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jmc1975
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Synergy Of A DL/CO Merger

Wed Apr 20, 2005 11:32 am

While this topic has been discussed in the past, I believe it is wise to reopen in a time of circulating rumors and smells of airline mergers. Delta and Continental have so many redundant resources to synergize to make a high-quality, full-service airline. If they get rid of the flab and redundancies and streamline their operations, they would be unstoppable!

Company:
- Delta Air Lines
- Headquarters in Atlanta...consolidated from Houston HQ.

Hubs:
- ATL, IAH, CVG, EWR, SLC
- CLE would go the way of DFW and become field station.
- JFK ops would shift to EWR and would subsequently become a field station, feeding some traffic to it's Skyteam

Fleet:
- 735, 73G, 738, 739, 752, 753, 762, 763, 764, 772
- Get rid of DL's M88, M90, 732, 733, RR-powered 772 and CO's 733

Challenges:
- CO and DL 752s have different engines.
- Seniority and Union Issues
 
avek00
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RE: Synergy Of A DL/CO Merger

Wed Apr 20, 2005 11:35 am

DL/CO is largely duplicitous, and doesn't allow for any real growth.
 
tpaewr
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RE: Synergy Of A DL/CO Merger

Wed Apr 20, 2005 11:38 am

overkill/anti-trust on the East Coast and TA, lack of many very long haul aircraft (777/747/340). Nadda on the Left Coast (SLC don't cut it). I think the key word you said yourself:



redundancies


bad idea, they should match up with UA or NW.
 
Delta4eva
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RE: Synergy Of A DL/CO Merger

Wed Apr 20, 2005 11:40 am

I would love to see a merger between the two, however, I see it as unlikely. DL and NW might make a better match and their routes might work better together with NW strong in the Pacific and Delta in the Atlantic.

IMO A DL and CO merger would produce a extremely strong airline. But would it pass government regulations?
 
jetblueatjfk
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RE: Synergy Of A DL/CO Merger

Wed Apr 20, 2005 11:44 am

DL/CO would be strong but NW has more to offer in a merger where it has a strong hold in places where others don't.

DL/NW is better.
CO can go with someone like UA(don't really mean that but just saying)

 airplane  jetBlueAtJFK  airplane 
 
jmc1975
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RE: Synergy Of A DL/CO Merger

Wed Apr 20, 2005 12:01 pm

As some of you have said, a DL/CO merger would make a strong airline. If their redundancies are synergized, they will be strong....it's the very key to making them a logical merger. Airline Economics 101...maximize RASM/minimize CASM! If their redundancies are not synergized, both carriers can potentially fail.

Those who suggest a DL/NW merger over DL/CO must have just walked out of an opium den. DL and NW have no fleet commonality and a merger of operations between those two would be absolutely attrocious and disasterous. However, to their credit, a synergization as of the two code-share partners under the umbrella of thei current agreement would be extremely beneficial to both carriers.

DL & UA????? Huh???? That makes absolutely no sense.
 
thomasphoto60
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RE: Synergy Of A DL/CO Merger

Wed Apr 20, 2005 12:08 pm

Correct me if I am wrong but every post seems to suggest that the name Continental would dissappear in such a merger. What about the other way around? I seem to recall some years back that CO made advances towards DL.

From a purely emotional and non-business perspective, HELL NO!

Thomas
 
2travel2know
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RE: Synergy Of A DL/CO Merger

Wed Apr 20, 2005 12:13 pm

Quoting Jmc1975 (Thread starter):
Headquarters in Atlanta...consolidated from Houston HQ.

Why HQ in ATL not in IAH ?

Quoting Jmc1975 (Thread starter):
CLE would go the way of DFW and become field station

Why drop CLE but not CVG?

Quoting Tpaewr (Reply 2):
Nadda on the Left Coast (SLC don't cut it).

I don't know why DL left PDX hub but keep SLC hub. PDX is a better gateway for Asia than SLC.
 
SESGDL
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RE: Synergy Of A DL/CO Merger

Wed Apr 20, 2005 12:15 pm

Quoting Thomasphoto60 (Reply 6):
Correct me if I am wrong but every post seems to suggest that the name Continental would dissappear in such a merger. What about the other way around? I seem to recall some years back that CO made advances towards DL.

