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Potential Of A CO/NW Merger?  
User currently offlineCIDflyer From United States of America, joined Apr 2005, 2281 posts, RR: 3
Posted (6 years 9 months 3 hours ago) and read 4387 times:

There was a brief in the Detroit Free Press today about the potential merger scenarios for Northwest, one being the obvious DL/NW hookup we have heard for so long, but the other one was about CO potentialy buying NW, which is the first time I have actually seen something about the two mentioned as possible merger partners in the press.

http://www.freep.com/apps/pbcs.dll/a...20071125/BUSINESS06/711250605/1019

Would a CO/NW merger be beneficial? The routes are complimentary, CO strong in the east, south, Europe and Latin America with NW strong in the midwest and Asia. Which name stays? MEM would probably be absorbed into IAH and CLE would probably go in favor of DTW. Let the speculating begin....

40 replies: All unread, showing first 25:
 
User currently offlineATCT From United States of America, joined Mar 2001, 2283 posts, RR: 38
Reply 1, posted (6 years 9 months 2 hours ago) and read 4347 times:

Not gonna happen.

-ATCT



"The way to get started is to quit talking and begin doing." - Walt Disney
User currently offlineJetdeltamsy From United States of America, joined Nov 2000, 2987 posts, RR: 8
Reply 2, posted (6 years 9 months 2 hours ago) and read 4341 times:



Quoting ATCT (Reply 1):
Not gonna happen.

Based on what?

I think there is tremendous potential for NW/CO merger.

I don't know how it would play out regarding which would be the controlling entity, as NW owns a chunk of CO.

But they have been sharing information about each others operations for years. I think this is definitely a possibility.



Tired of airline bankruptcies....EA/PA/TW and finally DL.
User currently offlineSTT757 From United States of America, joined Mar 2000, 16856 posts, RR: 51
Reply 3, posted (6 years 9 months 2 hours ago) and read 4345 times:



Quoting CIDflyer (Thread starter):
Which name stays?

CO, as if there were any question.



Eastern Air lines flt # 701, EWR-MCO Boeing 757
User currently offlineSTT757 From United States of America, joined Mar 2000, 16856 posts, RR: 51
Reply 4, posted (6 years 9 months 2 hours ago) and read 4342 times:

Quoting Jetdeltamsy (Reply 2):
I don't know how it would play out regarding which would be the controlling entity, as NW owns a chunk of CO.

NWA does not own any piece of CO, they did at onepoint about 8-9 years ago but CO but all of NWA's shares back. NWA does own one single voting share known as the "Golden Share" which they can use to block takeover of CO.

CO bought NWA's shares back in January 2001.

http://www.continental.com/web/en-US...ny/news/release/2001-01-22-02.html

http://www.continental.com/web/en-US...ny/news/release/2001-01-22-01.html

[Edited 2007-11-25 18:25:11]


Eastern Air lines flt # 701, EWR-MCO Boeing 757
User currently offlineToxtethogrady From United States of America, joined Dec 2000, 1275 posts, RR: 0
Reply 5, posted (6 years 9 months 2 hours ago) and read 4299 times:



Quoting Jetdeltamsy (Reply 2):
Based on what?

I think there is tremendous potential for NW/CO merger.

If they had similar fleets and compatible employee groups, maybe, but these are two ethnically different carriers united by a common alliance grouping. It would be a tough fit.


User currently offlineJetdeltamsy From United States of America, joined Nov 2000, 2987 posts, RR: 8
Reply 6, posted (6 years 9 months 2 hours ago) and read 4295 times:



Quoting STT757 (Reply 4):
NWA does own one single voting share known as the "Golden Share" which they can use to block takeover of CO.

'

That's what i'm talking about.

Does this "golden share," as you put it, give them any status in a proposed merger? Or is it only good for blocking mergers? And with any carrier? Or just any besides NWA?



Tired of airline bankruptcies....EA/PA/TW and finally DL.
User currently offlineATCT From United States of America, joined Mar 2001, 2283 posts, RR: 38
Reply 7, posted (6 years 9 months 2 hours ago) and read 4295 times:

The companies have complete different corporate structures, fleet systems, labor relations, and heck even quality of service. (I know that can be debated...but Northwest isnt exactly screaming quality in the things they do)

ATCT



"The way to get started is to quit talking and begin doing." - Walt Disney
User currently offlineToxtethogrady From United States of America, joined Dec 2000, 1275 posts, RR: 0
Reply 8, posted (6 years 9 months 2 hours ago) and read 4283 times:



Quoting Jetdeltamsy (Reply 6):
Does this "golden share," as you put it, give them any status in a proposed merger? Or is it only good for blocking mergers?

