Why would NW care about breaking the union? NW has already done it essentially. They got to impose all the new terms they wanted on the FA/GAs. They got the courts to take away the right for them to strike. The mechanics union is essentially broken. Pilots took a cut, but at least got a token equity stake in the NW.
nw and delta really cant merge til they are out of BK. Thats why Parker is so focused on Delta now. Delta is basically a non-union shop now except for the pilots. NW is union up to its eyeballs with an on-going war with its union employees. US air will be the best option for the creditors. They want as much $ as they can get on their bad investment and want to move on.
Doug Parker certainly timed his second offer perfectly in order to make sure that the creditors do not look too long into a potential merger with NW.
Without any doubt, the $ 8.X billion for DL were already inflated, the newest offer, upped by another 2 billion, is downright ridiculous.
US ( profit margin of about 2.5 % in 2006 ) is indeed getting into Captain Ahab move losing its sense of reality for the ultimate goal. I expected Doug to be smarter, but maybe the pressure from the stock markets has become too big already to do a move.
Why is DL worth such an amount of money and cash ?
They have to sell the shuttle, which brings back a certain amount of cash. Beside that we are still talking about Delta Air Lines, which will have lost about $ 18 - 20 billion after the 2006 annual report has been published. The company is in a middle of a highy questionnable international expansion strategy, however into markets where everybody is free to fly anyway, so if they come up with a few sweet spots, the competition is likely to move in anyway and destroy the yields. So far, yields in the US have bounced back stronger than on international routes, but DL is shrinking domestically and growing internationally
Unfortunately, a combination of DL and NW, which would make sense in terms of little route overlap will probably be ruled out pretty soon by DL`s creditors. It would probably be the best airline long term, but simply not yield the return of $$$ for creditors short term. In the meantime, DL and NW still have completely different long haul strategies, DL going small and non stop, NW prefering the hub and spoke concept across the Atlantic and Pacific and both believe in their strategies. Closing down the secondary hubs would probably create major battles. MEM would probably be gone relatively soon with CVG to follow later. And nobody needs SLC in the middle of nowhere in terms of international traffic patterns and too close to mighty UAL at DEN and especially low cost central with US and WN.
LAX could be a solution, providing slots are available to beef up capacity to a certain threshold which would allow for a profitable mini-hub. Especially DL, which lost $ 100 of millions with such an attempt at PDX, should be aware that you need a certain size for long haul ops.
The biggest upside for a potential DL/NW merger would be that relatively small amounts of money would be involved, cause it would be a merger of equals, providing all creditors would come to this point of view, which is highly unlikely.
If you ask the leaders of the major European carriers these days what they think about a € 14 billion acquisition in the airline industry, they would come to the conclusion that this question cannot be seriously.
Remember what LH paid for Swiss and AF for KLM....
Location: Some place in this wonderful world (usually at 39,000 ft in seat 1C)
Programs: CO Gold Elite / NW Gold Elite
Posts: 9,589
Quote:
Originally Posted by DanTravels
An AA-NW merger would be maintenance and type-certification hell, though - their mainline fleets have almost no commonality at all. Both fly the 757-200 (ick), and that's it.
In fact, no merger option is pretty. DL-NW's just as bad as AA-NW, and the others aren't much better. UA is the only other one with 747s, US is the only other one with 330s, and CO is the only other one with 787s on order.
NW is the only major with zero 737s, 767s or 777s. Here's how the fleets line up - I've bolded things NW has in common with 'em:
AA is barely profitable even after wringing concessions out of all it work groups. Its acquisition of TWA was a a debacle.
I dont' see AA in any kind of shape to mount a takeover, particulary of NW especially considering proximity of ORD to MSP and DTW.
US would be a much better fit to acquire NW. Reason US wants Delta is to eliminate some competition and to pick-up some South America, Mexico, Carribean and additional Europe routes. NW might work as well.
Uh-huh. AA paid down over a billion of debt last year and still has an impressive cash balance. After wringing concessions from all its work groups, it has been cash flow positive each and every quarter since. Without terminating or abandoning its pension plans. Without stiffing its creditors.