Umm, no. DL wanted to take over CO but it didn't work out, instead CO chose to enter an alliance with NW that still exists today. Everyone on this board seems to think CO would take over DL, that wouldn't happen. DL is far more recognized and is much larger than CO. Anyway though, no mergers are gonna take place anytime soon, it would be financial suicide. But a DL/CO merger would work better than any other airline combination.

Jeremy
 
SESGDL
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RE: Synergy Of A DL/CO Merger

Wed Apr 20, 2005 12:27 pm

Quoting 2travel2know (Reply 7):
Why HQ in ATL not in IAH ?

Cause ATL is the largest airline hub in the world and DL's based there and they're larger than CO.

Quoting 2travel2know (Reply 7):
Why drop CLE but not CVG?

DL's CVG hub is larger than CO's CLE hub.

Quoting 2travel2know (Reply 7):
I don't know why DL left PDX hub but keep SLC hub. PDX is a better gateway for Asia than SLC.

PDX was never a DL hub, it was a focus city with flights to LAX, SLC, CVG, DFW, ATL, LAS, NRT, NGO, and JFK at one time. SLC is an actual DL hub. DL has no intentions of flying SLC-Asia, their PDX-Asia routes weren't working for them obviously.

Jeremy
 
jmc1975
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RE: Synergy Of A DL/CO Merger

Wed Apr 20, 2005 12:29 pm

Quoting 2travel2know (Reply 7):
Why HQ in ATL not in IAH ?

Delta has a well-established HQ adjacent to Hartsfield in ATL. Selling off the corporate real estate in Downtown Houston can generate $$$ for the airline.

Quoting 2travel2know (Reply 7):
Why drop CLE but not CVG?

Delta has a well-established and efficient hub at CVG. CLE doesn't have much room for further expansion without a significant capital outlay. Again, selling off some assets at CLE could generate $$$ for the airline.
 
jmc1975
Topic Author
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RE: Synergy Of A DL/CO Merger

Wed Apr 20, 2005 12:33 pm

Under the DL/CO merger, the only nonstop transpacific Asia routes I see the new Delta flying (with 772s) are:

IAH-NRT
ATL-NRT
EWR-NRT
EWR-HKG
EWR-PVG
 
thomasphoto60
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RE: Synergy Of A DL/CO Merger

Wed Apr 20, 2005 12:38 pm

Quoting SESGDL (Reply 9):
Cause ATL is the largest airline hub in the world and DL's based there and they're larger than CO.

Which is the main reason why I would not want to see a marrige between the two. I rather get the feeling that IAH (and CLE) would end up like STL after the AA merger with TW, and that would be a real hit for the local economy. That said, I realize that business is business and I am looking at it from an emotional perspective.

Thomas
 
GQfluffy
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RE: Synergy Of A DL/CO Merger

Wed Apr 20, 2005 12:49 pm

Quoting Thomasphoto60 (Reply 12):
from an emotional perspective

There's a saying: "you can't make an omelet without breaking some eggs"

I'm not so sure IAH would turn into another STL (there's a lot more then just CO traffic in and out), but yes, it would change life there a bit. CLE needs some major help. Maybe it shutting down would be the best thing for it.  Wink

DL and CO will not merge. Like what was said earlier. Too many redundancies. You'd then have an airline that would most likely be in the same situation it was in before the merger.

fluffy
 
IAHTowTeam
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RE: Synergy Of A DL/CO Merger

Wed Apr 20, 2005 12:52 pm

First of all...CO would never get rid of their IAH hub. It is too strategiclly located to mexico and as a feeder to Mexico, central and south america....so you can scratch that idea. Also, there is no major direct low fare competition at IAH as there is in ATL with DL and AirTran compete. So there is no way we would move CO's hub to ATL. Also, CO and DL did want to merge back in 99-00. CO walked away from the merger because DL wanted to put all their employees at the top of the senioirty list and CO's on the bottom....Gordon and Larry said NO WAY! So here we are again. If CO and DL were to merge...alot of work would need to be done on the DL side. They are dead weight! They have way to much debt and their business model is still not a money maker, in these times. CO is in much better shape to go alone in all of this. While it may seem to be a good idea, it could very well, at this stage, be the end of both carriers, if they were to try it now. We are going to have to see fares go back up and fuel go back down first. I would maybe give it a year or two, if that.
 
