Delta and Northwest close to merger
 

For info ad nauseum on this, go to flyertalk.com.

Might be inevitable this time. And UA/CO will follow if DL/NW do merge:

http://www.chicagotribune.com/busine...0,140358.story

It's about time. If these mergers happen it will be great news for everybody. US does not need 6 legacies plus handfull of LCCs.

Once this happens I predict healthy financial returns for US based airlines.

Unfortunately there will be some layoffs, but in the long run, the ones still employed, will be looking at brighter future.

I don't see it as good news for the passengers.

Passengers benefit from the extreme competition, which results in very low airfare. Consolidation will decrease competition.

With 4 legacies merging it will leave us with 4 plus another 1/2 dozen LCCs. I don't believe competition will be effected by the mergers, yet it will create a healthy and more importantly <b>honest</b> airline business which is good news for stock holders, airline employees, passengers and cargo shippers.

WSJ today says part of the urgency is that they believe the antitrust review will go more quickly in the &quot;waning days of the Bush administration than when his successor is in place. Also says that if NW agrees to the DL merger (even if it is not completed, just formally agrees to it) then that will void NW's veto power over CO doing a merger with UA, which it has due to its CO stock holdings and has been a stumbling block to date.

rk - so what will happen to our hard won OnePass mileage and status???

Seamus - For those with lots of Onepass miles, a merger with UA will be great. Onepass is one of the worst FF program when it comes to perks and availability. To get all the *A award flights will be great.

And the day after both of those mergers, with two legacy carriers gone, there will be three new LCCs. Maybe four.

I could probably find some investors to front me the money to lease a couple of L1011s that are sitting in the desert. Apparently there are a lot of people with a lot of money to invest in new airlines and a lot of airplane lessors who can offer EZ terms that I think I could start my own airlines. Wouldn't even have to repaint the planes, just call it Totally Wunrfl Airlines.

What will happen with FF accounts? I have NWA and Delta.

The airlines will of course merge the FF programs and in fact you can combine miles from the two into a new account.

Happened basically every time there's a merger, whether it's CP/AC, AF/KL or US/HP.

Of course, who knows what the rules are for the new program. But for NW/DL, there aren't a lot of incompatibilities. Both are already Skyteam, and they have similar partners. Most of their fares earn 100% EQM/MQM on each other's program already, but they'll need to figure out the issue of EQP.

Relatively simple stuff.

Now, with a UA/CO combination, lots more to talk about. Very different upgrade programs, almost no common partners, etc.

To AA Frequent Flyer and others who are not airline employees-I have been an employee of a major US airline for almost 35 years now.

In that time, I have been reassigned to a reservations job from inflight service;been on reserve where they call you at the last minute for trips for almost 4 years(this was before cellphones and beepers so one had to &quot;call and ask&quot; to take a shower,etc.);taken numerous paycuts;lost a vacation week due to cutbacks;had my bases close and have to commute to another city to keep working;my husband lost his airline pension after 32 years AND I am now making about what I was in the early 90's.

For you AAFF to say, that I am in for brighter times makes me laugh!The last 10 or so years have been the worst. Mergers are horrible for most airline people as someone becomes the underling and loses whatever seniority they have accrued and what that seniority can provide for them in terms of position for work.

Do I love my job-yes, but not what I have had to go through the past 35 years. Any mergers will be another &quot;mountain&quot; I must go over in being a skygoddess!

twa, clever. going to lv?

dutyfree...I feel your pain.Every friend I have is somehow connected to the travel industry...Oh there is always at least maybe only one eternal optimist.By and large, they agree with you.Not one single, solitary person on this or any other travel forum could ever in a million years accurately predict what will happen in mergers in your industry.But, they do so love to play dont they!! I love it when we get together, and either a F/A, CSR, even a ramp agent comes out whith their story of the day:&quot; Guess what one of those flying idiots did/said today!!&quot;...Makes my day....

<b>dutyfree</b>.

