clrd4t8koff
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Info On The DL/NW Relationship

Sat Nov 24, 2012 8:13 pm

I'm curious about two things regarding the DL and NW deal:

1). What was the initial attraction to NW vs. UA, CO or AA? My first guess would be their Pacific operations, but UA has a huge Pacific operation and would have given them SFO, ORD, IAD and a greater LAX presence?

2). Did DL and NW merge or did DL acquire/takeover NW

Appreciate the info ...
 
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1337Delta764
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RE: Info On The DL/NW Relationship

Sat Nov 24, 2012 8:16 pm

Quoting clrd4t8koff (Thread starter):
I'm curious about two things regarding the DL and NW deal:

1). What was the initial attraction to NW vs. UA, CO or AA? My first guess would be their Pacific operations, but UA has a huge Pacific operation and would have given them SFO, ORD, IAD and a greater LAX presence?

2). Did DL and NW merge or did DL acquire/takeover NW

Appreciate the info ...


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1). What made them attractive over CO or AA was due to them having less overlap. As for UA, perhaps the likely reasons were due to them being alliance partners, as well as Richard Anderson being CEO.

2). While both airlines billed it as a merger, in truth, DL acquired NW, despite what many seem to think.
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spiritair97
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RE: Info On The DL/NW Relationship

Sat Nov 24, 2012 8:21 pm

Quoting 1337Delta764 (Reply 1):
As for UA, perhaps the likely reasons were due to them being alliance partners, as well as Richard Anderson being CEO.

Do you mean CO?
 
gigneil
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RE: Info On The DL/NW Relationship

Sat Nov 24, 2012 8:28 pm

Quoting 1337Delta764 (Reply 1):
2). While both airlines billed it as a merger, in truth, DL acquired NW, despite what many seem to think.

In truth, it was a merger by every definition of the legal term "merger".

Companies of that size just don't get acquired.

NS
 
Cubsrule
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RE: Info On The DL/NW Relationship

Sat Nov 24, 2012 8:29 pm

Quoting 1337Delta764 (Reply 1):
What made them attractive over CO or AA was due to them having less overlap. As for UA, perhaps the likely reasons were due to them being alliance partners, as well as Richard Anderson being CEO.

I'm not sure how you can argue that CO (EWR/CLE/IAH) had less overlap than UA (ORD/DEN/SFO/LAX/IAD). IAH and DEN/SFO/LAX are complementary. EWR was somewhat more overlapping than IAD (though remember that DL was much smaller at LGA then); by virtue of its much larger size, ORD was arguably more overlapping than CLE.

Quoting 1337Delta764 (Reply 1):
While both airlines billed it as a merger, in truth, DL acquired NW, despite what many seem to think.

Not only the airlines, but the government and the media too. But it was structured as an (all stock) acquisition.
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Cubsrule
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RE: Info On The DL/NW Relationship

Sat Nov 24, 2012 8:32 pm

Quoting gigneil (Reply 3):
In truth, it was a merger by every definition of the legal term "merger".

I'm not sure how an all stock acquisition - which is how it was structured - is a merger by every definition. The trouble is the imprecise use of the word "merger" by entities such as the Department of Justice. The "horizontal merger guidelines" do not differentiate between mergers and acquisitions.
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rwy04lga
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RE: Info On The DL/NW Relationship

Sat Nov 24, 2012 8:34 pm

Quoting 1337Delta764 (Reply 1):
2). While both airlines billed it as a merger, in truth, DL acquired NW, despite what many seem to think.

Uh oh, now you've done it. Try as we might, there will always be someone who will not accept the truth.

When RA became DL CEO, I told some rampers 'We're going to 'merge' with NW'. No one believed me. My rationale was that he already knew all there was to know about NW, our routes didn't overlap, we were already both in Skyteam, and we shared many facilities. At 15, I saw that DL and NW shared a terminal at TPA, at JFK, and at LGA and thought that they should merge way back in 1973. They waited for me to start working for DL to begin the process. So, you're all welcome!  Now my uncle Kenny in TPA (former NW) and I work for the same team.
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LAXtoATL
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RE: Info On The DL/NW Relationship

Sat Nov 24, 2012 8:38 pm

Quoting gigneil (Reply 3):

Companies larger than that get acquired all the time.
For PR reasons the DL/NW combination was marketed to the public and employees as a merger. But from a legal and financial perspective it was an acquisition.
 
boeing773er
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RE: Info On The DL/NW Relationship

Sat Nov 24, 2012 8:56 pm

I believe the main reason why DL acquired NW was because of their close partnership they already shared. NW really didn't have much to offer DL though when you really look at it. Sure they had a strong Pacific route network, but that was mainly through DTW and MSP, also to the lesser degree NRT.

I feel like DL and UA would of been a mega merger, where they would of been set besides the South America presence, but DL is getting around to it. The only problem I could of saw coming out of this would of been the Anti-Trust, this carrier would of been too big.

Then DL and AA would of been a good merger too. It would of been a fixer upper merger though. AA has good bones, it just needs to be worked on. They would of been able to build an international network out of LAX and ORD since they already have the feed.

Last DL and US, the orignal post didn't mention them but we can throw them in for fun. This wouldn't of been beneficial for either party. The overlap would of been huge, for example ATL/CLT, PHL/NYC, and PHX/SLC. Would never of worked out.
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michman
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RE: Info On The DL/NW Relationship

Sat Nov 24, 2012 10:21 pm

Quoting Cubsrule (Reply 5):

I'm not sure how an all stock acquisition - which is how it was structured - is a merger by every definition. The trouble is the imprecise use of the word "merger" by entities such as the Department of Justice. The "horizontal merger guidelines" do not differentiate between mergers and acquisitions.

