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Delta / TWA Merger?

Mon Jun 12, 2000 8:50 am

With all the news on the United / US Air merger, one partnership that might be great would be TWA and Delta Airlines. They both have so much in common as far as equipment and TWA is an airline that has been on the up and up over the last few years with new aircraft aquisitions. Examples:

Delta has large 757 fleet, TWA has purchased many new 757's just like Delta's with the same engines.

Delta has a large expanding 767 fleet and TWA is likewise buying up lots of brand new 767's.

Delta has large MD 88 fleet and TWA has large MD 83 fleet. I think both of theose planes are basically the same. Eventhough Delta is talking about getting rid of their 88's, the TWA 83's would be a bargain to hang on to since they have the extended range and same avionics as the MD 88's. Even if they sell them, they could get lots of cash for them since they are the same age as their current MD 88's.

With Delta building a big fleet of 737-700-800's, they would most likely get rid of all of TWA's old DC-9's. That sale would generate some more quick cash for Delta as well.

This Aquisition would give Delta a huge position in the midwest with TWA's St. Louis Hub. It would also give them a strategic maintenance base almost right in the center of the country. And furthermore, it would give Delta a monopoly on Kennedy airport in New York for international flights as well as domestic. In addition, Delta would gain very key, hard to get international slots overseas in Europe.

I think an aquisition like this would be more reasonable and helpful to Delta.

What are your opinions?


RE: Delta / TWA Merger?

Mon Jun 12, 2000 9:21 am

I think you've been sniffin' too much Jet-A.
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Nah...not Yet

Mon Jun 12, 2000 9:32 am

I don't think this is feasible...at least not yet. TWA needs to turn a profit and reconcile some of its fundamental financial problems before anyone would consider it as a merger partner. Operational integration and compatibility - things like aircraft types in the 2 fleets, that sort of thing - are secondary in merger discussions. They're secondary to the raw economics of it all. Airlines have made it clear that the goal of this consolidation craze is to put them in a better position to make more money, and so a merger involves a purchase or combination of assets, revenues, debts, and outstanding notes to form a carrier that will be a money-making machine. If fleet compatibility can play a role in that, then so be it. But most of the time, it works out so that the deciding factor is how successful, economically speaking, the merged carrier will be. And sometimes fleet compatibility and route network helps; other times, it's just because the two carriers are financially successful. As for TWA, it needs to solve some financial problems before it would be a viable merger partner. If you look at it from an economic perspective, TWA wouldn't work, not for Delta, not for anyone - at least not yet. Delta needs CO. That's what my money is on...no pun intended. (har!)  
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RE: Delta / TWA Merger?

Mon Jun 12, 2000 9:38 am

Would have to disagree, besides the fleet comonality, such a merger wouldn't be too beneficial. An additional hub in St. Louis would not sigificantly augment their existing route system, they already have the CVG hub in the same general area. As for the new york domination (which would not be as great as with a Dl-CO merger) is not necessarily a positive, but instead would put the merger up against more resistance from the justice dept. and the public. At least EWR is technically not in new york. As for the overseas slots, I don't think Dl is lacking in trans-atlantic ones (which would increases slightly in a twa acquisition); instead Dl is lacking in their trans-pacific service, which a TWA buyout would not help.

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Good Idea, But....

Mon Jun 12, 2000 9:41 am

Rick, you have a very good idea. The JFK routes and Asia-Mid. East routes would be very valuable to DL. I don't think DL will buy it unless they are making a profit and I don't think TWA is ready to give up. I could imagine a 717 in DL colors though.
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RE: Delta / TWA Merger?

Mon Jun 12, 2000 9:51 am

Hahahahahahaha. Where did this one start???

It will never happen!!!!!

RE: Delta / TWA Merger?

Mon Jun 12, 2000 11:17 am

I think this ones a sure shot. In fact, the two airlines have already had preliminary discussions and the word is Frank Lorenzo will be the new CEO. His COO will be Martin Shugrue, and the new airline will order a giant fleet of A3XXs. All routes excpet for TWA's daily BDL-PWM run will be sold, and STL will become a new type of ""focus city"". ATL Worldport will be sold to Airtran and the new airlines name will be: "This Ain't Happening Air."

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RE: Delta / TWA Merger?

Mon Jun 12, 2000 12:15 pm

is this merger mania stuff really true?who ever said that what the press says is even true? I think it is just a lie like any other merger. like AA/NW-down the drain, CO/DL?down the drain, the only one that may happen is NW/CO
Give me a break, I created this username when I was a kid...
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RE: Delta / TWA Merger?

