Delta/United Merger

[Oh My!]

If these 2 giants succeed in merging at their shareholders' (Pardus Capital Management) request, would the new airline be named:

Delited?

[Boz]

vegasrain said:

If these 2 giants succeed in merging at their shareholders' (Pardus Capital Management) request, would the new airline be named:

Delited?

Attention Mods:
This post above is just plain offensive. Please consider vegasrain for a lifetime ban. Ugh!

;D

[Oh My!]

I love you too, Boz!!!!

[vcjack]

This better end up with cheap flights from Chicago to Atlanta

[hoyatables]

vcjack said:

This better end up with cheap flights from Chicago to Atlanta

Doubtful. Right now there are three primary competitors on that route: DL, UA, and AA. You've just eliminated one of the competitors . . . .

[EasyEd]

Delta says there have never been any talks and none are ongoing.

So it's Deltaununited for now.

[DFW HOYA]

"U.S. Sen. Johnny Isakson (R-Georgia) said Wednesday he was personally given assurances by Delta CEO Richard H. Anderson that Anderson would back a merger only if "Delta is the survivor" and the carrier continued to be based in Atlanta."

(I'm sure that goes over big in Chicago.)

www.ajc.com/business/content/business/delta/stories/2007/11/14/delta_isakson.html

Bottom line, when you merge two unhealthy companies you get a much larger, much more unhealthy company. They're better off separate and let market forces winnow down the legacy carriers--probably at the expense of NWA and US Airways.

[The Stig]

Both United and Delta have strongly denied that they are talking about merging. This is just Pardus trying to push their stock up.

Airline mergers will be bad for us (the passengers). Mergers = fewer airlines, which means a cut in supply while demand stays constant, so fares will go up. The only people who will benefit from mergers are the shareholders and top management (the employees generally end up getting screwed).

It'll probably happen eventually though, but not with United and Delta since they're a bad match. Watch out for JetBlue/Frontier, Continental/United, and Delta/Northwest.

[bubbrubbhoya]

thestig said:

Both United and Delta have strongly denied that they are talking about merging. This is just Pardus trying to push their stock up.

Airline mergers will be bad for us (the passengers). Mergers = fewer airlines, which means a cut in supply while demand stays constant, so fares will go up. The only people who will benefit from mergers are the shareholders and top management (the employees generally end up getting screwed).

It'll probably happen eventually though, but not with United and Delta since they're a bad match. Watch out for JetBlue/Frontier, Continental/United, and Delta/Northwest.

Your logic is irrefutable. Mergers could never result in eliminating market inefficiencies.

[hoyatables]

bubbrubbhoya said:

thestig said:

Both United and Delta have strongly denied that they are talking about merging. This is just Pardus trying to push their stock up.

Airline mergers will be bad for us (the passengers). Mergers = fewer airlines, which means a cut in supply while demand stays constant, so fares will go up. The only people who will benefit from mergers are the shareholders and top management (the employees generally end up getting screwed).

It'll probably happen eventually though, but not with United and Delta since they're a bad match. Watch out for JetBlue/Frontier, Continental/United, and Delta/Northwest.

Your logic is irrefutable. Mergers could never result in eliminating market inefficiencies.

Good one. But I also think that there is something to be said for the fact that a Delta/United merger wouldn't really eliminate inefficiencies, but rather eliminate competition, particularly on the East Coast (due to the UA/US Airways codeshare) and in the Rockies (DEN versus SLC as hubs -- one would likely be eliminated.

[The Stig]

bubbrubbhoya said:

Your logic is irrefutable. Mergers could never result in eliminating market inefficiencies.

But who gains from eliminating "market inefficiencies"? Who loses?

Mergers can be great for the airline - it eliminates a competitor and gives you more monopoly routes. But monopoly routes suck for the consumer.

Remember when the Hoyas made the Sweet 16 in Minneapolis? I wanted to go to the game, but I couldn't find a plane ticket for under $1000 since Northwest is the only airline who flies DCA-MSP direct. I wanted to go visit a friend in Charlotte, but DCA and CLT are both US Airways hubs so the fares are outrageous.

Yes, all the competition is giving the airlines a pretty rough ride - don't go out and buy airline stock anytime soon. But it's also forcing them to try harder and harder to get our business, and that's great for us fliers.

Airline mergers also tend to be a lot messier than other mergers. There have been a ton in the past, but off the top of my head I can only think of one that went smoothly (Delta-Western).

[StPetersburgHoya (Inactive)]

bubbrubbhoya said:

thestig said:

Both United and Delta have strongly denied that they are talking about merging. This is just Pardus trying to push their stock up.

Airline mergers will be bad for us (the passengers). Mergers = fewer airlines, which means a cut in supply while demand stays constant, so fares will go up. The only people who will benefit from mergers are the shareholders and top management (the employees generally end up getting screwed).

It'll probably happen eventually though, but not with United and Delta since they're a bad match. Watch out for JetBlue/Frontier, Continental/United, and Delta/Northwest.

Your logic is irrefutable. Mergers could never result in eliminating market inefficiencies.

Yes, G-d forbid we do that. Let's just selectively enforce anti-trust laws.

I don't know a ton about airline mergers - but didn't the TWA and American merger go fairly smoothly?

[Deleted]

The Bluestar Airline takeover/merger didn't go all that well.

Blue Horseshoe loves Endicott Steel.

[hoyatables]

stpetersburghoya said:

bubbrubbhoya said:

Your logic is irrefutable. Mergers could never result in eliminating market inefficiencies.