First, we all pick our jobs. Nobody is forcing you. If I was not happy for 15 years, took abuse, paycuts, etc., I wouldn't care how much I loved my job, I would have left as soon as I wasn't happy with the treatment and or pay. Main goal of any company/corporation is to satisfy the customer, whoever that may be, not the employee. Of course in order to be a succesful, company/corporation you need happy, satisfied employees and that's why some are better then others, but at some point you also have to be realistic. When things are not working you may have to do some head cutting but at the end the remaining employees should look at a much safer, happier work environment.

second, I actully believe that mergers will result in better job security and overall better working environment. I did say that part of the merger will mean some people will lose their jobs and like you said, some will be pushed down in seniority, but would you rather have your company locking the door one day and you and thousands of co-workers being out of jobs?

The reality is setting in. Unless there are mergers or takeovers, the 6 legacy, and just as manu LCCs, can't last in this market. Deal with it, or look for a new job in a different market.

I would like to clarify some things to the general public about being an airline employee primarily a crewmember. It has been a great job through the years despite the change in various managements who come for their golden parachutes then leave and the traveling public.I plan on staying as long as I can as I enjoy the job and also need the money.

To work as an airline employee, one must be in tune with the lifestyle of it such as a ER night nurse at the hospital;truck driver,etc. The vast majority of the public would find it very hard to be gone for holidays,weekends,important life changing events and working strange hours everyweek with changing scheduling.Although most of my friends think that I lead this very exciting lifestyle,it took over 30 years to get to do it.The one thing that I constantly hear from most of my friends is that they would love to travel but would never want to be on a plane that long with the weird scheduling and the public in a closed container for 10 hours at a time at 37,000 feet.

That said-when one gets used to the &quot;non-scheduled&quot; lifestyle of an airline employee it is extremely hard to go into another more structured one with 9-5 hours,office,etc.(I am primarily speaking from a crewmember point of view!) The job requires one to be able to be by themselves in strange cities;go out to dinner by themselves and basically, be very self sufficient to entertain themselves which alot of people have a hard time doing.When one works with a difficult employee, it makes for a long 3-6 day trip and there is nowhere to hide from them.

I have a secondary teaching certificate that I have renewed every year but I am not interested in being in a ground job at this time.

My point to all of you who think mergers are so wonderful is that most of the airline employees have given and given through the years without ever getting back what we gave up previously. Meanwhile, the management teams come and go with &quot;new ideas&quot; (that have been used before but they want to use to show how great their MBA's are).They still do not understand that those of us who have been around awhile understand what it takes to get our passengers to come back and enjoy us-so why not use that information?

Time and time again, my airlines has seen these management clowns walk off with hundreds of millions in parachutes after only 1-3 years there.While I realize that this is very typical in many major companies, I find it very sad to see it in what most of us considered a &quot;people industry&quot;.Airlines should only be run by people who are actually airline people-they are not companies like Intel,GE or Proctor and Gamble. This is why so many of them are in shambles because the business school product pattern doesn't always adhire to a people industry.

The bottom line that they constantly tell us is that we are the spokespersons for our airline(the frontline) and that our jobs can make or break someone not wanting to fly with us again.

I still very much enjoy meeting new people on my flights and conversing with them in the back galley over the pond at night. I think that my outgoing personality and humor is perfect for this job so yes, I will stay with this company and hope that these mergers will help us &quot;little people&quot; in the long run...although I doubt it? I do hope that the above makes you understand my perspective on mergers and airlines?

Dutyfee, I totally understand your point of view and hope you get to finish out the career that you enjoy on the best terms possible. Best wishes!

I continue to marvel at those who blithely tell people to quit a job if they don't like it. The lack of understanding of what the &quot;grunts&quot; of this country do and how little choice many actually have is stunning. No one ever says that who's been making steadily less each year, adjusted for inflation, in areas of high unemployment and an era of poor health care provisions. People with dependents, in particular, often do not have realistic choices. Have four friends employed in res. agent jobs, and I've seen what they've been through since the 80s. Get another job? What, at WalMart?

With you all the way, dutyfree.

I am very puzzled by your initial post on this merger issue, AAFrequentFlyer.

You indicate that &quot;the US does not need 6 legacies ...&quot; Could you please explain why not? Do you have any economic evidence to support your opinion that 6 are too many? Are you aware of any historical data that should cause us to feel that we in the US do not need 6 legacies? Do you have any data that would indicate the correct number of legacies we in the US should have?

