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Could An AA/ DL Merger Ever Be Approved?  
User currently offlineaa1818 From Trinidad and Tobago, joined Feb 2006, 3437 posts, RR: 4
Posted (3 years 1 month 2 weeks 2 days 17 hours ago) and read 13346 times:

I am sort of thinking out loud here, and I am sure this has been discusses before, but I figured that things are slightly different now.

UA/ CO are number 1 in the US.
Southwest is very large and growing; having just acquired AirTran.
AA is rumored to be on the brink of bankruptcy.

The one market where an AA/ DL combination could have too much overlap would be in New York. But slot divestment could help them get over that hurdle. Either way, with CO/UA being so dominant at EWR, and the competition from International Airlines as well as JetBlue at JFK, it may not be such an issue for AA/DL.

DL's hubs- JFK, ATL, CVG, DTW, MEM, SLC and AA's hubs- MIA, JFK, LAX, DFW, ORD could make for an excellent combination.

I know AA's Labor issues and costs etc will play a big hindering role...however, I would envisage the following scenario.

AA enters Ch.11, slashes labor costs, cuts unprofitable routes, cuts its fleet, and upon re-emergence from Ch.11, DL snaps them up (perhaps even when they are still in Ch.11).

Is it possible? Would DL be interested in beefing up LAX, greater access at JFK, a hub in MIA, and a true Southern hub in DFW (where DL was once strong) for the right price?!.

Just thinking out loud, so please don't be too harsh!

AA1818


“The moment you doubt whether you can fly, you cease for ever to be able to do it.” J.M. Barrie (Peter Pan)
62 replies: All unread, showing first 25:
 
User currently offlineteme82 From Finland, joined Mar 2007, 1636 posts, RR: 0
Reply 1, posted (3 years 1 month 2 weeks 2 days 16 hours ago) and read 13346 times:
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I bet that the merger between AA and DL would not be possible at all. The regulators does not want this type of merger.


Flying high and low
User currently offlineORDBOSEWR From United States of America, joined Jun 2011, 471 posts, RR: 0
Reply 2, posted (3 years 1 month 2 weeks 2 days 16 hours ago) and read 13333 times:

I would say the answer will be played out with the AT&T and T-Mobile deal that is working through the process now. If AT&T is able to complete that deal then any deal should be possible, but it will take a significant amount of political capital to get it done.
I have never seen that desire from the airlines to make that happen. Look at UA & US that died from a similar fate.

It is really hard to fight for a deal in the airlines because of the employee issues that would be in limbo while the deal is being closed. It is hard enough when you have no opposition (see: US and AW) to get that part done.


User currently offlinelows From Austria, joined Oct 2011, 1189 posts, RR: 1
Reply 3, posted (3 years 1 month 2 weeks 2 days 16 hours ago) and read 13276 times:

Quoting aa1818 (Thread starter):
ORD

I can't imagine them keeping ORD, DTW and MSP. One of those would have to go.


User currently offlinewingnutmn From United States of America, joined Jan 2004, 653 posts, RR: 0
Reply 4, posted (3 years 1 month 2 weeks 2 days 16 hours ago) and read 13276 times:

I bet AA pilots would just love to be stapled to the bottom of the list. I hope DL pilots follow the AA pilots formula that was used in the TWA merger. But it would never happen, the merger and the screw job. AA is destined for a B6 merger or a liquidation.

Wingnut



Any landing you can walk away from is a good landing! It's a bonus if you can fly the plane again!!
User currently offlinejetlanta From United States of America, joined Jul 2001, 3365 posts, RR: 35
Reply 5, posted (3 years 1 month 2 weeks 2 days 16 hours ago) and read 13263 times:

From virtually every angle, such a combination would have huge difficulties...regulatory, labor, and technology come to mind immediately. However the network overlap is actually quite minimal, and it isn't illegal to be big, so I suspect it could pass regulatory muster. The caveat is that I'm sure there would have to be a significant divestiture of slots at LGA, and perhaps JFK.

But there is no doubt that the network combination would be extremely attractive. The combined carrier's position at NYC, LAX, ATL, DFW, MIA, DTW, and MSP would be a very strong part of any global network. It could certainly lead to some degree of consolidation between SkyTeam and oneworld, as well.

ORD, CVG and MEM would be toast as hubs, however. AA's position at ORD has been a source of angst for a long time now. DTW and MSP are dramatically better for DL than ORD is for AA.