Yes, G-d forbid we do that. Let's just selectively enforce anti-trust laws.

I don't know a ton about airline mergers - but didn't the TWA and American merger go fairly smoothly?

Yes, but probably because TWA had one foot in the grave already.

Not sure how well US Airways/America West has gone. That is the other most recent one.

[ExcitableBoy]

thestig said:

bubbrubbhoya said:

Your logic is irrefutable. Mergers could never result in eliminating market inefficiencies.

But who gains from eliminating "market inefficiencies"? Who loses?

Mergers can be great for the airline - it eliminates a competitor and gives you more monopoly routes. But monopoly routes suck for the consumer.

Remember when the Hoyas made the Sweet 16 in Minneapolis? I wanted to go to the game, but I couldn't find a plane ticket for under $1000 since Northwest is the only airline who flies DCA-MSP direct. I wanted to go visit a friend in Charlotte, but DCA and CLT are both US Airways hubs so the fares are outrageous.

I think you are mixing things together here. Yeah DCA-MSP flights were about $1,000, but that's because you tried to buy seats a week in advance on a crowded market that had already been driven up in price by the sweet sixteen.

I mean, I can't find any cheap flights to Beijing next August!! This must be because United has a monopoly on this route, right??

You are really arguing against the hub and spoke system, not monopolies. Just ask Larry Craig how one would get from the upper rockies to DC--it's almost always via MSP or DEN.

[bubbrubbhoya]

thestig said:

bubbrubbhoya said:

Your logic is irrefutable. Mergers could never result in eliminating market inefficiencies.

But who gains from eliminating "market inefficiencies"? Who loses?

Mergers can be great for the airline - it eliminates a competitor and gives you more monopoly routes. But monopoly routes suck for the consumer.

Remember when the Hoyas made the Sweet 16 in Minneapolis? I wanted to go to the game, but I couldn't find a plane ticket for under $1000 since Northwest is the only airline who flies DCA-MSP direct. I wanted to go visit a friend in Charlotte, but DCA and CLT are both US Airways hubs so the fares are outrageous.

Yes, all the competition is giving the airlines a pretty rough ride - don't go out and buy airline stock anytime soon. But it's also forcing them to try harder and harder to get our business, and that's great for us fliers.

Airline mergers also tend to be a lot messier than other mergers. There have been a ton in the past, but off the top of my head I can only think of one that went smoothly (Delta-Western).

This isn't Russia...is this Russia? This isn't Russia, Danny.

Look, here's the thing with free markets. If a "monopoly route" ends simply stiffing consumers, another company will enter the market for that route and drive prices down. Companies don't survive unless they can compete (unless that company is in the cable industry). Stopping mergers isn't the way to enforce free market rules. In fact, if you want cheaper flights, you might turn your wrath to domestic regulations of airlines instead of spouting some mumbo-jumbo about how mergers can't help consumers.

[The Stig]

I'm not saying the government should step in and ban mergers. I'm just saying that as a self-interested consumer in the airline industry that a merger would not be good for me, and I think the same would be true for most self-interested consumers out there.

It's also a known fact that employees tend to get screwed in mergers. Find a TWA employee from the time of the TWA-AA merger and ask them how that merger went - AA screwed them over. The employees from Republic and Northwest from the time of their merger still have grudges against each other (blue tails vs. red tails), and that happened 20 years ago.

If you're investing in an airline then mergers are a great thing right now. There are too many airlines out there, and none of them are making too much money (except Southwest - odd since they also have the highest wages in the industry). Consolidation would be a good thing from a profitability point of view, which is why shareholders like Pardus are pushing it hard.

My problem is that in most states management is entirely beholden to shareholders, not employees or customers. So if shareholders start clamoring for mergers, they have to start thinking about mergers even though it means selling their employees down the river and screwing over their customers. Wisconsin is slightly different - boards have to take stakeholders into account, which means shareholders plus anybody else affected in a big way by their actions. When Airtran tried to buy Midwest Airlines the Midwest BOD was able to hold them off by claiming that (among other things) Midwest customers would suffer from a drop in service levels. In the end they were able to secure a different deal that kept the airline independent.

[StPetersburgHoya (Inactive)]

Ok I know nothing about the law in Wisconsin - I can speak about the place where most corporations are incorporated anyways - Delaware. I don't think corporations (at least publicly traded ones) are beholden to the shareholders in very many meaningful ways. Its not like Gordon Gecko is running into shareholder's meetings and giving impassioned speeches to promote hostile takeover bids or for that matter any corporate action. The board has significant control over the proxy statement that the shareholders receive and a proxy battle is an unsure and expensive venture for shareholders who are demanding some sort of action and bringing legal action against a board when there was some rational business reason (not necessarily a good one) for their move is a losing venture. Shareholders have voting power, but they rarely are interested voters when that voting power is atomized.

I'm not saying that a merger would be bad. But I don't think it would be monopolistic either - a lot of that has to do with how the market is defined. If its routes between DC and MN fine - those are monopolized - but that's a myopic view of the airline industry. That's like those who claimed Whole Foods and Wild Oats were monopolizing some form of luxury health food grocery market - that's not a complete view of the market (and in that case, there is no real consumer loss because they come in the door expecting to pay a luxury price - they are going to Whole Foods, not Giant).

[FewFAC]

As long as I can get a flight to San Antonio in March, I still wouldn't fly either.