ummmm... "we have been screwing the airlines" ... really? I didn't make the rules, they did. I've only been playing within their rules. So to say I've been screwing them is a little far fetched. If it was THAT bad, why didn't they change the "rules" long before now?
Well, when there are 5 or 6 other competitors forcing their hand and holding NW down while we get our way and take what we want, I can't think of a better word that doesn't end in bang.
Quote:
Originally Posted by nsx
But we'll have to wait 9 months after the screwing begins to see for sure.
BTW, this thread on the CO forum makes some very salient points (particularly post #13) which are relevant to this discussion.
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I think thats called general market competition... the European arlines changed the rules after a while, no reason why airlines on this side of the pond couldn't have changed them...
Quote:
Originally Posted by Klm is Dead - Long Live KLM
Well, when there are 5 or 6 other competitors forcing their hand and holding NW down while we get our way and take what we want, I can't think of a better word that doesn't end in bang.
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Delta SkyMiles Forum Moderator - FlyerTalk Member #1,038
I too am quite aware of the increasingly poor financial positions of airlines. However, unlike with the apologists for this "merger" or one or both of the airline management teams, I have no "desperate pipe dream" that tying together two now separately sinking rocks and then cutting the excess rope between the two rocks will make them float.
I think there are some implicit assumptions in your analogy that aren't necessarily reasonable.
In your analogy, you are assuming that the only thing changing is what the rocks are tied to. But in this merger, the property making the rocks sink (buoyancy) is assumed to stay constant. In reality, the fundamental properties of the market (buoyancy) will shift. Suddenly #3 and #6 airline combine to make #1 airline. They are the unequivocal leader which allows them to save money they previously couldn't as standalone operations. Just consolidating operations at large non-hub stations as well as more precise fleet utilization will reap hundreds of millions of savings almost immediately. And the pricing power and route structure will either force the hand of consumers/businesses and may entice travelers to switch their business to the strongest brand. And since none of us knows what the resulting FFP will look like, imagine if the airlines really do decide to take the best of WorldPerks and SkyMiles and create a truly head-of-the-class FFP? This merger will certainly be industry changing, but there's no clear cut answer as to what exactly will change, and as a result, how the properties of the market (buoyancy) will be modified.
Your analogy strives to take a pre-determined opinion of an outcome and fit it to something you can easily illustrate. But there are too many factors you've left out in analyzing what the final effect may be.
Imagine, if you will, that enough rocks sink at a faster rate than a tied-up NW/DL. Perhaps enough will sink and form an underwater mountain so high that the NW/DL rocks continue to sink, but never actually go below the water line?
I think there are some implicit assumptions in your analogy that aren't necessarily reasonable.
In your analogy, you are assuming that the only thing changing is what the rocks are tied to. But in this merger, the property making the rocks sink (buoyancy) is assumed to stay constant. In reality, the fundamental properties of the market (buoyancy) will shift. Suddenly #3 and #6 airline combine to make #1 airline. They are the unequivocal leader which allows them to save money they previously couldn't as standalone operations. Just consolidating operations at large non-hub stations as well as more precise fleet utilization will reap hundreds of millions of savings almost immediately. And the pricing power and route structure will either force the hand of consumers/businesses and may entice travelers to switch their business to the strongest brand. And since none of us knows what the resulting FFP will look like, imagine if the airlines really do decide to take the best of WorldPerks and SkyMiles and create a truly head-of-the-class FFP? This merger will certainly be industry changing, but there's no clear cut answer as to what exactly will change, and as a result, how the properties of the market (buoyancy) will be modified.
Your analogy strives to take a pre-determined opinion of an outcome and fit it to something you can easily illustrate. But there are too many factors you've left out in analyzing what the final effect may be.
Imagine, if you will, that enough rocks sink at a faster rate than a tied-up NW/DL. Perhaps enough will sink and form an underwater mountain so high that the NW/DL rocks continue to sink, but never actually go below the water line?