Of course, from every angle other than network, this deal would be almost insane to contemplate now. But you are right, in a post-Chapter 11 environment, AA would likely be a bit smaller and certainly more attractive. The trend towards consolidation of legacy capacity isn't over yet. A combination of this size perhaps seems "too big", but a few years back no one would have thought that DL/NW or UA/CO would have been able to merge either. The industry is changing quickly and U.S. carriers need to be competitive abroad. To do that, stability is required at home. Consolidation is a major force of stability, as we've seen with the successful mergers of the past few years.


User currently offlineByrdluvs747 From United States of America, joined Jul 2004, 2462 posts, RR: 1
Reply 6, posted (3 years 1 month 2 weeks 2 days 16 hours ago) and read 13201 times:

Will not happen. No one in govt is in the mood for creating a duopoly in air travel.

I personally would be disgusted to have AA in Skyteam. Sickening!

Quoting aa1818 (Thread starter):
AA enters Ch.11, slashes labor costs, cuts unprofitable routes, cuts its fleet, and upon re-emergence from Ch.11, DL snaps them up (perhaps even when they are still in Ch.11).

DL won't be "snapping up" any AA stock. AA will have plenty of protectors(investors) to buy equity in the airline. Citi, TPG, and IAG are the obvious candidates.



The 747: The hands who designed it were guided by god.
User currently offlineSTT757 From United States of America, joined Mar 2000, 16907 posts, RR: 51
Reply 7, posted (3 years 1 month 2 weeks 2 days 16 hours ago) and read 13065 times:

There's way more of a chance that US acquires AA, but even that scenario I give less than 50/50 odds.


Eastern Air lines flt # 701, EWR-MCO Boeing 757
User currently offlinelows From Austria, joined Oct 2011, 1189 posts, RR: 1
Reply 8, posted (3 years 1 month 2 weeks 2 days 16 hours ago) and read 12981 times:

Theoretically, that would send Doug Parker running to UA for another go at a merger.

User currently offlineCubsrule From United States of America, joined May 2004, 23296 posts, RR: 20
Reply 9, posted (3 years 1 month 2 weeks 2 days 16 hours ago) and read 12967 times:

Quoting jetlanta (Reply 5):
and it isn't illegal to be big,

What's wrong with AT&T and T Mobile, then? There's nothing anticompetitive there but the size.



I can't decide whether I miss the tulip or the bowling shoe more
User currently offlinekanebear From United States of America, joined May 2002, 953 posts, RR: 1
Reply 10, posted (3 years 1 month 2 weeks 2 days 15 hours ago) and read 12894 times:

Quoting Cubsrule (Reply 9):
What's wrong with AT&T and T Mobile, then? There's nothing anticompetitive there but the size.

No way in heck such a merger would get past the DOJ. Pre-DL/NW? Perhaps. IMO AA/US is about all that'd work at this point. All the other dance partners have been taken.

Off topic : An AT&T and T-mobile merger is anticompetitive as it eliminates a competitor, reduces consumer choice, and reduces pricing pressure on AT&T. Verizon and Sprint wouldn't be allowed to merge either. A merger that MIGHT work? T-mobile and Sprint.


User currently offlinehiflyer From United States of America, joined Nov 2004, 2177 posts, RR: 3
Reply 11, posted (3 years 1 month 2 weeks 2 days 15 hours ago) and read 12859 times:

A merger between AA and DL is quite doubtful...however a Chapt 11 by AA with DL becoming debtor in possession could happen which then DL could pull the funding and dissolve AA for parts thereby not having to take the employees. (DL did the same with PanAm exactly 20 years ago).

However...I suspect the USAir/JetBlue/AA trio may have more traction...perhaps one of them would do the DL/PA trick to AA. Alaska used to be in these combo scenarios but hear less and less about them lately...same with Hawaiian.


User currently offlineenilria From Canada, joined Feb 2008, 7673 posts, RR: 15
Reply 12, posted (3 years 1 month 2 weeks 2 days 15 hours ago) and read 12729 times:

Quoting teme82 (Reply 1):
I bet that the merger between AA and DL would not be possible at all. The regulators does not want this type of merger.

There have been even crazier mergers considered and privately evaluated that AA/DL.

Quoting ORDBOSEWR (Reply 2):

I would say the answer will be played out with the AT&T and T-Mobile deal that is working through the process now.

I disagree. I'm no fan of mergers, but the DOT/DOJ treats airlines differently. I think they would approve anything given that the proposed divestiture list is followed.

Quoting lows (Reply 3):
I can't imagine them keeping ORD, DTW and MSP. One of those would have to go.

Here is my guess of how this gets done.