jmc1975
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RE: Synergy Of A DL/CO Merger

Wed Apr 20, 2005 12:57 pm

Thomasphoto60,
Under such a scenario, the CLE hub would most certainly be dismantled, with sevice only to CVG, EWR, IAH, ATL and possibly SLC. Perhaps you would see mainline Delta flying some high-yield point to point from CLE (i.e. LAX, LGA, DCA) You may even see Delta Connection doing CLE to MCO or FLL. Nonetheless, it would be much smaller than CO's current hub.

I don't anticipate IAH would be scaled down significantly from its current levels, however, redundant flying between the hubs would be eliminated and a few international routes could be synergized through ATL.
 
jmc1975
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RE: Synergy Of A DL/CO Merger

Wed Apr 20, 2005 1:04 pm

Quoting GQfluffy (Reply 13):
DL and CO will not merge. Like what was said earlier. Too many redundancies. You'd then have an airline that would most likely be in the same situation it was in before the merger.

You're misunderstanding the concept. The redundancies are a major part of what would make the merger work. It's the perfect match for synergized optimization.

Quoting IAHTowTeam (Reply 14):
First of all...CO would never get rid of their IAH hub. It is too strategiclly located to mexico and as a feeder to Mexico, central and south america....so you can scratch that idea. Also, there is no major direct low fare competition at IAH as there is in ATL with DL and AirTran compete. So there is no way we would move CO's hub to ATL.

The IAH hub would NOT move to ATL and I'm bewildered of who would give you that impression. Most of the Mexico ops would likely be connecting via IAH.
 
sccutler
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RE: Synergy Of A DL/CO Merger

Wed Apr 20, 2005 1:10 pm

Quoting Jmc1975 (Reply 10):
Delta has a well-established HQ adjacent to Hartsfield in ATL. Selling off the corporate real estate in Downtown Houston can generate $$$ for the airline.

CO's downtown office space is leased. No gains to be made there.

Any acquisition of CO would require consent of NW.

Quoting SESGDL (Reply 8):
Everyone on this board seems to think CO would take over DL, that wouldn't happen. DL is far more recognized and is much larger than CO.

No airline was more recognized than Pan Am; seen 'em lately? CO's been strategically expanding in profitable areas; DL's been retrenching with miserable results. Although I do not expect to see a merger of these two, were it to happen and DL emerged the controlling entity, I believe the capital markets would not be friendly to the combination.

Fire away.
 
SilentObserver
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RE: Synergy Of A DL/CO Merger

Wed Apr 20, 2005 2:10 pm

Quoting SESGDL (Reply 8):
instead CO chose to enter an alliance with NW that still exists today.

If you call partial ownership an alliance. NW owns I believe 49% of the B shares of CO. The DOJ forced them to limit their investment for Anti-Trust reasons, it even went to court and went against NW. If the DOJ will not approve a NW investment in CO, they won't be approving any mergers of the two.

A DL/CO merger would crate a much more objectionable pair then NW/CO that it would be almost impossible to gain approval. UA/US would have been roughly equivalent to a DL/CO merger and that didn't make it even to a final review. The DOJ even under Bush has made it clear that any merger in the industry must result in a clear benefit to the consumer, in DL/CO I see no benefit. I will agree NW/CO would make some sense, but their current structure might as well be one.
 
jmc1975
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RE: Synergy Of A DL/CO Merger

Thu Apr 21, 2005 12:15 am

Quoting SilentObserver (Reply 18):
A DL/CO merger would crate a much more objectionable pair then NW/CO that it would be almost impossible to gain approval. UA/US would have been roughly equivalent to a DL/CO merger and that didn't make it even to a final review.

