LAXDESI
Topic Author
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Delta-Northwest Merger On Mineta's Wish List

Sat Mar 11, 2006 3:46 pm

U.S. Transport Secy. Norman Mineta suggests Delta-Northwest merger. I am tempted to buy both stocks-currently both stocks are less than dollar- in the hope that at least one of them will survive and provide a big return over the next five years. Any advise? Link:
http://www.forbes.com/facesinthenews...0autofacescan15.html?partner=links


Quotes:
The U.S. transportation secretary addressed a throng of business leaders in Shanghai on Tuesday, where he mused about the future of the troubled American air sector. According to media reports, the chief of America's planes, trains and the roads used by automobiles opined that the latest generation of industry revamping could lead to a merger between Chief Executive Gerald Grinstein's Delta Air Lines (otc: DALR - news - people ) and CEO Douglas Steenland's Northwest Airlines (otc: NWACQ - news - people ).

"I sometimes wonder whether or not...Delta and Northwest will come out as a merged carrier," Mineta was quoted as saying. He added that he was just "thinking out loud." Respectively the No. 3 and No. 4 U.S. carriers, the firms both filed for Chapter 11 protection on Sept. 14. Spokesmen for the airlines demurred from commenting on Mineta's merger remarks. Instead, reports say, each firm maintained that it is focused only on restructuring.
 
HPRamper
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RE: Delta-Northwest Merger On Mineta's Wish List

Sat Mar 11, 2006 4:20 pm

Buying stock would be iffy, even if one "survives", when HP and US just merged BOTH stocks were scrapped in favor of a totally new one. So you still might end up SOL.
 
iowaman
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RE: Delta-Northwest Merger On Mineta's Wish List

Sat Mar 11, 2006 4:24 pm

The huge problem if they ever merged was there aircraft couldn't be much more opposite. The only thing in common is the 757 I believe.
 
masseybrown
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RE: Delta-Northwest Merger On Mineta's Wish List

Sat Mar 11, 2006 4:58 pm

Quoting LAXDESI (Thread starter):
I am tempted to buy both stocks-currently both stocks are less than dollar- in the hope that at least one of them will survive and provide a big return over the next five years. Any advise?

LAXDESI, as HPRamper said, the risk is huge that both of those penny stocks will be cancelled. If you want to take a flyer, buy some of their bonds. They represent a better chance to make you some money post-bankruptcy; but even bonds are still risky.

With that safety announcement over, those penny stocks DO go up and down with fairly big percentage moves. Since neither airline will come out of bankruptcy soon, there is time for short term trades (buy at 40 cents, sell at 60 cents) based on event-driven news. Proceed at your own risk.
 
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kc135topboom
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RE: Delta-Northwest Merger On Mineta's Wish List

Sat Mar 11, 2006 7:09 pm

Quoting Iowaman (Reply 2):
The huge problem if they ever merged was there aircraft couldn't be much more opposite. The only thing in common is the 757 I believe.

An even bigger problem is DL is mostly a non-union airline, while NW is mostly union. The management styles are also very different.

I just don't see DL and NW in a merger. It would make more sense for NW to merge with AA and DL to merge with CO. But, I don't see those mergers on the horizon, either.

What is Norm Mineta thinking?

Quoting MasseyBrown (Reply 3):
Since neither airline will come out of bankruptcy soon, there is time for short term trades (buy at 40 cents, sell at 60 cents) based on event-driven news. Proceed at your own risk.

I agree.
 
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Aloha717200
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RE: Delta-Northwest Merger On Mineta's Wish List

Sat Mar 11, 2006 7:38 pm

Meh, it wont happen and if it does I personally won't be too happy about it.
 
flyboyaz
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RE: Delta-Northwest Merger On Mineta's Wish List

Sat Mar 11, 2006 11:15 pm

Quoting HPRamper (Reply 1):
Buying stock would be iffy, even if one "survives", when HP and US just merged BOTH stocks were scrapped in favor of a totally new one. So you still might end up SOL.

Yes true but only the old US shareholders were SOL (because US was in BK, not HP)...the HP stock was transferred to the new one at a particular rate of exchange.
Catch a ride on a smile!
 