TWA? Debacle? The terrorist attacks that followed within several months of that purchase had nothing to do with how that turned out? Every other legacy airline except CO ended up in bankruptcy court yet AA didn't. Even with the TWA millstone around its neck.
AA may not end up buying NW, but it could easily finance such a purchase.
Uh-huh. AA paid down over a billion of debt last year and still has an impressive cash balance. After wringing concessions from all its work groups, it has been cash flow positive each and every quarter since. Without terminating or abandoning its pension plans. Without stiffing its creditors.
TWA? Debacle? The terrorist attacks that followed within several months of that purchase had nothing to do with how that turned out? Every other legacy airline except CO ended up in bankruptcy court yet AA didn't. Even with the TWA millstone around its neck.
AA may not end up buying NW, but it could easily finance such a purchase.
In which of the statements above was the assertion that "AA is barely profitable" refuted? You made a lot of points, and taken as a whole, it seems to be that you're saying it's doing quite well, but if it's got enough debt that it can pay down a billion... hmm.
__________________
I think of Delta as the New Worldwide Airline.
In which of the statements above was the assertion that "AA is barely profitable" refuted? You made a lot of points, and taken as a whole, it seems to be that you're saying it's doing quite well, but if it's got enough debt that it can pay down a billion... hmm.
I wasn't refuting "barely profitable."
I refuted "I dont' see AA in any kind of shape to mount a takeover . . ."
AA's debt is over $20 billion; not a whole lot more than UAL's (and proportionate given the size of AA and UA).
Besides, we haven't yet seen AA's fourth quarter. May very well have been profitable.
Since when were profits a requirement to borrowing more money to buy a competitor, anyway?
I wasn't refuting "barely profitable."
I refuted "I dont' see AA in any kind of shape to mount a takeover . . ." ...
Since when were profits a requirement to borrowing more money to buy a competitor, anyway?
Ah, okay!
__________________
I think of Delta as the New Worldwide Airline.
Programs: Delta Gold Medallion,AA,USairways,Midwest Airlines, National Emerald Club
Posts: 1,437
Quote:
Originally Posted by FWAAA
Uh-huh. AA paid down over a billion of debt last year and still has an impressive cash balance. After wringing concessions from all its work groups, it has been cash flow positive each and every quarter since. Without terminating or abandoning its pension plans. Without stiffing its creditors.
TWA? Debacle? The terrorist attacks that followed within several months of that purchase had nothing to do with how that turned out? Every other legacy airline except CO ended up in bankruptcy court yet AA didn't. Even with the TWA millstone around its neck.
AA may not end up buying NW, but it could easily finance such a purchase.
AA has not been consistently profitable, on the contrary since 2001 the vast majority of quarters have reported negative earnings per share.
And yes, the TWA acqusitition was a total debacle. TWA workers got the total screw in the 9/11 aftermath. You realize that AA tried to back out of that deal, don't you?
AA's Frequent traveler program is an industry worst. I used to be an AA Gold but when they discontinued more room in coach, I gave AA the boot. What a joke to have expiring miles.
Granted, there is probably some bank somewhere that would finance an AA acquisition, I just hope it doesn't happen.
AA has not been consistently profitable, on the contrary since 2001 the vast majority of quarters have reported negative earnings per share.
Nobody said AA was "consistently profitable." You are confusing the phrase "profits" (which I did not allege) with "cash flow positive" (which has been the case at AA ever since the May 2003 concessions were imposed on the workers). Cash flow positive reduces the odds that you have to file for bankruptcy. Negative cash flow (where AA was from late 2001 until the spring of 2003) is generally an unsustainable situation. Cash flow positive means you can keep on paying your bills (and pay down debt).
Quote:
Originally Posted by hazelrah
And yes, the TWA acqusitition was a total debacle. TWA workers got the total screw in the 9/11 aftermath. You realize that AA tried to back out of that deal, don't you?