The issue I take now with the above is not with what can be done (although amounts and timings may be in question) but with your assertion about the "implicit assumptions" of the analogy of the sinking stones. The problem is that the implicit assumptions are not as you try to make them out to be, which leads you, in essence, to put up a strawman of your own creation that you then knock down. (Hint: To see why I said this, note the use of the presence tense in the relevant quote of mine.)
Quote:
Originally Posted by TheMoose
And since none of us knows what the resulting FFP will look like, imagine if the airlines really do decide to take the best of WorldPerks and SkyMiles and create a truly head-of-the-class FFP?
Speaking of "truly head-of-the-class FFP", that could (and I have asserted that it will) mean the following:
Quote:
Originally Posted by GUWonder
[T]his "merger" will lead to "cuts in the FF programs" that will "come around sooner, be worse and be worse for more people, than would be the case in the absence of this 'merger'".
Do you think the FFPs' account holders will mostly be significantly better off as a result of this "merger" and benefit sooner than later from this "merger"?
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The issue I take now with the above is not with what can be done (although amounts and timings may be in question) but with your assertion about the "implicit assumptions" of the analogy of the sinking stones. The problem is that the implicit assumptions are not as you try to make them out to be, which leads you, in essence, to put up a strawman of your own creation that you then knock down. (Hint: To see why I said this, note the use of the presence tense in the relevant quote of mine.)
When the discussion turns to nit-picky self-references on rhetoric ab adsurdum, you know that the substantial or factual arguments have been exhausted. 'Nuf said.
Quote:
Originally Posted by GUWonder
Do you think the FFPs' account holders will mostly be significantly better off as a result of this "merger" and benefit sooner than later from this "merger"?
Yes. I certainly believe that NW Worldperks elite cardholders will be better off retaining their miles as promised in the new program rather than losing everything when Worldperks disappears together with NW.
NW has announced they are leaving the market and where NW goes, there goes WP. The mechanism they have chosen to cease (independent) operations is through assimilation by DL. If this mechanism fails, it is very unlikely that NW will be able to reverse its many months long decision to exit the market.
Quote:
Originally Posted by GUWonder
The issue I take now with the above is not with what can be done (although amounts and timings may be in question) but with your assertion about the "implicit assumptions" of the analogy of the sinking stones. The problem is that the implicit assumptions are not as you try to make them out to be, which leads you, in essence, to put up a strawman of your own creation that you then knock down. (Hint: To see why I said this, note the use of the presence tense in the relevant quote of mine.)
When the discussion turns to nit-picky self-references on rhetoric ab absurdum, you know that the substantial, logical or factual arguments have been exhausted. 'Nuf said.
Quote:
Originally Posted by GUWonder
Do you think the FFPs' account holders will mostly be significantly better off as a result of this "merger" and benefit sooner than later from this "merger"?
Yes. I certainly believe that NW Worldperks cardholders will be better off retaining their miles as promised in the new program rather than losing everything when Worldperks disappears together with NW.
NW has announced they are leaving the market and where NW goes, there goes WP. The mechanism NW has chosen to cease (independent) operations is through assimilation by DL. If this mechanism fails, it is very unlikely that NW will be able to reverse its many months long decision (and associated inaction barreling full speed ahead towards a brick wall) to exit the market.
When substantively refuting a position is too difficult, the following kind of non-response response is not unexpected:
Quote:
Originally Posted by Klm is Dead - Long Live KLM
When the discussion turns to nit-picky self-references on rhetoric ab adsurdum, you know that the substantial or factual arguments have been exhausted. 'Nuf said.
When the discussion turns to the above kind of "rhetoric ab adsurdum, you know that the substantial or factual arguments have been exhausted. 'Nuf said."
Quote:
Originally Posted by Klm is Dead - Long Live KLM
Yes. I certainly believe that NW Worldperks elite cardholders will be better off retaining their miles as promised in the new program rather than losing everything when Worldperks disappears together with NW.
Talk about saying "yes" and then following with an apparent non-sequitur.
