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USAIRWAYS and DELTA MERGER????

 
Old Jul 29, 06, 6:29 am
  #1  
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US CEO asks Delta to think about merger

Only a matter of time in the economic/industry cycle before this stuff started bubbling to the top of agendas...

July 29, 2006

US Airways Group Inc. Chief Executive Doug Parker, buoyed by a stock price that has more than doubled since the company's merger with America West Airlines, telephoned Delta Air Lines Chief Executive Gerald Grinstein earlier this summer to gauge his interest in a possible merger, according to people familiar with the situation.

Mr. Grinstein told Mr. Parker that Delta wasn't interested in starting merger talks, because the Atlanta-based airline plans to exit bankruptcy-court protection next spring as a stand-alone carrier, according to those people.
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Old Jul 29, 06, 6:43 am
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Interesting that Parker would try to merge with a second airline when he hasn't really even started the operational integration of the two airlines he has already. Makes me question those analysts who are so quick to praise him as a bright "rising star" type person in the airline industry.

As he will learn in the next 12 to 18 months, there's a lot more to merging two airlines than just changing the signs over the ticket counters and repainting some planes.....
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Old Jul 29, 06, 6:45 am
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I would not be to thrilled of a Delta / US merger. I think mergers are likely to happen down the road, but I could see more of a low fare carrier merging with a carrier like US to open international routes, like maybe AirTran. The thing for me is, outside of opening new routes, why would anyone want to merge with DL at the moment?
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Old Jul 29, 06, 7:39 am
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Originally Posted by N866DA
Interesting that Parker would try to merge with a second airline when he hasn't really even started the operational integration of the two airlines he has already. Makes me question those analysts who are so quick to praise him as a bright "rising star" type person in the airline industry.

As he will learn in the next 12 to 18 months, there's a lot more to merging two airlines than just changing the signs over the ticket counters and repainting some planes.....
I agree that it is way too early to call the HP/US merger a success.

I couple of years ago, I thought that a HP/DL merger would be a good thing. Delta needs to .... or get off the pot in the west. However, I think the DOJ would have significant objects to US(HP)/DL merger since US and DL share so many routes in the east.
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Old Jul 29, 06, 8:02 am
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Originally Posted by indufan
I couple of years ago, I thought that a HP/DL merger would be a good thing. Delta needs to .... or get off the pot in the west. However, I think the DOJ would have significant objects to US(HP)/DL merger since US and DL share so many routes in the east.
Besides, HP/US would offer practically ZIP in terms of DL's biggest gaping hole in its network - Transpacific. While DL can try to grow organically in the Pacific (say by adding some flights from LAX), I really think that DL will have to acquire someone's Pacific ops in the future to become a decent-sized player there.
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Old Jul 29, 06, 8:23 am
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Parker has been soliciting merger proposals from any airline he can find. I swear it's like a cat in heat. But I have yet to see any indication of reciprocal interest, from DL or any other airline.
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Old Jul 29, 06, 8:31 am
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US Airways Group Inc. Chief Executive Doug Parker, buoyed by a stock price that has more than doubled since the company's merger with America West Airlines, telephoned Delta Air Lines Chief Executive Gerald Grinstein earlier this summer to gauge his interest in a possible merger

This news item has "dejas vu" written all over it. It brings back fond memories of dearly departed but not missed Frank Lorenzo who also had such visions of grandeur.
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Old Jul 29, 06, 8:34 am
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That was a total mess - DL does not belong with US/HP. There's nothing to be gained from it.

Originally Posted by radonc1
This news item has "dejas vu" written all over it. It brings back fond memories of dearly departed but not missed Frank Lorenzo who also had such visions of grandeur.
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Old Jul 29, 06, 8:43 am
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Hahaha! A morning laugh...thank you so much, Doug. Let's look at some reasons why such a merger would be a bad thing and why Delta shouldn't be in the slightest bit interested.

1) US has positioned itself as a 'full service discount carrier', with 'full service' being more concept than practice. That is not the marketing niche Delta is investing to target.

