe they could just wait for Hawiian to die out to get those 767's. Anyway, just my thought.

signed,
Matthew



2013 Airports: EWR, JFK, LGA, LIS, AGP, DEN, GIG, RGN, BKK, LHR, FRA, LAX, SYD, PER, MEL, MCO, MIA, PEK, IAH
User currently offlineWdleiser From United States of America, joined Apr 2004, 961 posts, RR: 4
Reply 23, posted (8 years 10 months 18 hours ago) and read 4061 times:

We need to build more refineries but we can thank tree huggeres for that part. I am sorry but it is true.

User currently offlineAlphascan From United States of America, joined Nov 2003, 937 posts, RR: 13
Reply 24, posted (8 years 10 months 18 hours ago) and read 4044 times:

Quoting N328KF (Reply 13):
F9 and B6...that one is inevitable.

Except for the fact that both carriers' CEOs have publicly sworn off growth by merger - for the exact same reasons by the way- and both CEOs seem to have the full confidence of their respective Board of Directors.

Don't hold your breath for either of them to merge with anyone.



"To he who only has a hammer in his toolbelt, every problem looks like a nail."
25 FCYTravis : More refineries won't change the fact that our supply of crude oil is limited by natural factors - not the least of which is that a bunch of our oil a
26 DLKAPA : Will you get off it? Back in the wayback oil capacity was fine, so more refineries weren't needed. Ok now they are, build the things if it'll make yo
27 PhilSquares : It's all about productivity. Do you consider SWA a LCC? If so, take a look at their pilot and mechanic pay. It's not low cost. However, their key is
28 Boeing767mech : I also work for American and I have heard rumours that the VP of Maint. is having a meeting with the union in ORD and on of the things on the table i
29 AwysBSB : It is completely fool the idea of DL/NW merger. If each one is incapable to overcome its situation alone, there are better merger options like Delta/
30 Baexecutive : In light of recent consolidation throughout the continent I would say a BA tie up is inevitable. Possible candidates; Iberia, SN, Olympic???
31 Post contains images USADreamliner : Combine DL-AS-CO and name it Pan American Airways Combine AA-UA-NW and name it Eastern Airlines And the cycle of life begings again... USADreamliner.
32 Ouboy79 : Actually one of the news magazines did a story on this. Something where our oil demand right now is like 71 billion barrells, but our refining capaci
33 Rampart : You can thank several presidents, notably Richard Nixon, who supported laws to save your health and protect the environment. Yes, we need more refine
34 Fewsolarge : Would you really like to live in a world where the interests of the few and powerful run unchecked? Vive la balance!
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