The following is what I said:
Quote:
Originally Posted by GUWonder
Quote:
[T]his "merger" will lead to "cuts in the FF programs" that will "come around sooner, be worse and be worse for more people, than would be the case in the absence of this 'merger'".
Do you think the FFPs' account holders will mostly be significantly better off as a result of this "merger" and benefit sooner than later from this "merger"?
]b]Klm is Dead - Long Live KLM[/b], are you applauding "cuts in the FF programs that will come around sooner, be worse and be worse for more people, than would be the case in the absence of this 'merger'"? The airlines' main problems are not the FFPs, so to encourage a path toward "cuts in the FF programs" is quite a waste since such cuts will not provide much of a solution to anything.
We've already seen what the US-HP merger did for the FFPs when management there too was applauding how they would "combine the best of both airlines". That time too people were saying how a merger was supposed to prolong the viability of both carriers -- it's not clear that is what was the result but the impact on the FFPs is quite clear.
I definitely don't buy the premise that viability of each of the two carriers, jointly or separately, is necessarily improved by a "merger".
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When substantively refuting a position is too difficult, the following kind of non-response response is not unexpected:
When the discussion turns to the above kind of "rhetoric ab adsurdum, you know that the substantial or factual arguments have been exhausted. 'Nuf said."
This thread is starting to feel like some dialog example from Godel, Escher, Bach
Quote:
Originally Posted by GUWonder
]b]Klm is Dead - Long Live KLM[/b], are you applauding "cuts in the FF programs that will come around sooner, be worse and be worse for more people, than would be the case in the absence of this 'merger'"? The airlines' main problems are not the FFPs, so to encourage a path toward "cuts in the FF programs" is quite a waste since such cuts will not provide much of a solution to anything.
We've already seen what the US-HP merger did for the FFPs when management there too was applauding how they would "combine the best of both airlines". That time too people were saying how a merger was supposed to prolong the viability of both carriers -- it's not clear that is what was the result but the impact on the FFPs is quite clear.
I definitely don't buy the premise that viability of each of the two carriers, jointly or separately, is necessarily improved by a "merger".
Not applauding, just recognizing reality.
Unfortunately, I think that FFPs have enjoyed their heydey and will continue their descent into something less and less interesting for the key gaming demographic of this forum. With or without mergers, FFPs are going to be less and less about rewarding the frequent flyers with free flights and more and more about third party revenues, yield equivalence, segmented service offerings and alliance wide lock-in. I agree that, based on just about every merger out there, including AF+KL, the FFP will likely be rationalized more quickly and more abruptly -- than in an airline with a successful business model that is a going concern.
However, I still question whether a clueless, two-bit airline hovering around #5 on the league charts would have a better chance of actually surviving the next couple of years rather than combining to become #1. Size does matter. GE didn't get turned around by the mantra "we have to be #5 in the market and losing our shirt" and NW won't either.
When an airline disappears, the change (disappearance) to a program is even more abrupt. I believe that the new FFP will be better for WP members than losing everything overnight. However, since it looks like the merger is set to happen, we won't be able to test my hypothesis, but we will be able to see your point on how fast the Redtail's FFP is 'blued".
Unfortunately, I think that FFPs have enjoyed their heydey and will continue their descent into something less and less interesting for the key gaming demographic of this forum. With or without mergers, FFPs are going to be less and less about rewarding the frequent flyers with free flights and more and more about third party revenues, yield equivalence, segmented service offerings and alliance wide lock-in. I agree that, based on just about every merger out there, including AF+KL, the FFP will likely be rationalized more quickly and more abruptly -- than in an airline with a successful business model that is a going concern.
Sounds like a mutual understanding about the upcoming reality; for I am recognizing the above mentioned type of "cuts in the FF programs" when I say such "cuts in the FF programs will come around sooner, be worse and be worse for more people, than would be the case in the absence of this 'merger'".