Mon Jun 12, 2000 12:21 pm

"...give Delta a monopoly on Kennedy airport..."

Thats exactly what kills mergers, creating monopolies. The second they come into the picture, you can kiss the merger goodbye.

RE: Delta / TWA Merger?

Mon Jun 12, 2000 8:36 pm

It won't happen, TWA would not cancel it's order with Airbus for some new A318s, A319s & A320s that Delta doesn't want.
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RE: Delta / TWA Merger?

Tue Jun 13, 2000 12:07 am

No way......just check out today's Airline/Aviation news on Yahoo. There
is an articule about how TWA is being left out of all the merger mania,
going on. TWA is unprofitable, has few assets, a lot of debt, and no
real value. Why would Delta want TWA?

The only merger I would imagine with TWA would be one with America
West or possibly Alaska Airlines. Still, it's a long shot.

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RE: Delta / TWA Merger?

Tue Jun 13, 2000 2:21 am

Considering the media and wall street have a 100% record with TWA, (100% wrong) I would not be surprised by anything. Also as earlier noted TWA has very very little long term debt. Between 600-700 million. Read my Karabu thread and you can learn a few of the real facts with TWA,

It is not likely TWA will be bought out or merged anytime soon. Profits and an alliance are likely.

Speculation based on fallicy is unbecoming. Check the Karabu thread and then swing back by and comment.
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RE: Delta / TWA Merger?

Tue Jun 13, 2000 5:17 am

What's in it for Delta?
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RE: Delta / TWA Merger?

Tue Jun 13, 2000 9:42 am

I agree with ContinentalEWR, TWA might make it with Alaska, or America West.


RE: Delta / TWA Merger?

Tue Jun 13, 2000 10:23 am

ContinentalEWR, I have the hardest time finding anything on Yahoo for some reason. I think I'm the only one! Anyway, you think you could provide a link for that TWA article regarding M&A activity. Most appreciated.
thanks, russ
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RE: Delta / TWA Merger?

Tue Jun 13, 2000 12:13 pm

Have refrained from really commenting.. But, although TWA could offer DL a good midwest presence and some additional mideast and caribbean markets it just won't happen.

DL is still thinking about PA and do not fool yourself Atlanta want to see US/UA killed by the DOJ desperately.

TWA and DL could benefit each other fleets are close enough but, this one is extremely unlikely!

RE: Delta / TWA Merger?

Tue Jun 13, 2000 1:57 pm

If DELTA currently flying their MD90's, would TWA buy any MD90's direct from Boeing and not aquiring them from DELTA..??

As they are leasing their DL 88's / TW 83's ....??

TWA would buy 777's.??

Details please


RE: Yahoo Article

Tue Jun 13, 2000 2:07 pm

ST. LOUIS (AP) -- Like the unpopular teen-ager standing alone at the prom, Trans World Airlines is watching from its hub here as the airline industry's major players dance with each other.

Two weeks ago, UAL Corp. (NYSE:UAL - news) and US Airways announced a $4.3 billion merger, which would enlarge what was already the world's largest carrier -- UAL's United Airlines.

That sparked an industrywide reaction. As No. 2 carrier American reportedly sought out Northwest, analysts began speculating that No. 3 carrier Delta would fit well with Continental Airlines, and British Airways and KLM Royal Dutch Airlines admitted they are discussing a possible merger.

TWA's dance card, however, remains blank. Company officials say they're paying attention to what's happening in the industry and will listen to any offer that comes along.

But analysts don't expect anyone to start tapping TWA's shoulder.

``There is no place in this merger picture for TWA,'' said Ray Neidl, an analyst with investment bank ING Barings. ``I don't think anyone would be interested in them.''

It's not hard to figure out why. The St. Louis-based carrier hasn't turned a profit since 1988. In 1999, TWA lost $353.4 million, or $5.58 per share. None of the other top American airlines lost money last year.

But TWA does have consistently increasing traffic and a solid record as the nation's best on-time performer. For the last three quarters and the 1999 calendar year, TWA led the eight major U.S. carriers in on-time performance.

And it's next on the list. In 1999, the top six U.S. passenger carriers, based on operating revenue, were United, American, Delta, Northwest, US Airways, and Continental -- all mentioned in the recent bout of merger speculation. Independent-minded Southwest, profitable for the last 27 years, was No. 7, followed by TWA.

It's Southwest's success that keeps TWA's hopes for success and eventual profitability alive. TWA spokesman Mark Abels said no one thinks Southwest needs to find a partner to counter a prospective United-US Airways alliance.

Neither, then, does TWA.