Simple. It's a merger because they said it was a merger. Was it a merger of equals? No, DL was bigger. But then almost no merger is a true merger of equals. If that's how you define a merger, there would pretty much be no such thing as a merger. You might as well banish the term from business. They could have issued all new stock, but it was cheaper to issue new shares of DL stock for the outstanding NW shares (and airlines love cheap). Acquisitions generally involve some or all cash transactions. Also, the acquiring company generally does not bring in management from the acquired company or involve them in the decision processes. The DL/NW and CO/UA mergers were both cooperative mergers that meet the definition of merger (because that's what they called then). There's lots of stuff on the internet and wikipedia on mergers and their definition. The AA acquisition of TWA assets is an example of an acquisition.

[Edited 2012-11-24 14:25:59]
 
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RE: Info On The DL/NW Relationship

Sat Nov 24, 2012 10:27 pm

Quoting boeing773ER (Reply 8):

I believe the main reason why DL acquired NW was because of their close partnership they already shared. NW really didn't have much to offer DL though when you really look at it.

How can that be when the DTW and MSP hubs make the most money for DL behind ATL?

Quoting gigneil (Reply 3):

In truth, it was a merger by every definition of the legal term "merger".

Companies of that size just don't get acquired.

Right, and Boeing truly "merged" with McDonnell Douglas. Just don't tell the people at LGB.  
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RE: Info On The DL/NW Relationship

Sat Nov 24, 2012 10:31 pm

Quoting spiritair97 (Reply 2):
Quoting 1337Delta764 (Reply 1):As for UA, perhaps the likely reasons were due to them being alliance partners, as well as Richard Anderson being CEO.
Do you mean CO?

I believe he means that NW was chosen over UA for these reasons. Besides, CO was ALWAYS a very reluctant member of Skyteam.
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Amfleet82
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RE: Info On The DL/NW Relationship

Sat Nov 24, 2012 11:39 pm

DL needed access to Asia and a good Midwest hub (CVG is not Midwest but tries to serve the purpose). With NW they got the best network to Asia, lots of nice planes (though they were completely different than DL's fleet, TWO Midwest hubs with good O & D. They also got to be a monopoly in a whole new area (North Dakota, South Dakota and MN.

Plain and simple, DL couldn't figure out how to serve the American Midwest and Asia. NW couldn't figure out how to fly below the equator. The combined carrier is the best combination as could have been made at the time.

Adam
 
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RE: Info On The DL/NW Relationship

Sat Nov 24, 2012 11:53 pm

Quoting clrd4t8koff (Thread starter):
What was the initial attraction to NW vs. UA

NW was already in SkyTeam and they had a goood relationship pre-merger. That made the integration much easier.

But one of the issues overlooked was the size of UA compared to NW and the unionization issue. Delta is a mostly non-union airline and was much larger. By acquiring NW the majority of their employees would have been non-union after the merger making it less likely that workers could be organized. In fact, unionization efforts have failed since the merger.

UA on the other hand is 100% unionized and had more employees than DL and it's more likely the merged company would have become unionized and had to deal with more labor strife as a result.
 
milesrich
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RE: Info On The DL/NW Relationship

Sun Nov 25, 2012 12:00 am

Quoting gigneil (Reply 3):
Quoting 1337Delta764 (Reply 1):
2). While both airlines billed it as a merger, in truth, DL acquired NW, despite what many seem to think.

In truth, it was a merger by every definition of the legal term "merger".

Companies of that size just don't get acquired.

NS

Gigneil, You are mistaken. Companies that size get acquired all the time. I don't want to have my post deleted, but quite frankly, you have no idea what you are talking about. The surviving company is Delta. The headquarters are in Atlanta. The post merger management team is Delta's, not NW's. The primary maintenance base is in Atlanta, not MSP. Richard Anderson was with Northwest prior to joining Delta. Technically, it was a merger, because the balance sheets were merged. When our company, Louis Rich, Inc., was acquired by Oscar Mayer Foods Corporation, it was a "merger" too, but our company was acquired, even though the balance sheets were "merged".

Very few true mergers take place. The only recent ones I can think of were when Citizens & Southern Bank merged with North Carolina National Bank to form Nations Bank, which later acquired Bank of America and took their name, and Exxon/Mobil. Perhaps Burlington Northern/Santa Fe could be called a merger. But even there, the Santa Fe was acquired. United and Continental merged. That is a better argument, although one could say that Continental acquired United, and they kept the United name and decided on keeping the headquarters in Chicago. But Northwest Airlines, Inc., was acquired by Delta, and it no longer exists.
 
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RE: Info On The DL/NW Relationship

Sun Nov 25, 2012 12:00 am

I know this wasn't a huge factor, but DL's extremely close European partner, Air France, purchased NW's extremely close Euro partner, KLM, years earlier. Since all four are in Skyteam, it probably seemed like a nice transatlantic powerhouse alliance.
 
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RE: Info On The DL/NW Relationship

Sun Nov 25, 2012 12:15 am

Quoting milesrich (Reply 14):
The post merger management team is Delta's, not NW's.

You might want to check on that. I'd be willing to bet that there's a decent portion of them that are NW.

Quoting milesrich (Reply 14):
But Northwest Airlines, Inc., was acquired by Delta, and it no longer exists.

In name, no.......but their people, fleet, most of the facilities, some operational functions, etc., do.