Things are alot different now than they were in April 2000. One surviving airline is a much greater customer benefit than two struggling airlines that fail. It's only a matter of time before the DOJ needs realizes that.
 
luv2fly
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RE: Synergy Of A DL/CO Merger

Thu Apr 21, 2005 12:24 am

Quoting IAHTowTeam (Reply 14):
First of all...CO would never get rid of their IAH hub. It is too strategiclly located to mexico and as a feeder to Mexico, central and south america....so you can scratch that idea. Also, there is no major direct low fare competition at IAH as there is in ATL with DL and AirTran compete. So there is no way we would move CO's hub to ATL. Also, CO and DL did want to merge back in 99-00. CO walked away from the merger because DL wanted to put all their employees at the top of the senioirty list and CO's on the bottom....Gordon and Larry said NO WAY! So here we are again. If CO and DL were to merge...alot of work would need to be done on the DL side. They are dead weight! They have way to much debt and their business model is still not a money maker, in these times. CO is in much better shape to go alone in all of this. While it may seem to be a good idea, it could very well, at this stage, be the end of both carriers, if they were to try it now. We are going to have to see fares go back up and fuel go back down first. I would maybe give it a year or two, if that.

If CO and DL were to merge...alot of work would need to be done on the DL side. They are dead weight! They have way to much debt and their business model is still not a money maker, in these times. CO is in much better shape to go alone in all of this.

No airline wants the debt that is now the legacy of DL airlines.
 
flyabunch
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RE: Synergy Of A DL/CO Merger

Thu Apr 21, 2005 12:30 am

If this merger were ever to take place, I am gone as a CO Elite. One of the reasons I am Platinum on CO is because I would not want to be on DL.

Long live CO...independent and successful. If anything, they should entertain buying someone else instead of being sucked into a lose-lose situation.

Mike
 
PanAmDC10
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RE: Synergy Of A DL/CO Merger

Thu Apr 21, 2005 12:40 am

If a merger ever occured, I can forsee the new company changing the CO seat layout on their 767-400, more seats would be crammed in First/Business and Economy, similar to what Delta has done with it. I suppose it depends on whether the CO or DL execs have the upper hand when the dust settles.
 
DLPMMM
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RE: Synergy Of A DL/CO Merger

Thu Apr 21, 2005 1:03 am

Mergers and failures will occur throughout the industry over the next 2 years or so until we have 3 or so legacies and 3 large LCCs, (and a smattering of regionals here and there).

The questions are:

1. Who will survive.

2. Who will liquidate.

3. Who will be absorbed.

Please note that the survivor may not keep the same name, a la B of A is really Nationsbank and Wachovia is really First Union as far as management goes.
 
OttoPylit
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RE: Synergy Of A DL/CO Merger

Thu Apr 21, 2005 1:24 am

Quoting Luv2fly (Reply 20):
If CO and DL were to merge...alot of work would need to be done on the DL side. They are dead weight! They have way to much debt and their business model is still not a money maker, in these times. CO is in much better shape to go alone in all of this.

No airline wants the debt that is now the legacy of DL airlines.

As you so obviously show, you don't have the first clue what you are talking about. First of all, you have something against Delta. Ok, thats fine. Secondly, Delta has a lot of debt, you are correct. However, its not like its anything surprising. Even during record profit times, most airlines still carry a heavy debt load, the banks love it. You think new planes pay for themselves overnight? So they are 20 billion in debt, and it will take a while to pay off. But the banks agreed it, so if Delta's transformation plan didn't make sense, they would not have gotten the money anyway.

Third, you say Delta's model is not a moneymaker. Where is your basis to prove that? The fact that Delta has lost money, would be your answer. And that Delta is expected to post a heavy loss in the first quarter. My, what a short memory you have. If you remember when Delta introduced Simplifares, Delta and even the best analysts in the industry(Ray Neidl is the best, IMO) said that it would be a while before the profits picked up. The earliest that Delta would be able to post a profit is the third quarter. Its a loss initially, but pays off in the long run. So unless you have something to back up your moneylosing statement other than the fact that Delta has lost money, then that is just an opinion, and not a very good one at that.


You say CO is a lot better off to go its own way in this. I agree(isn't that a shocker). In fact, I think CO and DL are a lot better off to go their own ways in this. Not that anyone could buy anyone else anyway.