It gives NW leverage, but CAL is by far the stronger carrier.


User currently offlineDL767captain From United States of America, joined Mar 2007, 2539 posts, RR: 0
Reply 9, posted (6 years 9 months 2 hours ago) and read 4278 times:

It could work. The golden share thing could play a big role and make it easier. Their fleets are a problem though, i'm sure if continental was the buyer the boeing fleet would be the leader while the airbus fleet would be slowly fazed out. CO would probably get rid of the DC-9s (i know everyone will kill me for this) not all at once but gradually since CO seems to like newer more efficient planes. NW A320s (the newer ones) could replace the oldest 737s and maybe retire the oldest ones by selling them and make some money. 757s both variants would compliment CO's along with the 787, but they have chosen different engine manufacturers although delivery isnt for a while maybe they can change manufacturers. A330s would compliment Europe routes and the 777s could move to other asia routes that need more capacity. 747-400 would stay for asia routes, might even move to the 747-8 for added capacity and commonality with the 787. I do not know however the engine manufacturers favored by both airlines so that could be a problem.

NW gets europe flights and CO gets the asia flights. i think their hubs work together with few overlaps. CO would also get the KLM friendship. But the fleet difference could hurt things.

If this happened then DL and UA would definitely have to merge, their fleets make things better and UA would get a south east hub (ATL) like they wanted and DL would get asia routes. Fleet commonality is much better with only A320s to deal with.

It would be very interesting to see an A330 in CO colors though


User currently offlineLASOctoberB6 From Japan, joined Nov 2006, 2380 posts, RR: 1
Reply 10, posted (6 years 9 months 2 hours ago) and read 4268 times:



Quoting STT757 (Reply 4):
NWA does own one single voting share known as the "Golden Share" which they can use to block takeover of CO.

Could you better explain that to me? I've never understood this "Golden Share" NW stuff...



[NOT IN SERVICE] {WEStJet}
User currently offlineJetdeltamsy From United States of America, joined Nov 2000, 2987 posts, RR: 8
Reply 11, posted (6 years 9 months 2 hours ago) and read 4248 times:



Quoting LASOctoberB6 (Reply 10):
Could you better explain that to me? I've never understood this "Golden Share" NW stuff...

Me too. I've known of the arrangement for years but don't really understand it.

Someone who KNOWS, please explain.



Tired of airline bankruptcies....EA/PA/TW and finally DL.
User currently offlineJetBlueGuy2006 From United States of America, joined Jan 2006, 1656 posts, RR: 1
Reply 12, posted (6 years 9 months 1 hour ago) and read 4163 times:

Here is a little bit of info on the Golden Share:

Quote:
Northwest's golden share is a special voting series of Continental preferred stock it owns in connection with its marketing alliance with Continental, which runs through 2025. Northwest could use those shares to block a merger of Continental with another major airline -- if the combination required a vote by Continental shareholders. Even with the golden share in place, however, Continental could buy another airline without interference from Northwest if that transaction didn't require Continental shareholders' approval.

http://blogs.usatoday.com/sky/2006/12/what_theyre_say.html



Home Airport: Capital Region International Airport (KLAN)
User currently offlineAvek00 From United States of America, joined Oct 2004, 4368 posts, RR: 19
Reply 13, posted (6 years 9 months 1 hour ago) and read 4082 times:

Virtually all the synergies of a merger have already been realized through the existing alliance with none of the downside associated with a merger. So what's the point of a merger except as a last-ditch competitive response?


Live life to the fullest.
User currently offlineSuper80DFW From United States of America, joined Oct 2007, 1692 posts, RR: 11
Reply 14, posted (6 years 9 months ago) and read 4040 times:

I would much rather see a CO/UA merger.


"Things change, friends leave, life doesn't stop for anybody." -- EAT'EM UP EAT'EM UP KSU!!
User currently offlineAA737-823 From United States of America, joined Mar 2000, 5766 posts, RR: 11
Reply 15, posted (6 years 9 months ago) and read 3965 times:



Quoting DL767captain (Reply 9):
I do not know however the engine manufacturers favored by both airlines so that could be a problem.