1) AA files Ch11
2) AA shrinks ORD saying it can't compete with UA which is largely true
3) AA proposes merger and makes the case that it isn't standalone viable which would also be true
4) AA would be smaller than DL and that would mean that DL's union contracts would likely survive.
5) DOT/DOJ would ask them to surrender ORD to an LCC (B6 or VX or NK).
6) DOT/DOJ would take gates from them at LAX and JFK
7) OW would ally with US and B6 which might setup a merger of the two.


User currently offline727LOVER From United States of America, joined Oct 2001, 6608 posts, RR: 20
Reply 13, posted (3 years 1 month 2 weeks 2 days 15 hours ago) and read 12729 times:

So who would be buying, whos management, whos name kept?

The OP asked could a AA/DL merger EVER be approved, we're not neccesarily talking about RIGHT now. This could be 10 years from now.



Listen Betty, don't start up with your 'White Zone' s*** again.
User currently offlineTOMMY767 From United States of America, joined Aug 2003, 6929 posts, RR: 9
Reply 14, posted (3 years 1 month 2 weeks 2 days 15 hours ago) and read 12632 times:

Quoting hiflyer (Reply 11):
A merger between AA and DL is quite doubtful...however a Chapt 11 by AA with DL becoming debtor in possession could happen which then DL could pull the funding and dissolve AA for parts thereby not having to take the employees. (DL did the same with PanAm exactly 20 years ago).

But I feel like DL took a ton of ex-Pan Am employees with them, no?

Quoting STT757 (Reply 7):
There's way more of a chance that US acquires AA, but even that scenario I give less than 50/50 odds.

Agreed and/or merger with B6. I think the recent Airbus deal has a lot to do with either a US or B6 tie up somewhere down the road.

Quoting jetlanta (Reply 5):
ORD, CVG and MEM would be toast as hubs, however. AA's position at ORD has been a source of angst for a long time now. DTW and MSP are dramatically better for DL than ORD is for AA.

Didn't AA and NW try to merge in the early/mid 1990s in part because AA wanted a major hub as MSP? If they ever did merge, ORD would either be extremely downsized and/or toast. If this ever happened, I would expect Spirit to develop a small hub at ORD.



"KEEP CLIMBING" -- DELTA
User currently offlineLHCVG From United States of America, joined May 2009, 1642 posts, RR: 2
Reply 15, posted (3 years 1 month 2 weeks 2 days 14 hours ago) and read 12549 times:

Quoting enilria (Reply 12):
5) DOT/DOJ would ask them to surrender ORD to an LCC (B6 or VX or NK).

What about WN? I know WN is entrenched at MDW, and is somewhat identified with MDW just like HOU and DAL, but might this circumstance be worth switching to ORD? I say this from the anecdotal perspective that many seem to prefer ORD, and much more room to expand if/when needed.


User currently offlinemayor From United States of America, joined Mar 2008, 10645 posts, RR: 14
Reply 16, posted (3 years 1 month 2 weeks 2 days 14 hours ago) and read 12485 times:

Quoting hiflyer (Reply 11):
A merger between AA and DL is quite doubtful...however a Chapt 11 by AA with DL becoming debtor in possession could happen which then DL could pull the funding and dissolve AA for parts thereby not having to take the employees. (DL did the same with PanAm exactly 20 years ago).
Quoting TOMMY767 (Reply 14):

But I feel like DL took a ton of ex-Pan Am employees with them, no?

   Exactly.......DL did take quite a few PA employees with them in that acquisition. How could they NOT? A dramatically expanded system as they ended up with, who was going to work those stations and flights if they didn't have those PA employees, too.



"A committee is a group of the unprepared, appointed by the unwilling, to do the unnecessary"----Fred Allen
User currently onlineBoeingGuy From United States of America, joined Dec 2010, 3258 posts, RR: 7
Reply 17, posted (3 years 1 month 2 weeks 2 days 14 hours ago) and read 12430 times:

Maybe AS would be interested in buying out AA.  

User currently offlineTSS From United States of America, joined Dec 2006, 3070 posts, RR: 5
Reply 18, posted (3 years 1 month 2 weeks 2 days 13 hours ago) and read 12213 times:

Quoting 727LOVER (Reply 13):
So who would be buying, whos management, whos name kept?

In the context of this thread, a prospective AA/DL merger, the answer to all three questions is Delta. However, a much more likely candidate for a buyout/merger situation with AA is US, but I won't officially start worrying about that possibility until US leaves the Star Alliance and joins OneWorld.



Able to kill active threads stone dead with a single post!
User currently offlineItalianFlyer From United States of America, joined Nov 2007, 1099 posts, RR: 2
Reply 19, posted (3 years 1 month 2 weeks 2 days 13 hours ago) and read 11978 times:

Barring a complete collapse of the Northern Hemisphere economies (which is not totally out of the question), I see the Federal Aviation Act of 1958 limitations on foreign ownership/investment being amended before allowing uber-mega mergers like DL/AA, AA/UA or UA/DL or WN and everybody.