Finally, no airline wants the debt that is now the legacy of Delta Air Lines(it is Delta Air Lines, or DL. Not DL airlines, that doesn't make sense)? Well, you have your opinion(again!), but in about 10 or 15 years, the debt that you say is Delta's "legacy" will be down to the normal debt load that the airlines usually carry. For an airline that is 75 years old, the debt it has pulled up in 3 years is it's legacy, huh?  Yeah sure Thats actually a funny thought. Delta's ad slogan in 10 years can be: "Fly Delta, the debt-riddled 86 yr old airline."
 
goCOgo
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RE: Synergy Of A DL/CO Merger

Thu Apr 21, 2005 1:48 am

Quoting Jmc1975 (Thread starter):
CLE would go the way of DFW and become field station.

Why? CO has a brand new 10 year lease at CLE. I don't think CLE could so easily be dropped. CVG is larger based entirely on the fact that DL connects more passengers through there. CO doesn't have much equipment left after taking care of EWR and IAH. DL only needs to take care of ATL before CVG. Cleveland has much more O&D than Cincinnati. CVG has some better facilities, but not that much better. If the IX Center is demolished, there is plenty of room at CLE.

Don't presume that just because CVG has more mainline and more international destinations that it is a better potential hub for a combined carrier.

Quoting Jmc1975 (Reply 10):
Again, selling off some assets at CLE could generate $$$ for the airline.

Sell them to who? They could find a buyer I suppose, but would that cover the cost of the lease? If CLE isn't of interest to CO-DL, why would anyone else be willing to pay top dollar for CO's stuff here?
 
avek00
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RE: Synergy Of A DL/CO Merger

Thu Apr 21, 2005 2:04 am

CO and DL add little to each other's route networks. A merger would require substantial divestures and write-downs in order to eliminate duplicity and satisfy even a failing firm antitrust review.

Should the fabled industry consolidation occur via mergers, a much better merger partner (from a route network synergy standpoint) for CO is United. A United/Continental merger would create a global powerhouse that would be the largest US airline to every region of the world (worst case, a very close #2 to AA in Latin America), and possess a domestic route network even Southwest would envy.
 
ContnlEliteCMH
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RE: Synergy Of A DL/CO Merger

Thu Apr 21, 2005 2:06 am

Quoting OttoPylit (Reply 24):
So unless you have something to back up your moneylosing statement other than the fact that Delta has lost money, then that is just an opinion, and not a very good one at that.

What *better* evidence is there that the business plan is poor, than the fact that it is not making money? That it has lost billions of dollars in quarter after quarter, year after year? Please be specific.

Then again, CO is losing money as well. You can easily argue that their business plan is not working, either. I think that's just as fair as saying DL's business plan isn't working. It's not really opinion. It's evidence.

To call this *obvious* evidence "opinion" is a bit screwy. Besides, if DL posts a $600 million loss in Q1 05, you can be *sure* that huge number is not attributable solely to Simplifares. If it's not, then you still have a problem in Q3 05, even if Simplifares really pay dividends, which I think they will.


Quoting OttoPylit (Reply 24):
Finally, no airline wants the debt that is now the legacy of Delta Air Lines(it is Delta Air Lines, or DL. Not DL airlines, that doesn't make sense)? Well, you have your opinion(again!), but in about 10 or 15 years, the debt that you say is Delta's "legacy" will be down to the normal debt load that the airlines usually carry. For an airline that is 75 years old, the debt it has pulled up in 3 years is it's legacy, huh? Thats actually a funny thought. Delta's ad slogan in 10 years can be: "Fly Delta, the debt-riddled 86 yr old airline."

Well at least you're consistent. Of course, you can be consistently wrong and well as consistently right. On the one hand, you want us all to ignore the *obvious* red ink bleeding from Delta in the past three years. Now you want us to ignore the stifling amount of debt accrued in the past three years.

Problem is, you can't ignore EITHER. The following are *facts*, not opinion:

Delta has lost mondo megabucks in the past five years.
Delta has accrued mondo megadebt in the past five years.

You can forget about the 86 year history because it's irrelevant. Investors, creditors, and customers don't care about that. They care about what will happen tomorrow, and the next day, and the next day. Nostalgia is a poor substitute for profitability.