Quote:
Originally Posted by Klm is Dead - Long Live KLM
However, I still question whether a clueless, two-bit airline hovering around #5 on the league charts would have a better chance of actually surviving the next couple of years rather than combining to become #1. Size does matter. GE didn't get turned around by the mantra "we have to be #5 in the market and losing our shirt" and NW won't either.
DL or NW, pretty much the same could be applied to either. In any case I wouldn't compare DL or NW with GE when GE has a history of better management and of having larger proportion of its revenue stream coming from business lines in far less commoditized industries than is the case with the airlines. [Sidebar: GE has done what it could to keep more airlines flying in the air for far longer than would otherwise be economically viable in the absence of GE's having played its role in the sector.]
Quote:
Originally Posted by Klm is Dead - Long Live KLM
When an airline disappears, the change (disappearance) to a program is even more abrupt. I believe that the new FFP will be better for WP members than losing everything overnight. However, since it looks like the merger is set to happen, we won't be able to test my hypothesis, but we will be able to see your point on how fast the Redtail's FFP is 'blued".
Sure, if we were to suspend disbelief and take as a given both:
1. that NW would necessarily go into Chapter 7 or 11 before DL in the absence of this "merger"; and
2. that a "merger" of this nature necessarily avoids more of NW FFP account holder miles (and other benefits) from being further devalued (which, like at your extreme, includes, but is not limited to, seeing the miles and other benefits being wiped out under Chapter 11 or Chapter 7).
However, if we don't suspend disbelief, then those above two "givens", jointly or separately, are not necessarily a given.
To sum it up from my vantage point, I don't necessarily take it as a given that this "merger" will be the magic bullet that puts an end to the woes of either DL or NW or of both DL and NW (unless considering a suicide or suicide pact useful to one or both of these parties); and even if it were a magic bullet for either DL or NW or for both DL and NW, it would still be the case that the "cuts in the FF programs .... will come around sooner, be worse and be worse for more people, than would be the case in the absence of this 'merger'". The airlines have far bigger problems than the FFPs; however, as is typical with desperate, frightened and foolish actors, they will pursue courses of actions -- inside and outside -- that don't necessarily turn out to serve their interests or the interests of those who support the "leadership" that will waste (and has wasted) plenty of resources and will squander (and has squandered) goodwill by going about a fool's quest anyway. In the pursuit of noble aims, noble results are not necessarily a given.
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Quote:
Originally Posted by GUWonder
DL or NW, pretty much the same could be applied to either. In any case I wouldn't compare DL or NW with GE when GE has a history of better management and of having larger proportion of its revenue stream coming from business lines in far less commoditized industries than is the case with the airlines. [Sidebar: GE has done what it could to keep more airlines flying in the air for far longer than would otherwise be economically viable in the absence of GE's having played its role in the sector.
Some good points. I don't really see a tremendous difference between Delta or Northwest in terms of the financials, except Delta is larger.
The GE example is pretty funny. True that GE at one time turned themselves around but aren't they now off the tracks?
Quote:
Originally Posted by GUWonder
To sum it up from my vantage point, I don't necessarily take it as a given that this "merger" will be the magic bullet that puts an end to the woes of either DL or NW or...
TWA didn't really work out for AA. US really hasn't worked out for HP.
Sounds like a mutual understanding about the upcoming reality; for I am recognizing the above mentioned type of "cuts in the FF programs" when I say such "cuts in the FF programs will come around sooner, be worse and be worse for more people, than would be the case in the absence of this 'merger'".
There is no recognition, just pontification.
You can't recognize something that has not yet happened.
Quote:
Originally Posted by GUWonder
DL or NW, pretty much the same could be applied to either. In any case I wouldn't compare DL or NW with GE when GE has a history of better management and of having larger proportion of its revenue stream coming from business lines in far less commoditized industries than is the case with the airlines.
Many of GE's industries are commodities or commoditized. The point of Klm is Dead - Long Live KLM's analogy, which you completely missed, was not to draw a direct comparison, but to note the exponential advantage holding a #1 or #2 market position holds in a competitive marketplace.