I was involved with two mergers and one acquistion (with PA) and this SURELY smells like a merger, to me. The only ones that don't want to admit that are the "US vs THEM" crowd.
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Cubsrule
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RE: Info On The DL/NW Relationship

Sun Nov 25, 2012 1:54 am

Quoting michman (Reply 9):
There's lots of stuff on the internet and wikipedia on mergers and their definition.

I don't usually like wikipedia for technical legal distinctions, but wikipedia is helpful here, as it accurately describes this transaction:

Quote:
Usually, one company will buy another and, as part of the deal's terms, simply allow the acquired firm to proclaim that the action is a merger of equals, even if it is technically an acquisition. Being bought out often carries negative connotations; therefore, by describing the deal euphemistically as a merger, deal makers and top managers try to make the takeover more palatable.

Delta bought up all of Northwest's outstanding stock. It's an acquisition.

Quoting mayor (Reply 16):
I was involved with two mergers and one acquistion (with PA) and this SURELY smells like a merger, to me. The only ones that don't want to admit that are the "US vs THEM" crowd.

I think you are on to something (though I'd argue it slightly differently: only fanboys insist on it being called a merger, either because it makes it look less like NW died or because it makes DL look like the benevolent merger instead of the evil acquirer).

The issue is that the legal niceties of merger versus acquisition simply don't matter very much. In fact, I had to take to google before posting in this thread because I did not remember how the NW/DL deal was structured. UA/CO is more of a merger since United Continental Holdings will be the surviving corporate entity. But in five years, will that matter? No. Certainly, the fact that UA/CO is more like a merger than NW/DL has not helped the integration at UA/CO, which we all agree is much worse than the NW/DL integration.

The way a deal is structured has nothing to do with how much of one company versus the other is retained, which company's leadership is in charge, whether the two predecessor companies are truly equals, or really anything that matters to anybody but shareholders and lawyers.
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milesrich
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RE: Info On The DL/NW Relationship

Sun Nov 25, 2012 3:11 am

Quoting mayor (Reply 16):
I was involved with two mergers and one acquistion (with PA) and this SURELY smells like a merger, to me. The only ones that don't want to admit that are the "US vs THEM" crowd.
Quoting mayor (Reply 16):
In name, no.......but their people, fleet, most of the facilities, some operational functions, etc., do.


I was involved with two mergers and one acquistion (with PA) and this SURELY smells like a merger, to me. The only ones that don't want to admit that are the "US vs THEM" crowd.

If Delta didn't want to keep the operating employees and equipment of NWA, Inc., there would have been no reason to acquire it. I am glad it smells like a merger to you in FT. SMITH, AR. That is surely the center of Delta's operations. . The last time I checked, Delta Air Lines, Inc. and Northwest Airlines, Inc. never operated one scheduled flight into that city, although their regional partners have. As I remember Ft. Smith was a BN and FL town. Do you claim that Pan Am merged with National Airlines, or that they merged with AOA?

You are willing to bet? Please spare me Mitt!

Quoting mayor (Reply 16):
You might want to check on that. I'd be willing to bet that there's a decent portion of them that are NW.

And how much is a decent portion? I never claimed that everyone with Northwest was shown the door, but the Delta management team is running the show. As Cubsrule pointed out, many acquisitions are called mergers to make the acquired entity's employees feel good. Very few true mergers ever take place. A merger is a consolidation of EQUALS.

25 years ago, Delta "merged" with Western too. And 40 years ago, Delta "merged" with Northeast. And almost 60 years ago, Delta merged with Chicago & Southern. In the first case, they kept all of the aircraft for a while, but evenutally dumped the DC-10's and older 737-247's; they kept the employees, and they kept the LAX and SLC hubs. With NE, they kept the aircraft for a while but eventually replaced every bird from NE. Delta kept the route structure for a while, and the BOS base. In the case of C&S, they kept the people and equipment and routes, but sold off the L-649's.

I think most will see my point.
 
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RE: Info On The DL/NW Relationship

Sun Nov 25, 2012 4:59 am

Quoting milesrich (Reply 18):
If Delta didn't want to keep the operating employees and equipment of NWA, Inc., there would have been no reason to acquire it. I am glad it smells like a merger to you in FT. SMITH, AR. That is surely the center of Delta's operations. . The last time I checked, Delta Air Lines, Inc. and Northwest Airlines, Inc. never operated one scheduled flight into that city, although their regional partners have. As I remember Ft. Smith was a BN and FL town. Do you claim that Pan Am merged with National Airlines, or that they merged with AOA?

You are willing to bet? Please spare me Mitt!

Don't be such a smartass. Just because FSM is where I live has nothing to do with where I worked for DL.....I worked at ORD, SHV & SLC. In this day and age, I could live at the south pole and still be able to keep abreast of things that are going on. I don't see the reasoning (if any) of your reply. All I'm saying is that the two entities, MERGED. Fleets, facilities, employees, etc. I think I might have just a smidgen of knowledge about these mergers, because I was there, in the middle of them. Those are MY qualifications....what are yours?

Sure they "eventually" dumped the WA DC-10s and older 737s. They also KEPT the 727-200s of WA. They KEPT the employees, facilities, hubs, part of the fleet, route system, etc.

In the NE merger, they kept some of the fleet, for awhile, as well as the employees, route system, etc.


To me (a humble layman   ) no matter how you use the definitions, in the end, the companys' have MERGED into one unit. They may have acquired the assets, in total, but they merged those assets into one company. The PA deal was different as DL acquired those assets in PA's bankruptcy court proceedings. That doesn't make it any more a merger than the deal UA made, earlier, to buy PA's Pacific system.

[Edited 2012-11-24 21:10:57]
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michman
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RE: Info On The DL/NW Relationship

Sun Nov 25, 2012 5:23 am

Quoting milesrich (Reply 18):
Very few true mergers ever take place. A merger is a consolidation of EQUALS.