You also indicate, AAFrequentFlyer, that you &quot;... predict healthy financial returns for US based airlines.&quot; What has caused you to come to this conclusion? Are you aware of the historical data for financial returns in the cases of previous aviation mergers? Have you analyzed the financial returns over time of various US airlines before and after mergers and where mergers have failed to be approved? Do you feel that this merger will be somehow different from others that have preceded it?

Further on, you indicate with regard to employees that &quot; ...the ones still employed, will be looking at brighter future.&quot; Could you share with us your reasoning as to how this brighter future will occur? Do you have any thoughts as to what this brighter future will consist of?

As I initially mentioned, I am very puzzled by your comments and I would truly appreciate your describing to us what has caused you to arrive at your conclusions.

Thank you in advance for sharing your information with us.

If you want an in depth financial report and stock analysis, ask your favorite broker.

This is just a travel board and I was merly stating my opinion. Nobody has to agree with me.

That said, here is some food for thought. A weak company in deep financial troubles is just asking for a hostile takeover, aka AA buying TWA in 2001. Obviously 9/11 put a stop to what AA may have been planning to do with TWA but at the end, TWA is completely gone with 90% of it's employees working somewhere else. AA kept few of the desirable assets such as some planes, gates, routes and then basically just cleaned the house and basically got rid of one of it's biggest competitor. TWA is no more. One of the first premier international airlines yet it's long gone. PanAm another example when the market is just not there. The first truly international airline, a giant in the 60s and early 70s, GONE!

A friendly merger is in the best interest for all involved, or perhaps you just want the airline(s) to disappear?, shut the door, gone.

The 3 or 4 airlines are still showing loses overall. Couple of profit quarters but nothing to get excited about after losing billion$ over the last few years. How long do you think they can carry on?

By combining their work forces, shutting some stations, routes, unnecessary redundant hubs the remaining airlines will have a shot to become leaner, better and quite possibly (imagine that)...profitable, thus allowing the remaining employees to possibly have a more secure and financially healthier jobs.

Again, it's just my opinion, nobody has to agree.

dutyfree - without for a moment dismissing your hard work over the years, let me respectfully disagree with one of your statements. Airlines actually ARE companies just like Intel, GE or Proctor and Gamble - they take investor money, spend it on operations in the hope of returning a profit. Whether that operation produces computer chips, light bulbs, dish soap, or a service every investor expects a profit and it is the job of management to produce it. That does not justify corporate pirates sucking dry the value produced by the hard work of the rank and file, but it is the reality of any business.
Agree that the best folks to run an airline are those who know how the business operates and not just the accounting books. The reason Continental was able to pull off an amazing turnaround and go from the grumpiest, surliest most unhappy group of employees to where it is today is management led by a veteran pilot who put the cards on the table with employees and flat out said here is what we need to do, and either we do it or we do not survive. To their credit, CO employees took up the challenge, suffered the hard times and ultimately - but not easily - made it to the top.

There is a clear need for consolidation. It won't be pretty for employees or consumers, but the only other choice is to have some of these carriers limp along, squeaking out profits only in boom times, eventually folding up and having the assets sold for pennies on the dollar.

Virtually all of the carriers are stuck between a rock and a hard place. Their profits in the US are being squeezed. The LCCs have lower costs and can fly the same routes for a lot less money. And, nobody is willing to pay more than they have to. It is a commodity industry and the legacies are getting killed.

Of course, this leaves them with only one card left to play, and that is the international one. But, only AA, United, and (to a lesser extent) Delta have enough planes to really play with the big boys in this arena. I mean, look at the number of widebodies operated by the following airlines (in fleet/on order/options):

BA: 120/40/27
Lufthansa + Swiss: 121/47/43
Air France + KLM: 153/47/2
Singapore: 95/84/59
Emirates: 100/177/70
United: 117/0/0
American: 120/7/0 (excludes A300s)
Continental: 46/25/0
Delta: 109/8/0
Northwest: 48/18/50

And this doesn't even adequately take into account the fact that many of the US carriers utilize some of these widebodies on domestic routes, or the preponderance of some smaller widebodies (767s, in particular) among the US carriers. And, remember that the big Euro carriers may only get bigger, with AF/KLM seemingly poised to gobble up Alitalia, Iberia constantly being rumored to be merging with someone, and even the occassional BA/Lufthansa merger bandied about.