2) Delta is investing millions to refresh its cabins, improve the appearance and quality of its product, and is trying to reposition itself as a premier quality full service airline (hopefully not too late), and is gunning for the only other carrier that stands at the top of the pyramid - Continental. US is making no such investment, and many of its aircraft and service delivery initiatives are off the low end of the chart quality wise, and is gunning for the bottom of the pyramid - Northwest.

3) US, apparently never learning its lesson from the customer backlash it suffered when post 9/11 "only Y fare customers deserve to be elites", is currently on a tear to destroy the benefits and features of its own FF program, and is also removing seats from FC.

4) If Delta's improvements are not too little too late, it has no reason to want to merge with another carrier (especially a smaller and lesser one) as the bride - a couple years from now, it may decide to be the groom and go shopping for a merger partner of its own or be quite happy being profitable on its own.
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Old Jul 29, 06, 9:01 am
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NO! NO! NO! I do not want to be a part of US Airways! Never! I'll switch if that ever happens.
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Old Jul 29, 06, 9:36 am
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Parker is trying to make the claim that the consilidation was the reason for the profitability. If that's the case, explain to me why EVERY carrier has posted a profit. WAKE UP PARKER! When you raise fares you raise revenue. The largest portion of US's profit came from US East and that was given a nice boost when Independence Air liqidated and eased competition on many routes that were bread and butter for US. US West where US is in a fierce war with WN did not fare so well.

Personally, If US and DL were to merge I would head for the hills. HP has devalued the US brand to the point where I would rather fly WN. They are nickel and diming their pax for everything. Elites are no longer valued and they are ripping out seats in F and reducing pitch to get more seats on their aircraft. Everything except the toilet paper has an ad on it. It just does not fit with a model focusing on business pax. Dont even get me started on their PHL operation.

They have alienated their elites to the point where even Silver Preferreds are clearing well over 75% of the time on many routes out east. Nice for the Silvers but a bad sign for the airline.
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Old Jul 29, 06, 10:07 am
  #12  
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As an FYI -- got the full article on my doorstep (can't post a full Journal article here)...but some other facts from it...

Parker also approached NW with the same conversation.

CO and DL both had conversations with UA about an integration.

Either way...Parker has an inflated share price that can be used for some deals...and we know on the CO board that their management would be willing to do a merger if they were forced to by other action. They know mergers are a wreck and would never be the first mover, but if someone else did, sounds like they view it as a must.

Sadly as customers, primary driver here is much higher stock price valuations for US and CO in the last year, which makes things slightly more viable from a financing standpoint...but operating...well...we know the mess it could become...
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Old Jul 29, 06, 11:15 am
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I agree that consolidation maybe the answer, but I don't think that US is nearly ready to consolidate with anyone (besides, what exactly do they have that anyone would really want??). The only reason that the new US has ANY potential at all is that they were two smallish airlines - not megacarriers like NW, UA, AA, and DL (and to some extent CO). Plus, as mentioned, the service on US is atrocious at best! I'm not too sure Parker could ever be in the driver's seat for some merger like this.

Also, for fun, my merger speculations would be CO/UA (with CO in charge) and DL/NW. I could see AA merging with BA, if foreign control were to be relaxed.

Last edited by aa4ever; Jul 29, 06 at 4:57 pm
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Old Jul 29, 06, 12:23 pm
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I'm joining the chorus here singing "No, No, A Thousand Times No". That he is even suggesting such a thing publicly reeks of desperation and may be a sign that HP/US will soon be in as sad a shape as US was before that combination.
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Old Jul 29, 06, 12:47 pm
  #15  
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verything except the toilet paper has an ad on it.
they need to talk to Mel Brooks, he even had spaceballs the toilet paper...

I think a DL/USHP merger would be stupid. US doesn't bring anything to the table network wise, and a couple of ratty 767's and a few A330's that don't fit in DL's network.

DL and NW could make some sense, and CO/UA make some sense, but the fleet and workforce integration would be a nightmare.
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