Quoting OttoPylit (Reply 24):
Well, you have your opinion(again!), but in about 10 or 15 years, the debt that you say is Delta's "legacy" will be down to the normal debt load that the airlines usually carry.

That's a HUGE assumption. There is *no* evidence that this is true because it requires the following to happen: Delta's return to profitability above and beyond service on that massive debt. It also presumes that DL will not revolve the debt, or acquire new debt. This, my friend, is hopeful opinion. You could be right; you could be wrong. Only time will tell.

[Edited 2005-04-20 19:08:34]
 
ContnlEliteCMH
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RE: Synergy Of A DL/CO Merger

Thu Apr 21, 2005 2:11 am

Quoting Avek00 (Reply 26):
Should the fabled industry consolidation occur via mergers, a much better merger partner (from a route network synergy standpoint) for CO is United. A United/Continental merger would create a global powerhouse that would be the largest US airline to every region of the world (worst case, a very close #2 to AA in Latin America), and possess a domestic route network even Southwest would envy.

Exactly what I was thinking. United is huge in the midwest and west. CO is massive in the east and Texas. Both have massive international routes that complement each other.

That said, why in the *world* would CO want UA's baggage?
 
avek00
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RE: Synergy Of A DL/CO Merger

Thu Apr 21, 2005 2:15 am

Quoting ContnlEliteCMH (Reply 28):
That said, why in the *world* would CO want UA's baggage?

CO doesn't - I never said that this *would* take place, only that United is the most logical partner from a route network standpoint. That said, if US kicks the dust via merger or liquidation, I fully expect an offer to be made to CO to join UA in a broad codesharing deal that will include an invitation to join the Star Alliance, and CO would likely accept it.
 
jmc1975
Topic Author
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RE: Synergy Of A DL/CO Merger

Thu Apr 21, 2005 2:23 am

A UA/DL merger would entail:

Fleet:
735, 733, 73G, 738, 739, 319, 320, 752 (RR&PW), 753, 762, 763, 764, 772, 744

Hubs:
IAH, EWR, IAD, ORD, CLE, DEN, SFO, LAX

HQ in Chicago?

I guess CLE would close in favor of ORD. How about IAD and EWR?
 
DLPMMM
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RE: Synergy Of A DL/CO Merger

Thu Apr 21, 2005 3:14 am

What the heck!!

Let's Just:

1. CO/DL/NW

2. UA/US/HP

3. AA/AS/all the rest that aren't LCCs

Then we can sprinkle around some commuters.

Wouldn't that be a hoot!!
 
RAMPRAT980
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RE: Synergy Of A DL/CO Merger

Thu Apr 21, 2005 3:23 am

If DL & CO were to merge which livery would survive CO's or DL's.
Personally I prefer CO over DL. My reasons are obvious. However I do think that airline merger's will happen. The strong airlines must hold onto their managers and loose those from the weaker one.
 
padcrasher
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RE: Synergy Of A DL/CO Merger

Thu Apr 21, 2005 3:31 am

Since we're all dreaming here.

There is nothing redundant about DL in LGA/JFK and CO in EWR. You want that. You would crave for that. Having that market share in NYC is a huge plus. You can set up corporate agreements to serve companies in Manhattan and their employees via EWR or LGA/JFK. Depending on their needs. You're not asking them to drive all the way to EWR or JFK. You serve both. No other airline can match that. You leverage the Shuttle as well.
 
aa777jr
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RE: Synergy Of A DL/CO Merger

Thu Apr 21, 2005 3:34 am

This is the first merger thread I've read on this site where the majority of the posts actually make sense. Very enjoyable to read everyone's opinion on this topic.

Quoting RAMPRAT980 (Reply 32):
If DL & CO were to merge which livery would survive CO's or DL's.

Easy. You create a new livery for the merged airlines. I think it's the only suitable thing to do.

Regards.
 
flyabunch
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RE: Synergy Of A DL/CO Merger

Thu Apr 21, 2005 3:54 am

Quoting Aa777jr (Reply 34):
Easy. You create a new livery for the merged airlines. I think it's the only suitable thing to do.