Carriers like Continental and Northwest seem to genuinely need to merge, lest they end up slipping to far behind the rest of the industry in terms of destinations and capacity, because they need that international capacity to prop up their domestic operations.

Someday, maybe on another thread, those of you who think consolidation is not only great but needed in the airline industry will explain why you don't think the same thing is even more true for health care coverage.

and health care coverage has to do with travel how???

but since you asked, health related businesses are making record profits, so how are the 2 issues comparable?

&quot;Someday, maybe on another thread, those of you who think consolidation is not only great but needed in the airline industry will explain why you don't think the same thing is even more true for health care coverage.&quot;

Despite the completely non-sensical attempt to make this about the politics of health care, this one is easy.

None of the legacy airlines have shown an ability to earn sustained profits over anything approaching the long-term. Since there is nothing suggesting that they will all start making plenty of money, as presently constituted, one must ask how they are going to change. The consensus answer from shareholders to management is that consolidation is the best bet, and I don't see any reason to disagree. Don't confuse accepting the realities of the market place with embracing them.

And, for the record, the health care industry has seen plenty of consolidation, be it drug company mergers/buyouts, hospital group roll-ups, or insurance consolidation. Same market principles at work.

The two industries, in theory, serve the nation's well being and verge on being utilities -- although arguably, health care serves a more universal need than air travel. &quot;Market forces&quot; in health care have resulted so much duplicative bureaucracy and process that the system is nearly collapsing, and a substantial portion of the population is without coverage, which ultimately will have the same effect.

The main difference between the two industries is that one makes money for executives and shareholders while the other doesn't. Reform is therefore impending in the airline industry ONLY insofar as making money is involved; reform of traffic, air traffic control systems, safety, and administrative duplication has not been sufficiently motivating.

And yes, consolidation is happening in health care but, again, motivated by the well-being of the stockholders not improvement of the industry's service to the population paying the way.

What is your logical extension of &quot;consolidation&quot;? Three large airlines? Ten? But not, I'm sure, just one. Yet after a certain point, monopoly is the trajectory of consolidation.

My own response to these airline mergers? Fine, sure, it's inevitable, especially given the skewed way the industry has been treated (regulating what shouldn't be and not regulating what should be, etc.). Employees are going to suffer, as they always do from historical mismanagement. And consumers/passengers are again going to find services, benefits and amenities shrinking or disappearing in the transition. I don't think we'll end up with just 2 or 1 big airline, but we'll end up with the lousy service and high prices that would create, anyway.

I think we're getting some apples and bananas and Toyotas commingled here.

Consolidation of legacy airlines is, in my opinion, not necessarily setting the industry on a monopoly vector. Delta + NW = 1 from 2. Virgin America = 1 from 0. Zero sum. It's a dynamic industry same as any other.

I won't weep for DL and NW morphing into one airline - I'll still avoid NW's old DC-9s regardless of livery, and will continue to try not to frequent Delta's Atlanta hellhole. I will feel bad for small station people in towns where consolidation leads to closure, or for flight crews who have to change cultures, but I already feel bad for disenfranchised or forgotten employees whose jobs have been moved or eliminated, whether it be call centers moved to Bangalore, or washing machine factories moved to Indonesia.

Frankly, as for US &quot;legacy&quot; airlines (think it's time for a new term. How about &quot;old?&quot;) and their new brethren facing new realities in the market place, you ain't seen nothin' yet. Two words. Open Skies.

soccr - let's not hijack this thread but also let's not lose the interesting observation. How about a new post in the lounge?
And FWIW, I believe your comments relate not to the health care industry, but the insurance industry.

So if UA + CO merge, will American Express finally be forced to recognize United as a Rewards partner?

&quot;So if UA + CO merge, will American Express finally be forced to recognize United as a Rewards partner?&quot;

This depends upon whether someone else is willing to pay more for exclusive rights to be the partner card. I'm sure Amex would love to have a combined UA/CO, but I'm not sure they will be willing to pay a huge premium.

And, I wouldn't be so eager to see it happen. I have suspicions that the glut of Amex points is a big reason why Delta and Continental generally score so low when assessing award availability. Tough to prove, of course.