Back out of the acquistion? False. Do you have a link or other supporting evidence?
Of course the TWA employees got screwed - they were stapled to the bottom of the AA union senority lists (which was not within the province of AA management - the staples were done by the AA employee unions). When AA laid off over 20k employees in the wake of September 11, of course those on the bottom got the boot. Unfortunate? yes. AA's fault? Only if you think that September 11 was AA's fault.
Quote:
Originally Posted by hazelrah
AA's Frequent traveler program is an industry worst. I used to be an AA Gold but when they discontinued more room in coach, I gave AA the boot. What a joke to have expiring miles.
Industry worst? We'll have to agree to disagree. Millions of AAdvantage members probably agree with me and disagree with you.
Quote:
Originally Posted by hazelrah
Granted, there is probably some bank somewhere that would finance an AA acquisition, I just hope it doesn't happen.
I actually do hope it happens. Too bad Carty didn't pull the trigger in 2000 and pay the price demanded by NW management when AA was talking to NW about buying NW. Had AA bought NW, it would have never bought TWA (and those workers wouldn't have been screwed by AA's unions). They would have simply vanished when TWA went out of business on its own.
After NW's press release, it sounds like Delta's talks with NW are entirely a result of US' pressure on it. If any DL-NW merger were to happen, it would have to be pushed almost entirely from the Delta creditor side, convincing NW's creditors to do the deal.
It'll be interesting to see within the next month what Delta's creditors do. As of right now, Northwest looks to be in the clear, for the most part.
__________________
I only put this here so it isn't blank.
Doug Parker certainly timed his second offer perfectly in order to make sure that the creditors do not look too long into a potential merger with NW.
Without any doubt, the $ 8.X billion for DL were already inflated, the newest offer, upped by another 2 billion, is downright ridiculous.
US ( profit margin of about 2.5 % in 2006 ) is indeed getting into Captain Ahab move losing its sense of reality for the ultimate goal. I expected Doug to be smarter, but maybe the pressure from the stock markets has become too big already to do a move.
Why is DL worth such an amount of money and cash ?
They have to sell the shuttle, which brings back a certain amount of cash. Beside that we are still talking about Delta Air Lines, which will have lost about $ 18 - 20 billion after the 2006 annual report has been published. The company is in a middle of a highy questionnable international expansion strategy, however into markets where everybody is free to fly anyway, so if they come up with a few sweet spots, the competition is likely to move in anyway and destroy the yields. So far, yields in the US have bounced back stronger than on international routes, but DL is shrinking domestically and growing internationally
Unfortunately, a combination of DL and NW, which would make sense in terms of little route overlap will probably be ruled out pretty soon by DL`s creditors. It would probably be the best airline long term, but simply not yield the return of $$$ for creditors short term. In the meantime, DL and NW still have completely different long haul strategies, DL going small and non stop, NW prefering the hub and spoke concept across the Atlantic and Pacific and both believe in their strategies. Closing down the secondary hubs would probably create major battles. MEM would probably be gone relatively soon with CVG to follow later. And nobody needs SLC in the middle of nowhere in terms of international traffic patterns and too close to mighty UAL at DEN and especially low cost central with US and WN.
LAX could be a solution, providing slots are available to beef up capacity to a certain threshold which would allow for a profitable mini-hub. Especially DL, which lost $ 100 of millions with such an attempt at PDX, should be aware that you need a certain size for long haul ops.
The biggest upside for a potential DL/NW merger would be that relatively small amounts of money would be involved, cause it would be a merger of equals, providing all creditors would come to this point of view, which is highly unlikely.
If you ask the leaders of the major European carriers these days what they think about a € 14 billion acquisition in the airline industry, they would come to the conclusion that this question cannot be seriously.
Remember what LH paid for Swiss and AF for KLM....
Not only did Parker time this perfectly, Now the sweeter offer will end up with US getting to look at Deltas books. US may find some more hidden value to justify the higher bid. They may also find something to bargain down to middle ground.
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