In the USAToday blog Southwest CEO Gary Kelly reiterated my very sentiments...
"...Reuters quoted Kelly as saying on CNBC that Southwest "can't just stand still" as the industry undergoes a shakeup. "I don't think that means we have to look for a merger partner," Kelly added to CNBC, suggesting Southwest may be best served by doing nothing as its legacy rivals scramble to combine."
As is typically the case, Airline mergers turn into massive disasters with few exceptions. They're meant to benefit the investors and upper-management's wallets and egos. As the economy slides deeper into recession the mass confusion and disarray of a merger will do nothing but further deepen the financial troubles of Delta, Northwest, Continental, and United, there's no two ways about it.
Continental just posted a 1Q loss, American just posted a huge 1Q loss and all are citing fuel prices they're unable to keep pace with. It's only going to get worse. Continental especially would be much better served buckling down and fighting for survival as Gerald Arpey at American has claimed they'll be doing. The market will correct itself with Chapter 7s as have we've already seen without taking on the extra load of merging in a weak carrier for what will be nothing more than route networks. Routes, employees and equipment will be plentiful at a bargain for those who patiently wait out the economy. By then, the routes, employees and equipment may not be warranted or desired depending on the condition of the global economy. WHY risk plunging the company into BK just for the point of mass? They will NOT be stronger as a combined entity when the combining is taking place in this economy, that's a fallacy they're trying to sell the employees and the market. History has proven time and again the mergers culminate in there being nothing but losses-with rare exception-and often a complete disintegration of the weaker carrier's route network and employees when done in the confusion of a bad economy. Those that remain focused on their core operation benefit by snapping up the discarded routes of the merging entities.
Those that don't learn from history are doomed to repeat it. I think the two strongest carriers out there will benefit in the long run by systematically increasing market share in the wake of these undoubtedly disastrous mergers. Trying to pile mass on mass is going to make the rich richer and seriously degrade the financial viability of what remains.
I seriously think that Arpey, Kellner and Kelly stand to gain mightily by adjusting to the changing market, focusing on internal core operations, and merger-wise simply standing still and watching the carnival unfold around them. that at that point then being DL/NW and US/UA. This isn't an impending economic dip, it's an impending economic crash
[Edited 2008-04-17 09:53:15]