Quote:
Originally Posted by GUWonder
Sure, if we were to suspend disbelief and take as a given both:
1. that NW would necessarily go into Chapter 7 or 11 before DL in the absence of this "merger"; and
This would almost certainly happen. Have you read any of Jamie Baker's research notes lately? What about Moody's ratings? How does a B-1 compare to an A-1?
Quote:
Originally Posted by GUWonder
2. that a "merger" of this nature necessarily avoids more of NW FFP account holder miles (and other benefits) from being further devalued (which, like at your extreme, includes, but is not limited to, seeing the miles and other benefits being wiped out under Chapter 11 or Chapter 7).
Everyone should operate with the assumption a chapter filing could result in the elimination of accrued frequent flier benefits. Account holders are essentially unsecured creditors.
Quote:
Originally Posted by GUWonder
However, if we don't suspend disbelief, then those above two "givens", jointly or separately, are not necessarily a given.
Of course they're not a given. They just happen to be a much greater certainty.
Quote:
Originally Posted by GUWonder
To sum it up from my vantage point, I don't necessarily take it as a given that this "merger" will be the magic bullet that puts an end to the woes of either DL or NW or of both DL and NW (unless considering a suicide or suicide pact useful to one or both of these parties); and even if it were a magic bullet for either DL or NW or for both DL and NW, it would still be the case that the "cuts in the FF programs .... will come around sooner, be worse and be worse for more people, than would be the case in the absence of this 'merger'". The airlines have far bigger problems than the FFPs; however, as is typical with desperate, frightened and foolish actors, they will pursue courses of actions -- inside and outside -- that don't necessarily turn out to serve their interests or the interests of those who support the "leadership" that will waste (and has wasted) plenty of resources and will squander (and has squandered) goodwill by going about a fool's quest anyway. In the pursuit of noble aims, noble results are not necessarily a given.
This vantage point conveniently ignores the strategic goals of the merger, powerful ancillary players and market dynamics. In summary, it is a flat and limited perspective that excludes basic information about finance, the aviation industry and forward looking analysis.
Rather what your post has given us is pontification while failing to recognize that there was recognition of reality in my posts.
Quote:
Originally Posted by sxf24
You can't recognize something that has not yet happened.
Wrong -- both past developments and a long list of posibile future developments can be recognized.
Quote:
Originally Posted by sxf24
Many of GE's industries are commodities or commoditized. The point of Klm is Dead - Long Live KLM's analogy, which you completely missed, was not to draw a direct comparison, but to note the exponential advantage holding a #1 or #2 market position holds in a competitive marketplace.
Most of GE's units are not primarily operating in highly commoditized business lines where pricing power even in good times is poor.
Quote:
Originally Posted by sxf24
This would almost certainly happen. Have you read any of Jamie Baker's research notes lately? What about Moody's ratings? How does a B-1 compare to an A-1?
Your use of "almost certainly" is completely without susbstantive meaning in the absence of providing a meaningful and decision-actionable time frame for those events that you say "would almost certainly happen".
Quote:
Originally Posted by sxf24
Everyone should operate with the assumption a chapter filing could result in the elimination of accrued frequent flier benefits. Account holders are essentially unsecured creditors.
That's not news to my ears. Already factored in.
Quote:
Originally Posted by sxf24
Of course they're not a given. They just happen to be a much greater certainty.
Your concept of "greater certainty" is meaningless, especially when bereft of time frames.
Quote:
Originally Posted by sxf24
This vantage point conveniently ignores the strategic goals of the merger, powerful ancillary players and market dynamics. In summary, it is a flat and limited perspective that excludes basic information about finance, the aviation industry and forward looking analysis.
My vantage point does not conveniently ignore that which your post's pontification would have people conveniently believe. Rather the kind of pontification evident in the above post of yours conveniently ignores or attempts to downplay anything that does not follow the Official Line. It is not a surprise -- not everyone here is a customer advocate.