``The airlines like United and I'd say American have made the decision they're going to compete on the basis of massive size,'' Abels said. ``That's a business model that works. That's not the only way to compete in our business.''

Southwest does, however, carry a far greater number of passengers, about 5.3 million per month compared to about 2.3 million for TWA. Southwest also operates its entire fleet with a nontraditional ``no-frills'' approach. TWA's mold, meanwhile, is still that of the larger carriers. It aggressively markets to business travelers, has first-class sections and airport lounges, and offers trans-Atlantic service.

Abels insists TWA's path to finally turning a profit can continue uninhibited by a wave of airline mergers and industry consolidation. He said the airline's efforts to fully modernize its aircraft fleet, cut back on staff and improve its various computer systems is much more important.

If the industry does end up consolidating, with the top six carriers merging into three, TWA and No. 9 America West could get picked up by one of the new, larger carriers as an afterthought, said Terry Trippler, an airline expert at Minneapolis-based 1travel.com, which books discount airfares and travel packages.

``It's kind of like you're choosing up sides to play baseball, on the sandlot,'' Trippler said. ``At the end, `OK, I'll take him.' The last ballplayer.''

Or, he said, TWA, with hubs in St. Louis and New York, and America West, with hubs in Columbus, Ohio, Las Vegas and Phoenix, could get in on the big boys' act.

``Those two together could be a decent airline,'' Trippler said. ``When you think about their route structures, they don't really have many duplicated routes.''

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RE: Delta / TWA Merger?

Tue Jun 13, 2000 3:58 pm

Gee CStarU..

We all commented on that article earlier...

As usual... The media has had a 100% record with TWA. 100% wrong for the last 5 years... Oh well...

We will see. TWA/NWAC/AWA/CAL makes an interesting alliance possibility. No mergers just cooperation and codeshares.

It actually is something worth thinking about.
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RE: Delta / TWA Merger?

Tue Jun 13, 2000 4:13 pm

DL and TW came close to a codeshare agreement a few years ago between PDX and NRT. TW was supposed to buy a few seats each day on DL51/52 until they could serve NRT from STL with a modified 767-231 (possible?). Does anyone know why this deal was killed at the last minute?
This plane is built to withstand anything... except a bad pilot.
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RE: Delta / TWA Merger?

Tue Jun 13, 2000 7:39 pm

The deal for the codeshare was to take place on Delta flights between LAX-NRT and PDX-NRT and also PDX-Osaka. At the last minute Delta changed the minimum number of seats that TWA would have to purchase to be 1/3 the seats on the DL MD11's. TWA felt that with the decline of the Asian economy at the time that it was not likely to be profitable much less break even and decided not to participate in the codeshare agreement.

The move was probably the right one for TW and DL could have used the revenue as the MD11's were flying in general with less than 30% loads.

It would have been nice if the two carriers could have come to an agreement. Ever since the falling out over NRT the carriers have had an icy relationship.

RE: Delta / TWA Merger?

Wed Jun 14, 2000 1:41 am

TWA will be in no position to merge until 2003. That's when Karabu expires.

For those of you who don't know, Karabu is the name of a company controlled by Carl Icahn which has the authority to buy TWA tickets at 40% of face value and then resale them to whoever they want, but generally to consolidators and travel agencies. This allows these travel agencies/consolidators to sell those tickets as group packages at a much lower cost than TWA can sell the same ticket.

As pointed out in another thread, this is probably why most of TWA's flights to Europe have been cancelled as they were filled with consolidator groups and TWA was seeing NO revenue from these flights.

No other airline is going to assume the Karabu agreement.....could you imagine DAL merging with TWA in order to give Icahn the privledge of buying as many tickets as he wants on the DAL system for 40% of face value.

Not happening. No one will touch TWA until the end of 2002. It's just not worth the revenue hit.

But, when Karabu dies, TWA will become a hot property. A lean airline, well run, costs under control, lot's of route authority, new airplanes, etc. etc. etc.

RE: Delta / TWA Merger?

Wed Jun 14, 2000 7:14 am

Post Karabu will TW resume its transAtlantic flying? WIll it expand to its previosu European dewstinations.

Vitale mentioned something earlier about a TW/HP/CO/NW linkup. What would CO gain from TW. CO competes with TW on almost all of its routes out of JFK, from Fort Newark, plus CO has a much larger network. What about STL? Co doesn't gain there, it has CLE and IAH.

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RE: Delta / TWA Merger?

Wed Jun 14, 2000 8:36 am


TWA has a much stronger midwest network than CO, a strong caribbean presence and a strong middle east operation.