By your definition, there has never been a "true" merger as I'm quite sure you won't find a case where companies have combined while having same net worth, market cap, or whatever metric you choose to consider.

[Edited 2012-11-24 21:29:53]
 
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RE: Info On The DL/NW Relationship

Sun Nov 25, 2012 5:28 am

When two companies "merge" there is a better tax treatment than with a buyout. When Exxon bought Mobil, Exxon really bought Mobil but all the employees of both companies were told that this IS a MERGER, like it or not.
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michman
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RE: Info On The DL/NW Relationship

Sun Nov 25, 2012 5:37 am

"Merger" and "Merger of Equals" have two different meanings. Note that when the term "Merger of Equals" is used, it means "roughly" equal as you won't find a case where companies are exactly equal. If you want to argue that it wasn't a "Merger of Equals", there may be grounds for an argument. However, when you say it wasn't a "Merger" at all, that is a very different statement. From both a textbook and legal definition, it qualifies as a "Merger".
 
Passedv1
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RE: Info On The DL/NW Relationship

Sun Nov 25, 2012 1:02 pm

I thought for sure NW and CO were going to merge. I seem to remember that they had a pretty tight relationship (i.e. AS/DL) right up until they were merged/acquired/stapled/attached/combined/fused/incorporated/joined/married/melded/slapped on/tacked on/thrown together/united.

What is the history there?
 
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usdcaguy
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RE: Info On The DL/NW Relationship

Sun Nov 25, 2012 1:14 pm

What creates a "merger" in my mind is how employees are treated even though the actual transaction may technically be an "acquisition". From what I understand, many of the managers from NW moved to ATL to take over a number of leadership roles to the effect that there was a good balance of people from both sides. Many employees from MSP were extended offers to work in ATL, although such an offer may not have meant much to those who couldn't move. In some areas, legacy DL processes were retained and in others NW processes were used while many new processes were established to create a more efficient, profitable carrier. This balanced approach looks more like a merger to me from the human side, although it was obviously different on paper.

WN/FL, which was a true acquisition, is a different story. I've heard that WN basically came in and laid off most of the FL managers while those that got offers to move to Dallas were basically told that things had to be done the "Southwest" way without asking for their input, although there may have been some exceptions.

Quoting deltaffindfw (Reply 15):

I know this wasn't a huge factor, but DL's extremely close European partner, Air France, purchased NW's extremely close Euro partner, KLM, years earlier. Since all four are in Skyteam, it probably seemed like a nice transatlantic powerhouse alliance.

This was obviously a huge benefit; I think the combined entity was able to work with AF/KL much more easily as "DL" instead of DL and NW. Had UA been thrown into the mix with LH at its side, DL would have likely lost all the time it had spent establishing a close relationship with AF. AF/KL would have then had to create a JV with NW/CO. That would not have been bad at all and might have been better (that's a different thread), but I don't think that was ever in the cards.
 
rwsea
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RE: Info On The DL/NW Relationship

Sun Nov 25, 2012 1:57 pm

DL was weak in the upper midwest and in the Pacific (before the merger, DL had only one TPAC flight: ATL-NRT). NW was strong in these places, but weak on the east coast and in Latin America. Throw in the Skyteam connections and the merger made a lot of sense.
 
bobnwa
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RE: Info On The DL/NW Relationship

Sun Nov 25, 2012 2:12 pm

Quoting 1337Delta764 (Reply 1):
2). While both airlines billed it as a merger, in truth, DL acquired NW, despite what many seem to think.



How do you explain the fact that NW brought more unrestricted cash to the merger ?

Quoting Cubsrule (Reply 17):
Delta bought up all of Northwest's outstanding stock. It's an acquisition.


ASFAIR new stock was issued by the new company and exchanged for the stock of old DL and NW I believe the Delta shareholders received 55% of the new company and the NW shareholders 48% Various employee groups received the remainder.
 
Jano
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RE: Info On The DL/NW Relationship

Sun Nov 25, 2012 2:36 pm

Quoting bobnwa (Reply 26):
Delta shareholders received 55% of the new company and the NW shareholders 48% Various employee groups received the remainder.

55% + 48% = 103%
so the percentages must have been different.
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bobnwa
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RE: Info On The DL/NW Relationship

Sun Nov 25, 2012 2:52 pm

Quoting Jano (Reply 27):
55% + 48% = 103%
so the percentages must have been different.


you are right, the numbers should have been 55% for DL and 45% For NW
 
CIDFlyer
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RE: Info On The DL/NW Relationship

Sun Nov 25, 2012 3:24 pm

DL & NW really were a match made in heaven. From Star Alliance ties to the fact that Richard Anderson ran NW and then on to DL the marriage made a lot of sense. Minimal overlap for the 2, the only issues of overlap were CVG/DTW (CVG was slowly being downsized at the time) and MEM/ATL (MEM has never been a mega hub anyways by any means). The benefits of the merger are having pretty much the #1 presence in the south via ATL (and somewhat MEM but routes keep dopping there) and also a solid presence in the midwest via MSP and ATL to challenge UA and AA at ORD. Good mountain west coverage via SLC. Not to mention the Asia presence. IMHO DL is one of the best airlines out there.

