Originally Posted by
Tab Flyer
Delta actually does not need to buy anyone on the west coast. Just purchase the Saudia MD90s, establish an LAX category and running those twenty-five or so hulls up and down the west coast using existing gates and personnel. Use a rational schedule between city pairs to join our customers with Delta flights. Also supplement the MD90s with other fleet types here and there. the cost at $10 mil/frame, $250 mil total.
Let AA or SWA deal with the merger issues and costs.
I sure like the way you think, but Delta management obviously prefers to outsource this flying and make some marginal profit. Delta wants to avoid competition which would instantly result in this flying being unprofitable. Delta wants to avoid capital expenditures and risk.
Mergers always look cheaper than they turn out to be. With a stock swap the only immediate costs are all the attorneys and management time (which the players profit from tremendously). The real benefit to the merger is growing without having to compete for that revenue.
Delta (and the other carriers) will continue the cycle of merging and shrinking as long as they can. It takes an irrational player, like Virgin America, or Southwest back when they were "nuts" and proud of it, to actually put up a fight in this mature and saturated market.
Remember, Delta fought a war of attrition with Val-U-Jet / AirTran in Atlanta. The record shows Delta went bankrupt and damn near insolvent. Southwest now has 1/3 of the gates in Atlanta.
Crystal ball says we'll keep doing what we have been doing ... merge & shrink to the most profitable core of what we acquire. Use the merger process to capture revenue and grow without capital expenditure. (ALPA is VERY SMART to have learned how to capitalize on the process).