"Forward looking analysis" from DL or NW airline management or from those who too heavily rely upon official claims is not necessarily confidence inspiring.
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Rather what your post has given us is pontification while failing to recognize that there was recognition of reality in my posts.
Wrong -- both past developments and a long list of posibile future developments can be recognized.
I'm confused; are you recognizing recognition or vice versa?
Quote:
Originally Posted by GUWonder
Most of GE's units are not primarily operating in highly commoditized business lines where pricing power even in good times is poor.
Most, many, few or some. Depending on the qualifier selected we could both be right. However, this is not the issue being discussed.
Quote:
Originally Posted by GUWonder
Your use of "almost certainly" is completely without susbstantive meaning in the absence of providing a meaningful and decision-actionable time frame for those events that you say "would almost certainly happen".
Your concept of "greater certainty" is meaningless, especially when bereft of time frames.
Are you trying to say analyst reports and particularly ratings agencies are worthless because they don't provide "meaningful and decision-actionable time frame for those [possible] events?"
Probability does not necessarily come with time frames, though I have seen a model estimating the time frame for a possible chapter filing for various legacy carriers, including NW. Since there are so many variables, it is absurd to cater to your desire to validate an opinion with a specific time frame. Besides, such information is highly confidential.
Quote:
Originally Posted by GUWonder
My vantage point does not conveniently ignore that which your post's pontification would have people conveniently believe. Rather the kind of pontification evident in the above post of yours conveniently ignores or attempts to downplay anything that does not follow the Official Line. It is not a surprise -- not everyone here is a customer advocate.
"Forward looking analysis" from DL or NW airline management or from those who too heavily rely upon official claims is not necessarily confidence inspiring.
Shouldn't there a happy medium, communicated clearly without unnecessary fluff in an attempt to obnubilate the issue? Doesn't reality fall somewhere in the middle of the pro-DL, pro-merger, rosy outlook you're wrongly accusing me of and the head-in-the-sand, red-Koolaid drinking opposition?
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Quote:
Originally Posted by sxf24
What financials have you looked at?]
Their balance sheets for one. Except for scale (delta larger) they almost look like mirrors of each other. Simliar cash on hand, lots of debt. Second consider 1Q loss results , very similar. Also both airlines stock has dropped in simliar fashion since they exited BK.
Except for the fact that the merger won't do any good they look perfect for each other - but in the end it is two sinking stones tied together.
Quote:
Originally Posted by sxf24
:
What is your definition of "off the tracks"?]
A stock price that has declined to the same level as 4 years ago, and selling their appliance unit -sad.
And I notice how you didn't comment on AA/TWA and HP/US, guess they do not conform to your worldview that mergers are good.
Their balance sheets for one. Except for scale (delta larger) they almost look like mirrors of each other. Simliar cash on hand, lots of debt. Second consider 1Q loss results , very similar. Also both airlines stock has dropped in simliar fashion since they exited BK.
Except for the fact that the merger won't do any good they look perfect for each other - but in the end it is two sinking stones tied together.
There's a lot more to a company's than Q1 results or the front page of the Balance Sheet, particularly contingent liabilities and available financing. NW has significant weakness in both.
That said, I don't think NW is in quite the dire straights as say, AA or UA.
Quote:
Originally Posted by hazelrah
A stock price that has declined to the same level as 4 years ago, and selling their appliance unit -sad.
The Street is fickle. GE has consistently increased earnings and has demonstrated the ability to shed lower performing assets, re-investing in higher growth sectors. While the divestiture of the appliance unit is sad on a sentimental level, it demonstrates GE's superb ability to continually re-invent itself in a dynamic marketplace.
Quote:
Originally Posted by hazelrah
And I notice how you didn't comment on AA/TWA and HP/US, guess they do not conform to your worldview that mergers are good.
Shakes head and walks away...
I've commented on HP/US previously. From a financial standpoint, it has been successful, since two companies on the brink of liquidation are now a single, solvent entity. From an operational standpoint, the management of US has flushed a lot of potential down the toilet.