Now, does anyone remember when US made a run at DL? I'm still puzzled as to why they didnt try going after NW, US and NW's route map had virtually no overlap. They would have been strong in the west via PHX, in the midwest via MSP/DTW, the south via MEM/CLT and the northeast with DCA/PHL. I think if US and NW would have combined MEM would have had a better chance at maintaining a status quo hub since the distance between CLT and MEM are farther than MEM and CLT. Could have run the dual south hubs like they run the dual midwest ones via MSP and DTW.
 
dcann40
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RE: Info On The DL/NW Relationship

Sun Nov 25, 2012 4:10 pm

Quoting CIDFlyer (Reply 29):
DL & NW really were a match made in heaven. From Star Alliance ties

*A? Do you mean SkyTeam?
 
LAXtoATL
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RE: Info On The DL/NW Relationship

Sun Nov 25, 2012 5:09 pm

Quoting bobnwa (Reply 26):
ASFAIR new stock was issued by the new company and exchanged for the stock of old DL and NW I believe the Delta shareholders received 55% of the new company and the NW shareholders 48% Various employee groups received the remainder.

Delta issued new stock when they exited bankruptcy protection. The acquisition of NW was done with existing stock. DL shares exchanged for NW shares, NW shares removed from circulation.

Quoting bobnwa (Reply 26):
How do you explain the fact that NW brought more unrestricted cash to the merger ?

And that means what? The transaction did not involve any cash. So the amount of cash on hand is irrelevant, there was no cash involved in the transaction. The cash on NW balance sheet was factored in to the total value of the company including all other assets and debts (just as it is everyday for any publicly traded company to determine the entities value).

As long as you want to make up reasons why to you it was a merger, I suppose you can call it anything you want. But if we are discussing what actually happened as a legal matter and how the transaction was recorded in the financial records it was an acquisition. There is no debate or opinion to be had on that. Of course there were things that NW had like cash, facilities, skilled people, routes, planes, etc that Delta found attraction and wanted to retain - otherwise there was no reason for them to purchase the airline. And since this was not a hostile takeover it was a combination that was favored by both companies and facilitated an environment that allowed them to blend the cultures more seamlessly and bill at as a merger versus an acquisition which for PR purposes benefited them a great deal. And as cubsrule pointed out early, UA/CO was a merger from a legal/financial perspective and yet they have had much more difficulty combining the two operations. The point is, how the actual operational combination of assets is completed is irrelevant to what the actual legal transaction was that combined the two entities.
 
LAXtoATL
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RE: Info On The DL/NW Relationship

Sun Nov 25, 2012 5:20 pm

One more thought...

Considering that both DL and NW were in favor of combining the two companies. NW could have been the acquiring entity from a legal perspective and the airline could look exactly how it does today. DL acquired NW because both companies determined that it was to their financial benefit to structure the deal as an acquisition versus a merger and that DL acquiring NW was more beneficial than the other way around. Regardless of the structure of the deal, DL and NW management worked together to structure the deal and combine the two operational units. The structure of the deal is what it is, but regardless of how it was set up for financial reasons, the airline you see today would likely be the same regardless of how the deal would have been structured. Pure and simple, the financial transaction has little to nothing to do with the operational combination.

I myself, often refer to DL and NW merging. It just feels like thats what happen and that is what flows out of mouth without thinking about it. But that is technically incorrect. But hey, the two operations were merged, so in a way it could be a correct statement as long as you are only referring to the operations which by most definitions were merged together. But if you are discussing the financial transaction that combined the legal entities into one it was an acquisition.
 
United1
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RE: Info On The DL/NW Relationship

Sun Nov 25, 2012 5:47 pm

Quoting LAXtoATL (Reply 31):
And as cubsrule pointed out early, UA/CO was a merger from a legal/financial perspective and yet they have had much more difficulty combining the two operations.

Actually UA/CO was structured almost exactly like DL/NW in terms of how they completed the transaction. UAL Corporation issued additional shares which were used to purchase CO and then enacted a name change becoming United Continental Holdings. From a legal and financial standpoint UA/CO was very much an acquisition. UAL Corporation and United Air Lines Inc are/will be the surviving framework that the combined company is being built on.

From a product/branding perspective UA/CO was much more a merger than DL/NW was. In the case of DL/NW most of what the passenger sees came from the DL side as they simply took DLs brand and replaced NW with it. In the case of UA/CO its much more of a blending of both sides which is my opinion at least why you are seeing UA struggle a bit more with digesting the merger.
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tommy767
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RE: Info On The DL/NW Relationship

Sun Nov 25, 2012 5:54 pm

Some say the writing on the wall for the DL/NW merger was how back in August 2005 both Delta and Northwest declared BK on the same exact day. I didn't think of it that way, but after a while it all made sense.

Quoting PassedV1 (Reply 23):

What is the history there?

CO and NW had EXTENSIVE code share agreements through the early 2000s but were especially prevalent in the late 1990s. NW also had a "golden share" at CO which technically prevented CO from merging with UA in 2008.

Apparently the writing on the wall for the CO/UA merger was all the way back around 2000. I chatted with a flight attendant who used to fly Gordo from IAH down to GIG and apparently he used to get slammed on scotch and told the f/a's that it was inevitable that UA was going to buy out CO, but they were waiting for the right moment.
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rwy04lga
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RE: Info On The DL/NW Relationship

Sun Nov 25, 2012 6:24 pm

Quoting LAXtoATL (Reply 32):
I myself, often refer to DL and NW merging. It just feels like thats what happen and that is what flows out of mouth without thinking about it. But that is technically incorrect. But hey, the two operations were merged, so in a way it could be a correct statement as long as you are only referring to the operations which by most definitions were merged together. But if you are discussing the financial transaction that combined the legal entities into one it was an acquisition.