Great, we'll call it "Delta Dental"  Silly

Mike
 
aa777jr
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RE: Synergy Of A DL/CO Merger

Thu Apr 21, 2005 3:56 am

Deltinental.

filler

filler
 
Planesmart
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RE: Synergy Of A DL/CO Merger

Thu Apr 21, 2005 4:00 am

DLPMMM summarises well.

There has to be significant redundancies, fleet and route disposal, otherwise whats the point of re-naming, re-branding, merging, acquiring, or whatever. Zero.

These changes are not poised to happen for staff, shareholders or suppliers. They are not even for customers. It's survival.

Do you want an industry with 8-9 sick businesses, or after soft mergers 5-6 sick or sicker busineses, or 3-4 healthy ones, re-capitalised, with new funding, more modern fleets, modern staff contracts and remuneration able to match or beat LCC's and overseas competition?

Fact. If the finance industry, leasors and suppliers are going to take a big hit, then people in the industry are going to take a big hit too. And that doesn't mean a 20% paycut - it means a 100% paycut for many. It means no seniority. It means slashing benefits. It means an end to outdated work practices, such as negotiating new aircraft models, new routes, etc.

It means airlines are going to enter Chapter 7, to enable all contracts & agreements to get torn up, a white knight will establish a new airline, selected assets will be acquired, and hiring will commence.
 
N1120A
Posts: 26860
Joined: Sun Dec 14, 2003 5:40 pm

RE: Synergy Of A DL/CO Merger

Thu Apr 21, 2005 11:09 am

Quoting Jmc1975 (Reply 30):
A UA/DL merger would entail:

From what this looks like, it is a UA/CO merger you are talking about here

Quoting Jmc1975 (Reply 30):
Fleet:
735, 733, 73G, 738, 739, 319, 320, 752 (RR&PW), 753, 762, 763, 764, 772, 744

You seem to forget A319/A320 at UA, and the fact that UA's 777s and 767s are PW powered,

Quoting Jmc1975 (Reply 30):
I guess CLE would close in favor of ORD.

CLE would actually be a good relief domestic hub for ORD

Quoting Jmc1975 (Reply 30):
How about IAD and EWR?

They would both stay as both pull premium traffic and EWR has a capacity crunch while IAD has room to grow
 
777gk
Posts: 1488
Joined: Mon Jun 19, 2000 3:04 am

RE: Synergy Of A DL/CO Merger

Thu Apr 21, 2005 11:49 am

If I weren't retiring, this would concern me simply because I would more than likely get screwed over big time as far as seniority. It happened before, and the general nature of an airline merger has not changed fundamentally since the Texas Air Group feeding frenzy of the late 1980s. I'd take up an Early Out long before anything like that would come to pass, and I know for a fact a sizeable number of my colleagues would do the same.

Just a few inconsequential matters-of-fact:

-The 99/00 merger proposal had the name of the combined airline as "Delco Airlines". The origin of it is obvious, but don't ask me why they thought that would work, but at least it was before the advent of the "chic" names for airlines, otherwise who knows what idiotic ideas would have been thrown out there.

-The more recent go-round, sometime after 9/11, would actually have had Continental assuming control of Delta Air Lines, therefore the name of the merged company would have been Continental. However, both airlines would have operated separately for a while, much like AA/TW, but this idea was shot dead pretty early along in the process.

-I agree with Padcrasher's assessment of the NY market, having all the major airports in the area covered like that would make any airline exec salivate, but I can't imagine a combined DL/CO being allowed continue combined operations at the level things are right now. I think that would easily be classified as a monopoly, so at least some aspects of the operation would have to be surrendered.
 
OttoPylit
Posts: 2259
Joined: Wed Dec 17, 2003 10:58 am

RE: Synergy Of A DL/CO Merger

Thu Apr 21, 2005 12:10 pm

Quoting ContnlEliteCMH (Reply 27):
What *better* evidence is there that the business plan is poor, than the fact that it is not making money? That it has lost billions of dollars in quarter after quarter, year after year? Please be specific.



Quoting ContnlEliteCMH (Reply 27):
Well at least you're consistent. Of course, you can be consistently wrong and well as consistently right. On the one hand, you want us all to ignore the *obvious* red ink bleeding from Delta in the past three years. Now you want us to ignore the stifling amount of debt accrued in the past three years.