Just my .2

[Edited 2011-11-02 09:52:07]

User currently offlineRamblinMan From United States of America, joined Oct 2010, 1138 posts, RR: 1
Reply 20, posted (3 years 1 month 2 weeks 2 days 12 hours ago) and read 11866 times:

Quoting LHCVG (Reply 15):
What about WN?

Seriously? You think they'd move their largest hub from an airport they practically own to an airport which is eternally congested and which is seeing increased growth by NK almost every quarter?

Quoting TOMMY767 (Reply 14):
If this ever happened, I would expect Spirit to develop a small hub at ORD.

NK is doing that anyway, whether this scenario comes to pass or not.


User currently offlineenilria From Canada, joined Feb 2008, 7673 posts, RR: 15
Reply 21, posted (3 years 1 month 2 weeks 2 days 12 hours ago) and read 11735 times:

Quoting LHCVG (Reply 15):
What about WN? I know WN is entrenched at MDW

You answered your own question. I don't see the point of being big at both airports. Maybe they'd want to operate some token flights someday, but they "own" MDW. That's their Chicago operation. Why beat their head up against the wall with UA in such a dominant post-merger position?

Quoting RamblinMan (Reply 20):
Quoting TOMMY767 (Reply 14):
If this ever happened, I would expect Spirit to develop a small hub at ORD.

NK is doing that anyway, whether this scenario comes to pass or not.

Well, they already built one. Look at their route map.


User currently offlineLHCVG From United States of America, joined May 2009, 1642 posts, RR: 2
Reply 22, posted (3 years 1 month 2 weeks 2 days 12 hours ago) and read 11603 times:

Quoting RamblinMan (Reply 20):
Seriously? You think they'd move their largest hub from an airport they practically own to an airport which is eternally congested and which is seeing increased growth by NK almost every quarter?

You're right ORD is congested, but would presumably offer better and larger facilities (if they took over T3), longer runways to accomodate potential larger fleet types and/or intercontinental service down the road (emphasis on down the road, not imminent of course), and the perception of ORD as a preferred airport. That last is totally anecdotal, but I get the impression that people, particularly the business crowd, prefer ORD (DL swapping the LGA-CHI shuttle from MDW to ORD?) overall. Obviously congestion and NK (not to mention UA definitely not laying down before WN at ORD of all places) are barriers, but I asked out of curiosity if that opportunity were to arise.

Quoting enilria (Reply 21):
You answered your own question. I don't see the point of being big at both airports. Maybe they'd want to operate some token flights someday, but they "own" MDW. That's their Chicago operation. Why beat their head up against the wall with UA in such a dominant post-merger position?

My assumption was moving from MDW to ORD, given the rationale above (not saying it's true, just my view of possible factors that could play). Certainly opening ORD as a second CHI airport with MDW would probably be less than ideal.


User currently offline7673mech From United States of America, joined Mar 2004, 744 posts, RR: 0
Reply 23, posted (3 years 1 month 2 weeks 2 days 12 hours ago) and read 11535 times:
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I think the regulators would approve it with provisions (sell this, give up these slots - etc.)
Getting the labor unions on board at AA would be near to impossible.


User currently offlineCubsrule From United States of America, joined May 2004, 23296 posts, RR: 20
Reply 24, posted (3 years 1 month 2 weeks 2 days 11 hours ago) and read 11480 times:

Quoting LHCVG (Reply 22):
That last is totally anecdotal, but I get the impression that people, particularly the business crowd, prefer ORD (DL swapping the LGA-CHI shuttle from MDW to ORD?) overall.

I don't know why any business traveler in their right mind who is going downtown would prefer ORD.

The key, though, is "going downtown." Much of the business in the suburbs is closer to ORD.



