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Quote:
Originally Posted by Firewind
1. Wow. We've heard that the pilots' buy-in was/is a stumbling block to the merger... Is anyone else struck by seeing that DL putting its symbol on the codeshare falls under collective bargaining? Begs the question: What do NW ALPA (especially as it won't be NW's symbol on the codeshare) and both airlines' flight attendants have to say? Invites the question: What are some of the other bargaining items that might amaze lay folk?
2. Rep. Mica, R-FL, is now on the minority side. Only noted as what he says is not necessarily fact (anymore).
Embedded in 1. and 2.: "Many's the slip 'twixt cup and lip", unless extending the bargaining period to 2012 effectively swept ALL the rest of the pilots' issues. Still, there are those other three pesky bargaining groups.
I'm not buying it either. The seniority issue is still on the table for pilots at both carriers, either carrier's pilot union can scuttle the deal if they perceive they're getting shafted, and John Mica is not only no longer a relevant voice, he doesn't speak for the rest of Congress, many of whose members are sharpening their knives to stab this merger before it comes to life.
UA and US doing the dosey do won't help the DL/NW case, as a rash of large scale mergers is bound to reduce capacity, reduce competition, raise prices and produce layoffs.
If I had to take a wild bet, I'd guess Congress would be more apt to relax the foreign ownership restricts and block the mergers - but then again, what foreign airline with half a brain would ever invest in a US carrier?
The US airline business has become a zero-sum game since deregulation - make lots of money in good years, then give it all back during the bad years. With margins slimmer than the variance on some casino table games, most investors are probably better off investing their airline stock money at the craps table.
__________________ Rich and 50 is the same as middle-class and 30
A proposal by Delta Air Lines (DAL.N: Quote, Profile, Research) to buy Northwest Airlines (NWA.N: Quote, Profile, Research) is likely to be approved by the U.S. government, an influential lawmaker on aviation affairs said on Wednesday.
Rep. John Mica, a Florida Republican and former chairman of the House of Representatives aviation subcommittee, told a hearing on the merger proposal the deal to create the world's biggest airline did not appear anti-competitive.
Mica said the industry faces enormous challenges and it was more likely than not that "this merger will be granted" by officials at the Justice and Transportation departments who are reviewing the potential impact on competition and service.
Antitrust and industry experts have said previously the Delta/Northwest proposal stood a good chance of winning regulatory approval.
Honestly, sometimes you show limited understanding of how politics is actually done in the United States. A congressman, who is in the minority even a former chairman, speaking in a hearing means just about nothing. Being in the minority means you get maybe 5 minutes in a two hour hearing to try to get a soundbite on tv.
Quote:
Originally Posted by Klm is Dead - Long Live KLM
If that wasn't an impassioned plea for rational, national regulation of this critical industry, I don't know what is.
Seems to me that deregulation achieved everything the people ever wanted. Low fairs, frequent flights, and true competition. Why on earth would anyone, other than the airlines themselves, want to go back to the old system?
Last edited by thezipper; May 16, 08 at 10:36 am.
Reason: Consecutive Posts by OP
Mica's statement carries no weight; he was merely weighing in with his opinion that the Department of Justice would probably approve the merger. As has been posted previously, members of Congress don't approve or reject potential mergers. Congress just makes the laws. The President enforces the laws, in this case via his Attorney General at the Department of Justice.
Despite all the blather to the contrary, what Oberstar or Mica think or say about this merger is completely irrelevant. Lawyers and analysts at DOJ will recommend approval or rejection.
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Quote:
Originally Posted by bocastephen
UA and US doing the dosey do won't help the DL/NW case, as a rash of large scale mergers is bound to reduce capacity, reduce competition, raise prices and produce layoffs.
Whereas without these mergers financial losses will force reduced capacity, reduced competition, higher prices, and layoffs.
So why do we need to be protected from mergers? We don't, but Congress does. Because someone might blame THEM, rather than market forces, for what happened.
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Quote:
Originally Posted by nsx
Whereas without these mergers financial losses will force reduced capacity, reduced competition, higher prices, and layoffs.
So why do we need to be protected from mergers? We don't, but Congress does. Because someone might blame THEM, rather than market forces, for what happened.
The financial forces killing the airlines right now are the same forces killing the rest of us at the gas pump. Absent these insane fuel prices, the airlines would be making money hand over fist, given the bursting at the seams loads they're experiencing now.
I'd be more interested in Congress going after the oil speculators and getting prices back in line with real supply and demand, than I would be with them approving or disapproving a merger, or re-regulating the airline industry.
__________________ Rich and 50 is the same as middle-class and 30
The financial forces killing the airlines right now are the same forces killing the rest of us at the gas pump. Absent these insane fuel prices, the airlines would be making money hand over fist, given the bursting at the seams loads they're experiencing now.
I'd be more interested in Congress going after the oil speculators and getting prices back in line with real supply and demand, than I would be with them approving or disapproving a merger, or re-regulating the airline industry.
Probably the most meaningful thing I have heard on this whole thread! Thanks for stating this so well.
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Quote:
Originally Posted by bocastephen
I'd be more interested in Congress going after the oil speculators and getting prices back in line with real supply and demand, than I would be with them approving or disapproving a merger, or re-regulating the airline industry.
As a mediocre investor over the years, I've learned that sometimes the market knows something you don't know and sometimes it's just idiotic. But you can never know until later which of these is the case.
Programs: CO Platinum, SPG Platinum, HH Gold - whatever that's worth now :(
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Quote:
Originally Posted by nsx
As a mediocre investor over the years, I've learned that sometimes the market knows something you don't know and sometimes it's just idiotic. But you can never know until later which of these is the case.