HPRamper
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RE: Delta-Northwest Merger On Mineta's Wish List

Sat Mar 11, 2006 11:19 pm

Quoting Flyboyaz (Reply 6):
Yes true but only the old US shareholders were SOL (because US was in BK, not HP)...the HP stock was transferred to the new one at a particular rate of exchange.

Yeah wasn't it 50%?
 
texan
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RE: Delta-Northwest Merger On Mineta's Wish List

Sat Mar 11, 2006 11:34 pm

Quoting LAXDESI (Thread starter):
Any advise?

Don't buy airline stock.

The other question in all this mess is, since neither of the individual airlines involved have the capital to acquire Great Lakes much less a large airline, who would provide the needed capital for one airline to buy the other? What about the redundancy of hubs (CVG vs. DTW, MEM vs. ATL)? And I guess maybe a better question is this: since both airlines are money losing entities, what in god's name makes Mineta think that if they merged the result would magically be a money gaining entity? Kinda makes me wonder what planet Mineta is on right now.

Texan
"I have always imagined that Paradise will be a kind of library."
 
LAXDESI
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RE: Delta-Northwest Merger On Mineta's Wish List

Sun Mar 12, 2006 12:59 am

Thanks everyone for your suggestions/comments. I am inclined to buy these shares as I have done well with low price and leveraged shares/mutual funds over the years. I will balance my investments by buying a air transport sector mutual fund/ETF. I looked but could not find any airline mutual fund/ETF. Does anyone know of an airline mutual fund/ETF?
 
srbmod
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RE: Delta-Northwest Merger On Mineta's Wish List

Sun Mar 12, 2006 1:04 am



This article is two months old, and this topic has already been discussed back when this article first came out.
US Transport Chief Ponders Delta-Northwest Merger (by DAYflyer Jan 10 2006 in Civil Aviation)
 
ckfred
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RE: Delta-Northwest Merger On Mineta's Wish List

Sun Mar 12, 2006 1:05 am

Quoting KC135TopBoom (Reply 4):
I just don't see DL and NW in a merger. It would make more sense for NW to merge with AA and DL to merge with CO. But, I don't see those mergers on the horizon, either.

AA won't be buying another airline for some time. First, it's track record with mergers is horrible. Air Cal, Reno Air, and TWA have not worked out at all well.

Second, buying another airline would ruin the labor relations that it has enjoyed since Arpey succeeded Carty as CEO.

Third, there is also no commonality in the two fleets. Even the 757s have different engines.
 
masseybrown
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RE: Delta-Northwest Merger On Mineta's Wish List

Sun Mar 12, 2006 5:57 am

Quoting LAXDESI (Reply 10):
I looked but could not find any airline mutual fund/ETF. Does anyone know of an airline mutual fund/ETF?

I don't know of one. You could try XAL, an index option that is based on 10 airline stocks.
 
LAXDESI
Topic Author
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RE: Delta-Northwest Merger On Mineta's Wish List

Sun Mar 12, 2006 6:12 am

Quoting MasseyBrown (Reply 13):
I don't know of one. You could try XAL, an index option that is based on 10 airline stocks.

Thanks for the tip. Unfortunately call options on XAL index have close to zero volume and zero volume for Leaps. I will have to settle for the broader air transport sector.
 
LAXDESI
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RE: Delta-Northwest Merger On Mineta's Wish List

Sun Mar 12, 2006 6:53 am

Quoting MasseyBrown (Reply 13):
You could try XAL, an index option that is based on 10 airline stocks.

I am surprised that XAL index does not include United and US Airways.
 
bobnwa
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RE: Delta-Northwest Merger On Mineta's Wish List

Sun Mar 12, 2006 6:58 am

Quoting Texan (Reply 9):
what in god's name makes Mineta think that if they merged the result would magically be a money gaining entity? Kinda makes me wonder what planet Mineta is on right now.

