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A Quick Word about the (now announced) Northwest – Delta Merger

I’m not going to write much about the Delta – Northwest merger because you’ll find plenty about it elsewhere, but there are 2 points I’d like to make:

– This is not a done deal. There will be significant pilot opposition to this, and that should not be discounted.

– In theory – theory – I can understand doing this if you shut down a hub or two (Memphis comes to mind) and laid off a bunch of people, cutting a bunch of cost out of the system. Perhaps, then, I’d understand how they’ll generate some cost savings. But that’s not the message. In an email, Northwest says that they won’t be eliminating any hubs or any service to small towns. Now, I’m guessing that is one giant load of poop, as how could you possibly save two struggling carriers by simply jamming everything they have together. That doesn’t really make any sense (as if the airline industry is run by sense).

I have the feeling that I’m missing something, but if neither one of these airlines could be successful longterm on their own in an extremely difficult environment, how would focusing on merging these airlines together (instead of the actual airline operation) improve matters? And when United and Continental get together (as rumored) – look out. As I’ve mentioned before, this will be an operational mess the likes of which we’ve never seen. I’m an optimist about this industry, and I cannot conceive how how this can all work out.

I’m done.

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  1. Jared,

    Can you explain to me why Continental feels the need to merge with United in response to Delta-NW? Even assuming that Delta-NW works out, wouldn’t it still make more sense for CO to compete on its own, without any distractions? Last I checked, CO was one of the few legacy carriers that was in good shape.

    -avi

  2. How is extracting extra profit from a few routes to small cities where they two overlap going to help a combined Deltawest? I know a few business/last minute tickets are the key to profit, but when you look at cities where the merged airlines would have market control, I can’t imagine a huge amount of business traffic.

    Maybe NW’s Asia flights are interesting, and the merger would give NWA a chance to retire the MD-80s.

    But otherwise this merger would be a disaster.

  3. Avi, I have absolutely no idea why Continental would want to take a perfectly good business and destroy it in a merger.

    Maybe IAHPHX can weigh in…thoughts?

  4. I’m not a big fan of a CO-UA merger. Kellner thinks he needs to get bigger to compete against NW/DL.

    The only thing I can say is that UA seems to be run poorly from a management perspective. I bet there are a zillion efficiencies CO management could wring out of UA if they took over and could get a good handle on this collosus. It’s a huge undertaking but, down the road, if they could shape UA’s culture to be like CO’s (and remember before Bethune, CO had the WORST culture!), they would create the number one airline in the world for like forever.

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