EXACTLY (and I mean 100%) what I wanted to say but I couldn't say as eloquently. Thank you!
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NW
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RE: Info On The DL/NW Relationship

Sun Nov 25, 2012 7:48 pm

Quoting deltaffindfw (Reply 15):
I know this wasn't a huge factor, but DL's extremely close European partner, Air France, purchased NW's extremely close Euro partner, KLM, years earlier. Since all four are in Skyteam, it probably seemed like a nice transatlantic powerhouse alliance.


I think this is what got the ball rolling and has a lot more to do than SkyTeam, it was all about the Joint Venture between NW and KL.
 
gigneil
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RE: Info On The DL/NW Relationship

Sun Nov 25, 2012 7:57 pm

I don't understand what you people think you know. This was a legal merger with no cash changing hands. Delta didn't buy a thing. They reissued shares of paper money in a new corporation.

Don't believe me?

http://www.sec.gov/Archives/edgar/da...0465908025369/a08-10921_1ex2d1.htm

NS
 
NWAROOSTER
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RE: Info On The DL/NW Relationship

Sun Nov 25, 2012 8:24 pm

As a retired Northwest Airlines employee that went through some of the problems leading up to the formation of the NEW Delta, I have written below what I believe are some of the facts that lead up to and consummated into the "merger" of Northwest Airlines into Delta Air Lines. and what the future of the NEW Delta will be like. Many of you will find it interesting, while others will find it too wordy and whole heatedly disagree with my writings. That is your right.

Delta Air Lines acquired Northwest Airline, even though both Delta and Northwest touted it as a "merger" of equals, which it was not.
This acquisition was long in the planning. Richard Anderson was CEO of Northwest when the early planning was started. Part of the planning may of included breaking the mechanics union AMFA which had recently defeated the IAM in a representation election. I was told that Northwest's key executive management, which probably included Richard Anderson, had a closed party celebrating AMFA's victory at the now abandoned Northwest Airlines World Headquarters.
Sometime after that, Richard Anderson left Northwest Airlines to head United Health Care, which now, if I am correct, is the health carrier for all Delta employees. Richard, as he likes to be called did not want to damage and tarnish his name in the breaking of AMFA and the possibility of putting Northwest Airlines through bankruptcy. Northwest did as a result of the failed 2005 AMFA "strike" reduce the mechanic numbers from an approximate 4000 number to less than 1000 mechanics, which consisted of those who crossed the picket lines and replacement workers. Doug Steenland was put in charge to do all the dirty work and was rewarded well when he left after the "merger."
Northwest needed to restructure itself by shedding debt through the rejecting of aircraft leases, airport, facility, equipment leases and items that I can not think of. Wages and benefits needed to be restructured and the employee head count need to be reduced. This was a very carefully planned bankruptcy.
While this was being done at Northwest, Delta was probably preparing itself for the same bankruptcy scenario.
It is interesting that both Delta and Northwest, if I am correct, filled for Chapter 11 bankruptcy on the same date.
Both Delta and Northwest got almost everything that they wanted through bankruptcy. Delta managed to shed it's pilot's pension plan, which is still a sore spot. Northwest did not try to shed it's pilot's pension plan.
Both Delta and Northwest emerged from bankruptcy pretty much as they had both preplanned. Richard Anderson was by then a member of Delta Air Lines board of directors. Miraculously, Richard Anderson was chosen to be Delta's new CEO. Shortly after that, it became public that Delta and Northwest were talking about "merging" or combining into one airline.
Both airlines made promises that 10,000 employees would be kept in Minnesota even thought the NEW airline would be named Delta and the headquarters would be located in Atlanta, GA. Key executive employees, for the most part were relocated to Atlanta. Many other MSP employees were "given" the opportunity to relocate to Atlanta, probably at their own expense. Some relocated, some resigned, maybe with a severance package. The original Northwest headquarters, stores, inside shops and hangers, except for the engine shop and hangers 6 and 7, the 747 hangers were torn down as part the MSP Metropolitan Airports Commission' 2020 plan, which was initiated with the blessings of the now defunct Northwest Airlines. I hear that the remaining hangers 6 and 7 are going to be also torn down. All this to the NEW Delta's relief.
All that will remain at MSP of the original Northwest buildings, pre Republic merger, will be the engine shop, which will someday also be torn down if the MSP Metropolitan Airports Commission ever decides to complete the implication of the 2020 program. The cargo facility still remains but the attached Building F, which held Flight Attendant and mechanic training along with many of the flight simulators and SOC was recently torn down. The (SOC) Systems Operations Control at Northwest Airlines dealt with normal flight operations, flight delays and cancellation of services. Management of airplane breakdown. Handling of emergency situations and passenger safety. Problems caused by weather conditions, were Specialties of SOC Operations in the event of flight cancellations that were developed under the leadership of Donald Nyrop. The computer building, Building J was emptied.
Also, the new Northwest World Headquarters now stands empty and has been for sale for several years.
Delta also has vacated the new hangers that Northwest Airlines built at the original Republic Airlines facility along with the office tower Northwest also built when the additional 747 hangers were built. Delta also moved the stores facility from the old Republic facility to Atlanta.
Delta has turned MSP into nothing more than a large hub similar to DTW, while keeping a limited amount of aircraft maintenance at the remaining original Republic Airlines hangers that Northwest acquired. Because the NEW Delta Air Lines fell below the covenants of the loans it had with the State of Minnesota and the MSP Metropolitan Airports Commission Delta payed of the loans that Northwest had originated.
The acquisition has had a number of positive effects on the NEW Delta. This allowed Delta to expand into Asia with a simple signature and expand into the Midwest of the United States also. Due to Delta being larger than Northwest Airlines, it basically remained non union with the exception of the pilots which were members of ALPA at both carriers and one other small group of employees that I can't remember who they are.
With the exception of the Boeing 757, both airlines flew different aircraft. Northwest flew Airbus A319 and A320 aircraft along with A330s which were totally new to Delta. Northwest also had 16 747-451 aircraft which Delta has put to very good use. Delta will fly these 747s until they are retired to the desert. Acquiring Northwest's aircraft, including some DC-9s has allowed Delta the freedom of not needing to acquire new build aircraft. Delta has learned from Northwest and some of it's management it brought in the benefits of seeking out used aircraft. Delta is laughing its way to the bank by acquiring every MD-90 that it can for flying or for spare parts, such as the Saudi MD-90s. It is even getting 88 Boeing 717s that AirTran flew from Southwest Airlines at a bargain lease.
This was a well planned "merger", with Delta trying appear as though it wants to treat it's employees well so as to remain basically non union and combine the two airlines with out serious problems like those that are hampering US Airways. We will see how long Delta maintains the status quo with its employees before Delta starts to turn in the screws on its employees, like Delta did with the State of Minnesota and it's employees at MSP.
Another pair of losers in this "merger" will be the cities of Memphis, TN (MEM) and Cincinnati, OH (CVG). Both these cities will see significant loses in flights and revenue.
Delta Air Lines and AeroMexico are planing to begin construction of a jointly operated aircraft maintenance, repair and overhaul (MRO) center at the Intercontinental Airport in Queretaro in Mexico, which may result in the lose of more aircraft maintenance within the United States.
Delta now is considering making changes to the pass policies which would make passes for retirees less desirable and useful. Flying on a pass can be difficult enough for any employee due to Delta's "right sizing" by reducing the gauge of the aircraft used. Will Delta's next plan be to try and shed it's under funded pension plans for it's retirees. I understand changes have be made in the way current Delta employees pensions are funded. It may come to the point that the employees must fund their own pension with little or no help from Delta. All this while the key executive management takes good care of themselves.   