If you read what Mineta said, he made no reference as to whether it was a good idea or not for DL and NW to merge. Leaping to conclusions, might also qualify one to be on another planet!
 
socalfive
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RE: Delta-Northwest Merger On Mineta's Wish List

Sun Mar 12, 2006 7:11 am

Quoting LAXDESI (Thread starter):
U.S. Transport Secy. Norman Mineta suggests Delta-Northwest merger. I am tempted to buy both stocks-currently both stocks are less than dollar- in the hope that at least one of them will survive and provide a big return over the next five years. Any advise?

There's a 99.9% chance that both company's stock will be worthless at the end of their bankruptcys. Stock is almost always wiped out in favor of creditor assumption of equity. Especially in the case of NW, there is nothing left, the stock WILL cancel and IF they emerge from Bankruptcy at all, new stock will be issued at that time. So there is NO chance that buying stock and waiting for a merger or miracle will workout so DO NOT buy it!!
 
Bluewave 707
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RE: Delta-Northwest Merger On Mineta's Wish List

Sun Mar 12, 2006 7:17 am

The lack of fleet commonality will drive up further training expenses as the DL folks will have to learn the NW Airbus fleet, and NW folks learn the DL Boeing fleet.

At least the US/HP merger had the A320 series, and the 737s as commons. Not the 757s in the sense that both had different engine types.
"The best use of your life will be to so live your life, that the use of your life will outlive your life" -- D Severn
 
christao17
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RE: Delta-Northwest Merger On Mineta's Wish List

Sun Mar 12, 2006 7:52 am

Quoting GeorgiaAME (Reply 7):
so that we never,ever give the impression that we might be hurting the feelings of certain minority groups that have a consistent record of blowing up passengers, shooting up airports, and flying airplanes into tall buildings.

That's not appropriate - no minority groups have any consistent record of blowing up passengers, etc. Those have been actions of individuals and small groups of extremists. Don't try to pin those actions on entire minority groups.

While I share your frustration at security measures that could be a lot more effective, stereotyping entire groups based on their culture or ethnicity just fans the flames of hatred that cause people to commit acts of terrorism.

Surely you wouldn't want others to stereotype Americans just because one guy blew up a bomb during the Atlanta Olympics and another blew up a Federal building in Oklahoma City, would you?
Keeping the "civil" in civil aviation...
 
SeeTheWorld
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RE: Delta-Northwest Merger On Mineta's Wish List

Sun Mar 12, 2006 8:23 am

Quoting GeorgiaAME (Reply 7):
You have to remember that this great idea comes from the same guy who is responsible for babies in diapers and little old ladies in wheelchairs being thoroughly searched for handguns and carving knives in our airports, so that we never,ever give the impression that we might be hurting the feelings of certain minority groups that have a consistent record of blowing up passengers, shooting up airports, and flying airplanes into tall buildings.

COME ON FOLKS!!!

The TSA is under the Department of Homeland Security (DHS) not the Department of Transportation - GET YOUR FACTS RIGHT. The DOT and Mineta have virtually no influence on the TSA!!!
 
srbmod
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RE: Delta-Northwest Merger On Mineta's Wish List

Sun Mar 12, 2006 8:31 am

Quoting SeeTheWorld (Reply 20):

The TSA is under the Department of Homeland Security (DHS) not the Department of Transportation - GET YOUR FACTS RIGHT. The DOT and Mineta have virtually no influence on the TSA!!!

Prior to the formation of the Department of Homeland Security, the TSA was under the Department of Transportation. It was part of the DOT from it's creation on November 19, 2001 until March of 2003. It was during this time frame that many of the well publicized incidents occurred. So perhaps you may want to get your facts straight.
 
jacobin777
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RE: Delta-Northwest Merger On Mineta's Wish List

Sun Mar 12, 2006 9:41 am

Quoting Socalfive (Reply 17):
There's a 99.9% chance that both company's stock will be worthless at the end of their bankruptcys

actually it will be a 100%, post bankruptcy, the stock never emerges unless it goes to the pink sheets and gets bought out..basically as a shell company.

only the creditors and the bondholders get something back....the shareholders of the company (i.e-stockholders) are last in line...

and there is more debt in their books than money that either NW or DL have, so that basically means there is less than .0001% chance that shareholders will see any returns..