Northwest, by far, prefers Pratts:
747- PW4000 and JT9
757- PW2000
A330- PW4000

While Conti prefers GE, due to GE contributing heavily to their cause in the last bankruptcy:

737, 767, 777 ALL GE powered birds.
The only aircraft in the fleet that aren't GE powered are the 757s, obviously.

But, on the other hand, Conti's 737s and Northwest's A32X are all CFM powered, and that's a lot of aircraft.

Anyhoo, back to the point... there's not a lot of fleet commonality between these carriers... at all...


I am in favor of Continental doing anything to strengthen itself SO LONG AS they keep the Continental name, management, and product.
Which is very difficult in a merger.


User currently offlineJetdeltamsy From United States of America, joined Nov 2000, 2987 posts, RR: 8
Reply 16, posted (6 years 8 months 4 weeks 1 day 23 hours ago) and read 3895 times:



Quoting Avek00 (Reply 13):
Virtually all the synergies of a merger have already been realized through the existing alliance with none of the downside associated with a merger.

Oh; No way.

Two separate corporate structures including two sets of executive officers, two sets of reservations systems, two sets of accounting departments, two sets of sales departments...two of virtually everything.

Synergies of a marketing alliance are NOTHING like a full-on merger (in the case of NW and CO).



Tired of airline bankruptcies....EA/PA/TW and finally DL.
User currently offlineJEdward From United States of America, joined Nov 2005, 133 posts, RR: 0
Reply 17, posted (6 years 8 months 4 weeks 1 day 23 hours ago) and read 3858 times:



Quoting Jetdeltamsy (Reply 16):
Two separate corporate structures including two sets of executive officers, two sets of reservations systems, two sets of accounting departments, two sets of sales departments...two of virtually everything.

Synergies of a marketing alliance are NOTHING like a full-on merger (in the case of NW and CO).

*raises eyebrow*

Within this is the assumption overlapping departments can be integrated into each other in a productive (ha!), calm (haha!) way that won't eat up a good portion of the so called 'synergies' (hahahahaha!) and result in a net negative.

...to say nothing of what integrating the other workforce (pilots, FA's, etc.) would due to the bottom line.

You also seem to dismiss the fact that codeshring at its peak form implies price collusion as anti-trust immunity is granted to the various parties to essentially collude.

I'm with Avek00 on this one; unless absolutely critical I doubt the proclaimed savings from a merger do not justify the pain such an action would cause...especially when the majority benefits of a merger can be realized through codesharing.



As Christ died to make men holy, let men die to make us rich. --S.C.
User currently onlineMasseyBrown From United States of America, joined Dec 2002, 5401 posts, RR: 7
Reply 18, posted (6 years 8 months 4 weeks 1 day 22 hours ago) and read 3835 times:

Can't see NW and CO merging. NW and B6, however, is an interesting match.


I love long German words like 'Freundschaftsbezeigungen'.
User currently offlineCoewraatysaz From United States of America, joined Jun 2006, 196 posts, RR: 0
Reply 19, posted (6 years 8 months 4 weeks 1 day 20 hours ago) and read 3743 times:



Quoting Toxtethogrady (Reply 5):
If they had similar fleets and compatible employee groups, maybe, but these are two ethnically different carriers united by a common alliance grouping. It would be a tough fit.

Which is essentially the same situation in a CO/UA merger? Except so many ppl seem to think we are the best possible combo.



Continental Airlines: Trabajar con empe�?��?�±o, Volar con Pasi�?��?�³n
User currently offlineJetjack74 From United States of America, joined Jul 2003, 7407 posts, RR: 50
Reply 20, posted (6 years 8 months 4 weeks 1 day 11 hours ago) and read 3569 times:
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Quoting AA737-823 (Reply 15):
Northwest, by far, prefers Pratts:
747- PW4000 and JT9
757- PW2000
A330- PW4000

Our 787 aircraft will be RR-powered. In the future of outsourcing, fleet commonality is of little relevance. In about 5-10 years, it won't matter what the commonality would be in fleets except for purposes of cabin crewtraining which can be done in a year.



Made from jets!
User currently offlineBobnwa From United States of America, joined Dec 2000, 6464 posts, RR: 9
Reply 21, posted (6 years 8 months 4 weeks 1 day 10 hours ago) and read 3501 times:



Quoting Toxtethogrady (Reply 8):
It gives NW leverage, but CAL is by far the stronger carrier.