[Edited 2012-11-25 12:26:34]
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mayor
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RE: Info On The DL/NW Relationship

Sun Nov 25, 2012 9:34 pm

Quoting NWAROOSTER (Reply 38):
Sometime after that, Richard Anderson left Northwest Airlines to head United Health Care, which now, if I am correct, is the health carrier for all Delta employees.

Immaterial, as UHC was the healthcare provider, LONG before the merger.

Quoting NWAROOSTER (Reply 38):
Delta now is considering making changes to the pass policies which would make passes for retirees less desirable and useful.

The are ALREADY less uselful and desirable, mostly because of changes in bookings, upgrades, etc., NOT because of change in gauge of a/c. Actually, and this is off topic, but lets see what happens when the retirees get done with the letter writing campaign to management, which is already under way. The Delta Pioneers are helping with the push on this.

Quoting NWAROOSTER (Reply 38):
This was a well planned "merger", with Delta trying appear as though it wants to treat it's employees well

"trying to appear"??? I would say the large amounts of money that have been paid in profit sharing, alone, are more than an "appearance"......it's probably the real thing.
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CIDFlyer
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RE: Info On The DL/NW Relationship

Sun Nov 25, 2012 9:34 pm

Quoting dcann40 (Reply 30):
*A? Do you mean SkyTeam?


yes sorry I meant skyteam...fingers and brain werent working at the same time  
 
TrijetsRMissed
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RE: Info On The DL/NW Relationship

Sun Nov 25, 2012 9:48 pm

Quoting gigneil (Reply 37):

You can say it was a merger, after all that is what is was filed as. And indeed there are some legacy NW employees at the VP level at DL. But looking beyond the legal language and the textbook, for all practical business purposes, it was truly an acquisition. Much like Boeing and MDC 15 years ago.

Quote:

The year after it emerged from Chapter 11 in 2007, it acquired Northwest Airlines Corp., which had stepped out of court protection around the same time, cleansed of costs and debt.
Quote:
Mr. Anderson returned to Delta in 2007, first as an outside director and then as CEO. His first order of business was negotiating the 2008 acquisition of Northwest, and help Delta successfully work through a multiyear integration process, giving it a head start on rivals still embroiled in that exercise.

The reality is, in another 10-15 years, the remnants of NW will be quite marginal. To the point of when thinking of DL, the 2008 merger will just be a footnote. Save the ex-NW employees and some A330s.
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Cubsrule
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RE: Info On The DL/NW Relationship

Sun Nov 25, 2012 10:59 pm

Quoting gigneil (Reply 37):
This was a legal merger with no cash changing hands.

You are the second person to suggest that an acquisition must be conducted with cash. What gives you that idea?

Quoting gigneil (Reply 37):
Delta didn't buy a thing.

They bought the assets of Nautilus Merger Corporation, no?
I can't decide whether I miss the tulip or the bowling shoe more
 
NWAROOSTER
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RE: Info On The DL/NW Relationship

Sun Nov 25, 2012 11:51 pm

Quoting mayor (Reply 39):
Quoting NWAROOSTER (Reply 38):
Sometime after that, Richard Anderson left Northwest Airlines to head United Health Care, which now, if I am correct, is the health carrier for all Delta employees.

Immaterial, as UHC was the health care provider, LONG before the merger.

If UHC was Delta's health care provider long before the merger, it only made it easier for Richard to become CEO of Delta, by being a member of Delta's board of directors.
It does somewhat compare when Gary Wilson was elected to the board of directors of Northwest Airlines in the 1980s.
This gave him inside information on Northwest Airlines fat financial condition, which resulted in Gary Wilson, Alfred Chechi and Fred Maleck to decide to take over Northwest Airlines and strip it of its assets.