I see a better chance of Osama Bin Laden having dinner with George W. Bush at a 5-star restaurant then either one of the companies not having their stock cancelled...

look at UA and HP.....same thing happened.
"Up the Irons!"
 
nwab787techops
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RE: Delta-Northwest Merger On Mineta's Wish List

Sun Mar 12, 2006 10:09 am

Quoting KC135TopBoom (Reply 4):
I just don't see DL and NW in a merger. It would make more sense for NW to merge with AA and DL to merge with CO. But, I don't see those mergers on the horizon, either.

I don't see a DL and NW merger as well. I think you would see AA and NW merger only if a UA and CO merger came first. If there is no UA and CO merger, maybe a CO and NW merger.

I don't think the Gov will let any merger go. Becouse of that you'll see the big old airlines stay the same.
 
CTHEWORLD
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RE: Delta-Northwest Merger On Mineta's Wish List

Sun Mar 12, 2006 10:26 am

See, the problem is Norm Mineta's son works at Delta, and he has always been swayed by that. Norm Mineta is one of the most ineffectual S.O.T. this country has ever had. It is time Bush get rid of his token Democrat in his cabinet and get someone in there that can actually do the job.
 
worldtraveler
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RE: Delta-Northwest Merger On Mineta's Wish List

Sun Mar 12, 2006 10:35 am

If Norman Mineta's son works at Delta, nothing else the DOT has done has helped DL to any great degree.

I'm with Georgia AME. Leave Mineta out of the decision making process.

Honestly, I think NW will be the last girl picked at the dance despite its Pacific routes. NW is a mess and it won't be looking pretty anytime soon.

I'm ready to put my money on a DL acquisition of UA assets (probably not the whole company) in the next five years. I'm sure some of you will get a kick out of that statement but that's ok - I'm now on record and I believe I'll be right.
 
MalpensaSFO
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RE: Delta-Northwest Merger On Mineta's Wish List

Sun Mar 12, 2006 10:52 am

Quoting LAXDESI (Thread starter):
Norman Mineta suggests Delta-Northwest merger.

That is your first problem... Mineta!  wink 

Quoting Nwab787techops (Reply 23):
I don't see a DL and NW merger as well.

Never say never... Although that will have been when Northwest finally admits they have been modelling their customer service after that of Greyhound!  wink 
TO FLY IS TO SERVE
 
HPRamper
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RE: Delta-Northwest Merger On Mineta's Wish List

Sun Mar 12, 2006 12:23 pm

Quoting MalpensaSFO (Reply 26):
Although that will have been when Northwest finally admits they have been modelling their customer service after that of Greyhound!

It's only been over the past two years they've really gone downhill. I used to actually prefer to fly NW because of the great customer service I got. This was within the past three years.
 
CTHEWORLD
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RE: Delta-Northwest Merger On Mineta's Wish List

Sun Mar 12, 2006 1:47 pm

Quoting WorldTraveler (Reply 25):
I'm ready to put my money on a DL acquisition of UA assets

Wow, that proves the old adage, a fool and his money are quickly parted!!!!
 
worldtraveler
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RE: Delta-Northwest Merger On Mineta's Wish List

Sun Mar 12, 2006 10:52 pm

C,
I didn't say how much but I will say that conventional wisdom as to how this industry will shake out is probably all wrong. You gotta take the long term view if you want to see what will really happen.
 
Tan Flyr
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RE: Delta-Northwest Merger On Mineta's Wish List

Mon Mar 13, 2006 12:09 am

A NW/DL merger would be akin to the New York Central / Pennsylvania RR merger in 1969 (or so). (A total disaster that eventually ended up with CONRAIL formed in 1976. I don't think anyone wants the government runningb an airline or 2.)

Two totally different organizations, both with fundmental weaknesses. IMHO, such a merger would result in a trip to BK court again in 3-5 yrs, if not sooner.

The BEST prescription for all is to find a way to get supply and demand into balance while getting costs competitive and revenues up.

Now we could talk about the best ways to accomplish those items all day, but at the end of the day that is still the needed result. Without those fundmentals none will survive long term.

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