I can't decide whether I miss the tulip or the bowling shoe more
25 LHCVG : Geographically yes, but I recall seeing on here that DL moved their shuttle at least partly because the biz pax preffered using ORD. That doesn't add
26 aa1818 : I agree with you on the labor unions, though, if AA goes through Ch.11 and labor gets the short end of the stick, perhaps then they would view an ama
27 Cubsrule : Convenient, then, that they moved the shuttle after WN opened MDWLGA. Probably 20 minutes in "average" traffic and about the same on the El.
28 klkla : I don't think this could ever happen. The only possible scenario would be AA filing Chapter 7 instead of Chapter 11 and DL picking up some of it's ass
29 747400sp : Why AA and US, can not merge, DL and UA are too big already, an AA/US merger, seems like a better option.
30 LHCVG : So which is worse, competing against UA and AA ORD-LGA, or WN on MDW-LGA? Pick your poison on that one, I don't see either as a great option for DL i
31 HPRamper : AA, US, B6, maybe F9 are probably the only airlines in play in terms of merger right now. The new DL and UA are just too big and their absorbing anoth
32 ripcordd : Wingnutmn there was a big big differnce when AA put TWA pilots and employees at the bottom TWA WAS BOUGHT yes BOUGHT by AA not merged not combined bu
33 DeltaMD90 : IMO, I see many scenarios more likely than that: 1. AA+B6 merger 2. DL+AS merger 3. US+AA merger 4. AA getting divested between everyone 5. finally, A
34 IrishAyes : Delta also has a lounge at T2 at ORD. It's convenient for DL to consolidate its premium-heavy capacity at one airport where the facilities are in pla
35 ordjoe : Oh hell no I want my AAdvantage miles which are worth something and international first, not the worthless sky peso.
36 CIDFlyer : Interesting scenrio, but I dont see it happening, unless ORD gets closed. ORD would overlap MSP and DTW. ORD would bring a huge Chicago market to the
37 LHCVG : Thanks for the detailed response. That all makes sense, and I forgot about DL's lounge in T2 - the first time I walked by the SkyClub on way to catch
38 AA767LOVER : WN could make the next move and buy Frontier and solidify DEN as a major fortress hub. Think so?
39 HPRamper : Not with Frontier's fleet. WN has zip experience with Airbus. At least FL flew a Boeing product, and WN isn't even satisfied with that. Too much of a
40 GUYAIR707 : Imagine the size of that airline. GUYAIR707
41 point2point : At this point, I don't think that the government would be radically opposed to an AA/DL merger, given some divestitures in key markets. On the other h
42 type-rated : Always watch who you step on while on the way up, you may need their help on the way back down.....
43 BOACCunard : I absolutely think it could be approved, with certain divestitures. I think all of AA's LGA slots would have to go, otherwise the combined airline wou
44 rising : Commercial Aviation in the United States has been deregulated since 1978. As has been said on this website and many others for the past decade, the D
45 Cubsrule : Under what law could they sue DOJ?
46 TOMMY767 : I wonder in terms of fleet planning, what types would be dumped first? My guess is the oldest AA M82s and oldest 757s from DL. A combined entity (whil
47 airlinespotter : When it's all said and done, I still believe AA and US will merge. My 2cents.
48 enilria : That will not happen. You never trade away a dominant position to be 2nd banana down the road. They'd be crazy to do such a thing. Too bad B6 doesn't
49 LHCVG : That may be, but that's why I asked, if it was at all possible. I didn't say it was likely, I merely laid out some points that would make such a move
50 Cubsrule : I don't see the point. They'd have no choice but to give away their dominant positions in PHL, DCA and CLT. There's only a limited amount of demand f
51 rwy04lga : It seems that Delta bought out NWA but didn't staple NWA employees to the bottom. Guess they wanted to take care of BOTH families equally. If DL and
52 Flighty : DL has nothing to gain from AA and it would be totally illegal for them to even discuss a merger, besides. JMO.
53 point2point : Illegal? Why?
54 DeltaMD90 : I think the biggest question is if DL wants to inherit AA's troubles and if they could make AA's network profitable under DL. Maybe they can, but if a
55 mayor : Considering what is happening with representation, this time, I wonder if DL would even want to go thru it, again. Seems like more trouble than it's
56 staralliance85 : A DL/AA merger will Never get approved by the DOJ/Eric Holder under the Obama Administration. He will never let such a merger happen. If a Republican
57 DeltaMD90 : Granted the heart attack DL inherits (AA) doesn't kill DL first... But haven't we seen multiple, failed US/UA mergers? This time, it would be even le
58 ripcordd : I dont see anyone merging with AA....It would be DL buyout not a merger
59 staralliance85 : Oneworld without American would leave a huge hole in their portfolio! If DL takes over AA than it would be by far the largest airline in the world and
60 polot : True, but AA and DL are the only American carriers that Oneworld and Skyteam respectively have (in fact AA is Oneworld's only North American carrier)
61 Post contains images DeltaMD90 : I agree on all points, but I still don't think this would cause oneworld and Skyteam to merge. Who says Skyteam would want oneworld? Now something I
62 delta2ual : I just don't know anymore. Ten years ago I would have said absolutely not. But, we live in such a global economy now. The Middle East carriers are a r
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