In the case of oil, even the oil companies are saying the price is wrong, all while they rake in record profits. I recall reading a couple experts and an oil company pegged $60 as around fair value given current supply/demand.
__________________ Rich and 50 is the same as middle-class and 30
Honestly, sometimes you show limited understanding of how politics is actually done in the United States. A congressman, who is in the minority even a former chairman, speaking in a hearing means just about nothing. Being in the minority means you get maybe 5 minutes in a two hour hearing to try to get a soundbite on tv.
Sounds like you have more of an issue with reuters and the NY Times than with me. I don't make this news or report this news, I just placed the links. You can form your own opinions, as we all do.
So, should we assume that you think the merger is doomed to be stopped by the anti-trust enforcers in Washington and that both NW and DL will be forced to stay independent until the bitter end?
Any links you could provide supporting this hypothesis?
Quote:
Originally Posted by bocastephen
The financial forces killing the airlines right now are the same forces killing the rest of us at the gas pump. Absent these insane fuel prices, the airlines would be making money hand over fist, given the bursting at the seams loads they're experiencing now.
This is patently untrue. Even before oil was at record high levels, ever since deregulation the US airlines have been caught in the web of zero sum games and have lost every cent they ever made and more.
Quote:
Originally Posted by humanoid94
Seems to me that deregulation achieved everything the people ever wanted. Low fairs, frequent flights, and true competition. Why on earth would anyone, other than the airlines themselves, want to go back to the old system?
What true competition? If the competition were true, most US airlines today would be extinct and we might have a generation of efficient, innovative, new business model carriers operating in the US as an example to the world instead of a bunch of basket cases that were all propped up with government support.
Let's not forget a few things people probably never wanted, why leave things like these out?
- billions of hidden costs in losses forced on the economy and taxpayers through bankruptcy proceedings to prop up the well connected
- abominably poor service today across the board more appropriate for Aeroflot at the height of the Soviet Union than for the largest economy in the world
- a legacy of old, inefficient fleets that go through kerosene like Southern Baptist college students go through beer on Spring Break
- an entire industry utterly unprepared to compete with Asian and European carriers
- lobbying from the usual suspects that has left the US with an air space system that is 30 years behind where it needs to be
-...
Prices have been low. Yes. And the costs have been high.
Quote:
Originally Posted by bocastephen
I'd be more interested in Congress going after the oil speculators and getting prices back in line with real supply and demand, than I would be with them approving or disapproving a merger, or re-regulating the airline industry.
Quote:
Originally Posted by nsx
As a mediocre investor over the years, I've learned that sometimes the market knows something you don't know and sometimes it's just idiotic. But you can never know until later which of these is the case.
Perhaps the market is indeed wrong, thinking all this time incorrectly that oil is a finite resource, when in fact due to a secret discovery of a fault in the time/space fabric off the coast of California near Burbank it is now possible to obtain infinite supplies of black gold from other faraway planets.
Most refiners in the US are actually LOSING money at the moment, as they can't pass the higher cost of oil into the price of gasoline, essentially the same problem the airlines have. In response, they are also cutting capacity, hoping for pricing power.
Perhaps the global oil market is not a conspiracy, but is actually functioning as a market functions. Exploration and discovery is disappointing, key suppliers are having trouble meeting production goals, huge suppliers have been attacked militarily by their largest customer or are facing other social and political unrest further threatening supply while at the same time both China and India and a slew of other developing economies all want to duplicate or surpass the United States record of blowing through 25% of the world's oil production every year. So demand is growing faster than supply can and will keep up.
Sounds to me like the market is functioning pretty well.
Last edited by thezipper; May 16, 08 at 10:37 am.
Reason: Consecutive Posts by OP
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Quote:
Originally Posted by nsx
Whereas without these mergers financial losses will force reduced capacity, reduced competition, higher prices, and layoffs.
So why do we need to be protected from mergers? We don't, but Congress does. Because someone might blame THEM, rather than market forces, for what happened.
Folks, its all about the BIG WALL STREET BANKs AND HEDGE FUNDs,i.e institutions that have large positions in both Delta and NW. Capacity reductions are inevitable.
The net effects of either merger or bankruptcy will be reduced capacity. The banks and institutional investors just want to dictate the timeline; they want time to gradually unwind their crappy positions in the airlines so they don't have to book the loss all at once.
Oil futures have an insanely low margin deposits. This lets speculators get in at with insanely low prices (pennies on the dollar). Just changing the Margin requirements to be in line with other futures could radically change prices.
You know, the European critics should really be careful about criticizing the US bankruptcy process since its clear that they don't understand the issues.
At least justify Alitalia before opening your mouth.
You know, the European critics should really be careful about criticizing the US bankruptcy process since its clear that they don't understand the issues.
At least justify Alitalia before opening your mouth.
Ahem, dribble, dribble (...typing with pencil in mouth...) Although I hardly qualify as a European critic, I will take this one from the floor.
Alitalia is heading to almost certain liquidation by the end of summer after the deal with AFKL was skuttled because of pre-election posturing by an idiot who also now happens to be elected to lead the country (part of this must sound familiar). Burlesque-aroni is being raked over the coals by the EU for his illegal loan, and Alitalia has just about run out of options. Stupidity of those who can't face the facts. What's to justify?
Since I am sure I am not alone in not sharing your in depth understanding the issues surrounding the Ch. 11 US bankruptcy process, particularly its track record in stimulating innovation, efficiency and effective national-wealth-creating competition and higher customer service, care to enlighten us? The results so far have not been promising, but perhaps I am missing something.