Yes, ken, I was just there, at ph (pretty nice). How about you?

Air travel is a commodity and is relatively easy to deliver. If service is cut by mergers then someone else is going to move in. It is inevitable. Whatever gains these mergers might have for other airlines will soon evaporate.

ph=palazzo? swank! hope to check it out end of march.

&quot;Air travel is a commodity and is relatively easy to deliver. If service is cut by mergers then someone else is going to move in. It is inevitable.&quot;

Both JetBlue and AirTran are on record as saying they are not opposed to industry consolidation and think it is needed. So, even the littler fish aren't scared, domestically.

I do, however, think that this may bring benefits to the merged carriers. As I noted above, most of these carriers need long-haul capacity to compete with the big (and getting bigger) international carriers. Something like DL-NW helps both carriers come closer to matching the big boys.

No, planet hollywood.

The smaller carriers don't mind consolidation because they will have less competition and they can continue to expand. And there may be a happy time for the airlines but it won't last. The extreme competition that rkkwan mentioned, if it eases up at all, will come back and last longer than the happy time did. That's my prediction.

<i>Whatever gains these mergers might have for other airlines will soon evaporate.</i>,

disagree with the above statement.

1.the mergers will create super sized airlines with healthy financials. If a new US based international start up tries to come on board, the new and improved exisitng airlines will be in a position to squeeze them out by matching anything and everything the new start up will put on the table. Eventually the start up runs out of cash (aka MaxJet just recently and the other 2, EOS and SilverJet still hanging on a thin thread as they are getting hit from both sides of the Atlantic. Perhaps 1 of the 2 will survive at the end but that's not the point here.

2.We're talking about US based domestic/international airlines. There has to be some consolidation or some of them will burn down to the ground(no pun intended) at some point.

3.If some investors decide to invest in a brand new US based domestic/international airline they will think twice before they do it, and I believe that it won't happen for at least few years until the global economy upturns. That gives enough time for the mergers to sort themselves out and make it for a brighter future for the left standing airlines.

1) Is there reason to believe that these mergers would be approved by the U.S. govt? I don't know, I'm asking. The government has been active about preventing a big boy from squeezing out the competition. If USAir and United had merged then maybe neither would have gone bankrupt. But that merger was forbidden.

2) Burn downs happen like Pan Am, Eastern, and TWA. And new airlines emerge.

3) I remember going out to IAD a few years ago to catch flights on United. Practically overnight it seemed that flyi had taken over. That airline burned a bunch of money. But at the same time jetBlue was taking off, more slowly, and have been expanding. If not new airlines then there will be expansion among the existing airlines that will keep the competition keen.

mrwunrfl - The airlines think they have a decent chance of getting clearance from the current administration, less so the next one. That's why there's such a hurry to get this done this year.

And because many think now that the government should have let UA and US merged a few years ago, there's less resistance this time around.

Thanks. Ok, if the 'many thinkers' are in the Justice Dept then I might change my prediction a little.

&quot;Onepass is one of the worst FF program when it comes to perks and availability&quot;

rkkwan, as you know I've switched from Aadvantage to OnePass in the last year. But your statement above has given me second thoughts. I recently took an award trip to Egypt/Jordan and I had no problems getting the tix I wanted from CO/AF. But did I get lucky on that trip? Should I expect more problems in the future?

P_M: Onepass certainly doesn't make it easy for one to use their miles. I am definitely not saying it's impossible, as in the last 3 years, I've helped spent approximately 1million Onepass miles for my family members, and I only have to use SleazyPass (aka EasyPass) awards twice - both for myself, and both are coming back to the US early January from overseas.

But I still think they're harder to spend than other miles. Good news is that it doesn't to have gotten worse. And now with so many partners - DL, NW, KL, AF, etc - the availability is there, but often requires lengthy phonecalls to get them.

And very often, you just have to use a partner, and can't fly on specific CO flights one may want. It's especially true if you want to secure award flights far in advance. CO doesn't release standard awards until about 3-4 months before flight time, unlike the 11 months like most airlines.

I think if you understand the limitations and requirements, it's not really that bad. Like I said, I manage to book so many award flights for all my relatives in the past 3-4 years.