Your missing what I am saying. At the turn of the year, Delta's old way of making money(or in this case, losing money) is out, and the new way is in. Costs have been cut, Simplifares introduced, payscales arranged, and debt costs re-structured. So NOW is what I am talking about. He is referring to the business model, but no one can make a judgement of the business model because it has not had a chance to show its results. We all knew first quarters would be losses, that wasn't new. But by the end of the year, we will be able to see if the NEW business model is working or not. Until then, it is purely speculation, and therefore opinion.

Quoting ContnlEliteCMH (Reply 27):
You can forget about the 86 year history because it's irrelevant. Investors, creditors, and customers don't care about that. They care about what will happen tomorrow, and the next day, and the next day. Nostalgia is a poor substitute for profitability.

I never said anything about that. All I said was that you can't rack up 3 years of debt as compared to 75 years of almost complete profitability(with the exception, on total, of about 10 years from the beginning of the company, right after deregulation, and the early 90's after the Gulf War and Pan Am purchase.

Quoting ContnlEliteCMH (Reply 27):
There is *no* evidence that this is true because it requires the following to happen: Delta's return to profitability above and beyond service on that massive debt. It also presumes that DL will not revolve the debt, or acquire new debt. This, my friend, is hopeful opinion. You could be right; you could be wrong. Only time will tell.

Ok, you got me there. You're correct, it is opinion. However, from my experience and knowledge of the industry, as well as the numbers that I am looking at, and the things that I know that not too many other people on these forums do, things look very positive. Of course, its all positive on paper, so its not proven yet, but it certainly looks good. With what Delta has already re-structured with the debt and that Delta has a fairly young fleet(with the exception of the 732's, although they are the newest -200 models), and with the hope(and prayer) that fuel costs go down, there is no reason why Delta should have to accrue more debt in the future or make any more losses. Right now, I would say that fuel is the biggest burn on Delta. It is probably the one thing that will kill off US and DH, and if continued, may possibly send Delta into BK. But hopefully, somehow the costs of fuel can be cut or fares raised and be able to lower the total cost on the airline's back.


Otto
 
Blackhawk144
Posts: 769
Joined: Fri Aug 20, 2004 6:20 am

RE: Synergy Of A DL/CO Merger

Thu Apr 21, 2005 12:38 pm

Maybe every airline in the world should merge...

Global Airlines...

Flying every kind of airplane there is...with all engine types

Would that make everybody happy?

Anthony
 
ContnlEliteCMH
Posts: 1391
Joined: Wed Mar 02, 2005 8:19 am

RE: Synergy Of A DL/CO Merger

Thu Apr 21, 2005 12:48 pm

Quoting Blackhawk144 (Reply 41):
Flying every kind of airplane there is...with all engine types

Would that make everybody happy?

For this frequently flyer? No. Actually, I only really care that my favorite carrier returns to profitability. The rest are just academic interests.

Now, if I owned stock, then I'd really care.
 
jmc1975
Topic Author
Posts: 3129
Joined: Mon Sep 18, 2000 10:57 am

RE: Synergy Of A DL/CO Merger

Fri Apr 22, 2005 12:45 am

Let's look at a couple of examples of the benefits:

CURRENT IAH-ATL flights:
Continental- 10x daily flights (4x ERJ, 5x 735, 1x 733)
Delta- 9x daily flights (2x CRJ, 1x CR7, 2x 732, 4x M88)

COMBINED/SYNERGIZED post-merger IAH-ATL flights:
Delta- 12x daily flights (mixture of 735,73G,738,739,752*,753*,763*,764*,772*)

------------------------------------------------------------------------
CURRENT EWR-ATL flights:
Continental- 9x daily flights (9x 735)
Delta- 14x daily flights (2x 732, 3x 738, 9x M88)

COMBINED/SYNERGIZED post-merger EWR-ATL flights:
Delta- 14x daily flights (mixture of 735,73G,738,739,752,753,763*,764*,772*)


It becomes quite clear that the combined companies of Delta and Continental would reduce resources to accomplish to transport the same number of pax, meanwhile boosting yields and improving airline health.


*larger aircraft solely for scheduled/unscheduled repositioning purposes

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