I would agree that CO has better customer service and is running a good airline, but in what regard is it stronger. Its route system, and financial structure are less or at best equal to Northwest. Not sure that he financial community who would have to support such a merger would agree with you.


User currently onlineMasseyBrown From United States of America, joined Dec 2002, 5401 posts, RR: 7
Reply 22, posted (6 years 8 months 4 weeks 1 day 9 hours ago) and read 3418 times:



Quoting Bobnwa (Reply 21):
in what regard is it stronger.

I think CO is still the stronger financially based on balance sheets and structurally based on their growth rate; but, if NW can maintain their terrific 3rd quarter earnings, they'll be able to reduce their debt burden quickly. Then it will be a contest.

A real weakness of NW is their route structure; it lacks strength on either coast - where the higher margin business is. They really need to bulk up on one or both coasts. I'd say NW needs to acquire somebody - and Midwest certainly isn't the one. They need US, JetBlue or Alaska. CO would be too expensive, too big a bite, and too big a risk of customer attrition (not that US would be easy).



I love long German words like 'Freundschaftsbezeigungen'.
User currently offlineDeltaL1011man From United States of America, joined Sep 2005, 9310 posts, RR: 14
Reply 23, posted (6 years 8 months 4 weeks 1 day 8 hours ago) and read 3394 times:



Quoting DL767captain (Reply 9):
If this happened then DL and UA would definitely have to merge, their fleets make things better and UA would get a south east hub (ATL) like they wanted and DL would get asia routes. Fleet commonality is much better with only A320s to deal with.

1) if it happens u need to change your name (UA767cap.)
2) the state of GA would keep it in the courts tell the new press in 09
3) why do they have to merge with UA? they could just buy AS and get the SEA and LAX hubs then go to Asia by them self's
4) fleet commonality means pretty much nothing in these types of mergers

i still think it will be DL/NW(SkyTeam) and UA/CO(Star) then AA will just pick up some stored A/C from the to airlines and grow off of that and some old TW routes they have.



yep.
User currently offlineAvek00 From United States of America, joined Oct 2004, 4368 posts, RR: 19
Reply 24, posted (6 years 8 months 4 weeks 1 day 8 hours ago) and read 3376 times:



Quoting Jetdeltamsy (Reply 16):
Synergies of a marketing alliance are NOTHING like a full-on merger (in the case of NW and CO).

Conversely, the costs of a full-on merger are nothing like those of a marketing alliance either.



Live life to the fullest.
25 Bobnwa : I believe CO has more debt than NWA, but I could be wrong.
26 EXAAUADL : NW/CO makes the most sense, but it probably would have happened by now
27 DocLightning : Not really. Fleet incompatibility has never been a major problem in the past. From an ops point of view, a merger doesn't change much. A320's would s
28 KarlB737 : Wasn't this tossed around a few years ago and went no where in the end?
29 DL767captain : that would be an option but a combined NW/CO would be massive and a threat unless they joined UA who already has an extensive and strong asia network
30 Coewraatysaz : I think our color scheme is that of a very professional one.
31 WorldTraveler : so what is so different between DL and CO on these same characteristics? NW is just as much of a stretch for DL as it is for CO. The real question wi
32 DeltaL1011man : i don't think its the airlines so much as the stupid hedge funds........just remember when US came after DL who did DL start to have talks with(hint
33 MasseyBrown : In billions Current Liabilities CO $4,435 NW $4,139 Long debt/leases CO $4,651 NW $6,437 NW also has pension and health obligations of $3.4 billion,
34 Bobnwa : Thanks for the figures.
35 WorldTraveler : true but it is those hedge funds that have the ability to shape a company's future. It takes a very smart management team to be able to convince inve
36 Post contains images Isitsafenow : In U.S.business history, most companies involved in mergers, do not scream quality in the things they do. That's one reason why they are involved in
37 2travel2know : If NW is so weak in the East-coast, shouldn't they put more attention to BDL and really make it into a good focus city?, I'm saying this specially aft
38 Avek00 : To answer the question in the thread title, the answer is that there is little potential to a CO/NW merger that: (a) has not already been realized by
39 ATCT : Touche! ATCT
40 Post contains images MasseyBrown : I don't think BDL is big enough to make a difference. I'm intrigued by the idea of NW acquiring B6 and becoming a factor in the NY market. The idea o
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