Quoting mayor (Reply 39):
Quoting NWAROOSTER (Reply 38):
This was a well planned "merger", with Delta trying appear as though it wants to treat it's employees well

"trying to appear"??? I would say the large amounts of money that have been paid in profit sharing, alone, are more than an "appearance"......it's probably the real thing.

Is there any guarantee that Delta will continue paying profit sharing in any significant amount in the future? Only time will tell. The glory days in the airline industry are over. It is no longer like what was in the 1960s and early 1970s. Yes, there were strikes, but they always got settled and the airlines did not run to bankruptcy court. Northwest went through several strikes, while Delta did not experience any strikes. I don't think Delta was hit by the 1966 strike that Lyndon Johnson had order stopped. However, Delta had to befit from the strikes at both Northwest Airlines and National Airlines. Also, the same people are not running the airlines now that were running them in the distant past. Airline people then vs bean counters that do not have a real understanding of what it takes to run an airline. "Debt is your friend" as Alfred Chechi would say. Debt existed prior to the new breed of airline executives, but it was used in a more rational way. It was not, how much can airline borrow, but how much does the airline really need to borrow.   
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RE: Info On The DL/NW Relationship

Mon Nov 26, 2012 1:05 am

Quoting NWAROOSTER (Reply 43):
If UHC was Delta's health care provider long before the merger, it only made it easier for Richard to become CEO of Delta, by being a member of Delta's board of directors.

Unless I'm mistaken, UHC was DL's healthcare provider, even BEFORE Anderson was with UHC.

Quoting TrijetsRMissed (Reply 41):
Quote:Mr. Anderson returned to Delta in 2007, first as an outside director and then as CEO. His first order of business was negotiating the 2008 acquisition of Northwest, and help Delta successfully work through a multiyear integration process, giving it a head start on rivals still embroiled in that exercise.

Not sure who's quote this is, but I don't understand the "Mr. Anderson RETURNED to Delta in 2007" part......I don't recall him being with DL before he was named to the BOD. Clarification, anyone?
"A committee is a group of the unprepared, appointed by the unwilling, to do the unnecessary"----Fred Allen
 
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usdcaguy
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RE: Info On The DL/NW Relationship

Mon Nov 26, 2012 12:12 pm

Quoting NWAROOSTER (Reply 38):
Many other MSP employees were "given" the opportunity to relocate to Atlanta, probably at their own expense. Some relocated, some resigned, maybe with a severance package.

From what I heard, MSP employees got the standard DL relocation package. A number on both the DL and NW sides did take early retirement (offered with health benefits) or simply a severance package.

Quoting NWAROOSTER (Reply 38):
The computer building, Building J was emptied.

That's not correct. I believe it still houses a number of IT functions for DL and will eventually include IT support for MLT.
 
bobnwa
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RE: Info On The DL/NW Relationship

Mon Nov 26, 2012 1:13 pm

Excellent recap of the DL/NW merger
 
delta2ual
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RE: Info On The DL/NW Relationship

Mon Nov 26, 2012 1:29 pm

Quoting NWAROOSTER (Reply 43):
Is there any guarantee that Delta will continue paying profit sharing in any significant amount in the future? Only time will tell.

Well unfortunately, there are no guarantees about anything, anywhere. In my experience, most people that are RD's ("real Delta") like myself tend to believe that DL will do no wrong by them, whereas many former NW tend to be mistrustful of management (and with good reason). I think there has to be a balance; DL will certainly do what it needs to to remain competitive, but I don't think senior management sits around and thinks of ways to screw the employees.
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mayor
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RE: Info On The DL/NW Relationship

Mon Nov 26, 2012 5:48 pm

Quoting NWAROOSTER (Reply 43):

If UHC was Delta's health care provider long before the merger, it only made it easier for Richard to become CEO of Delta, by being a member of Delta's board of directors.

Just as an fyi, I found out when UHC became DL's healthcare provider.....it was January 1, 2001. BEFORE Anderson was on the BOD, I believe.
"A committee is a group of the unprepared, appointed by the unwilling, to do the unnecessary"----Fred Allen
 
AADC10
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RE: Info On The DL/NW Relationship

Mon Nov 26, 2012 6:59 pm

Quoting clrd4t8koff (Thread starter):
1). What was the initial attraction to NW vs. UA, CO or AA? My first guess would be their Pacific operations, but UA has a huge Pacific operation and would have given them SFO, ORD, IAD and a greater LAX presence?

The only possibility on that list was NW. A merger or other combination among the big 3, (AA, UA & DL) was unlikely to receive approval from the DOJ due to anti-trust concerns. Even post 9/11, unless one of them was on the brink of collapse, any combination would not be approved. There was some talk of an extensive code share deal between UA and DL in the late 1990s and even that trial balloon was shot down by DOJ.

CO was not available due to NW's holding "golden shares" preventing CO from merging with anyone other than NW. It was certainly possible for a payment to be made to NW to release CO but the case for a DL/CO combination was probably not strong enough to make such a deal worthwhile. The golden shares deal ended with the DL/NW merger, paving the way for the UA/CO merger.

For the two of the big 3 that did not have a Pacific network, NW was the prize and if DL did not get NW, they would be in serious trouble. DL not only lacked extensive Pacific routes, as did AA, DL did not have the portfolio of LHR slots that AA and UA had. While DL purchased most of PA's routes, except for the Pacific and LHR routes sold to UA, most of those routes were to 2nd tier Europe, not nearly as valuable as LHR. With domestic fares stagnant, international was propping up the legacy carriers and if DL did not get NW, AA almost certainly would. Now AA only has US available as a viable merger partner, which does not help them much.

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