This is why mergers won't happen
 

http://www.usatoday.com/travel/fligh...-mergers_N.htm

Already, congress and some very powerful congressman are speaking out against major airline mergers. It looks like Delta would have a very steep hill to climb in Washington.

I concur..I agree

The next election could have a MAJOR impact on the feasability of future mergers...the executive branch can throw a lot of obstacles in the way of a merger (or remove them).

If I ran an airline and wanted to merge, I would be trying REAL hard to get it done in 2008. Or at least get so far along that it couldn't be reversed.

A hill that is undoubtedly easier climbed when pre-greased with large deposits made into the previously mentioned congressman's re-election account. Knowing what most of our airline executive's bank accounts look like, I bet they could change an opinion or two.

We already have a Democratic congress, with Democrat's running the major committees related to aviation. They can really slow down any merger deal by insisting on hearings and then getting them scheduled...eventually. So, the while a Democratic Administration might help prevent mergers, I'm not so sure that's all that necessary.

This gives our politicians a chance to support the "little" guy, the consumer and the airline employee, which they like to do. They did this in the failed USAir bid for Delta by suggesting strongly to USAir that if it could afford $12 billion for Delta, USAir could afford to take it's employee pensions back. Interestingly, that deal died shortly after.

Hopefully the last past few years of executives looting their airlines and screwing their employees is coming to an end when the republicans get their butts tossed out of power. Got to admit, though, under the Bush and his cronies, the airline corporate elite have gotten a bonanza to their personal bank accounts.

Let's not forget the oil companies/executives too...............:rolleyes:

Oh yah, under the Clinton Administration the Executives were in the soup line.....give us all a break.
If it is so bad the past few years why haven't your liberal friends in Congress done anything? I thought they wrote legistlation and had the power to override anything the "evil" Bush vetoed.

Need 2/3 vote to override a veto. Pretty difficult in most cases.

If this truly is the case, then why didn't Congress intervene with the TWA/AMR merger after watching the adverse effect on the TWA employees, the STL Lambert Airport, and the economies of STL/MCI.

Sen. Bond and Sen. Talent of Missouri faced constant resistence from Sen Kay B. Hutchinson of Texas (Dallas, TX) in trying to perserve jobs in Missouri for Missouri residents (TWA employees).

My point is the passenger airline industry is fragile and mergers may be the only way for them to continue as competitive entities in both the LCC arena and the International market whereas governments help support their national airline. Sadly, if deregulation is so wonderful why do we have to ask Congress to step in to seperate the catfights that occur during mergers. Secondly, we have seen in the TWA/AMR, Senators going to bat for the people they represent and then others leading the charge for political or financial reasons to prevent this form of equality within mergers.

Your viewpoint may vary,

FF

Seems like I remember when US and UAL tried to merge Congress or a judge stopped that too back in '99? Because it would be "too big" of an airline.

Because TWA was in chapter 11 when others were making money. Without a buyer, who's to say that they would not have been parted out and all of the employees out on the street? I don't think TWA ever had a chance in STL. Less than 20% of their passengers were originating. The vast majority were connecting, which makes it nearly impossible to make money.

I hate to see names like TWA, Pan Am, NWA, etc. go away. I agree with Congressman Oberstar that mergers in the current market are bad for everything (all but a few greedy investors who only care about a quick buck, even if it takes food off people's tables).

if these idiots wanted to save money they should start with the merging of regionals. there is a lot or redundant management at that level...

To accept the purchase of their assets, TWA was instructed by AMR to file for Chpt 11 so that the courts would eject Carl Icahn and his debilitating Karubu ticket agreement and to re-negotiate it's airplane leases which (because of TWA's poor credit rating) were very high. In simple terms, TWA's BK was a pre-packaged deal set forth by their buyer, AMR....period.

Back in 2001, the economy was faultering and the price of oil was rising thus making it hard to say that the profits made by the legacy carriers were certain to continue even without factoring in the 9/11 event.

AMR was not the only buyer of TWA. Boeing stepped forward, America West was already involved with a marketing agreement with TWA, of course Carl Icahn would have loved to regain control of TWA and finally there were a few other raiders/crackpots that stepped forward. To me in retrospect, Boeing would have been the best suitor. They did not want 185 airplanes being put on the market to dilute demand in addition TWA had placed a large order for aircraft. Boeing made it very clear to our managment that if they took over, their jobs would be terminated immediately. With the AMR offer, management as well as the employees were promised employment with the merger TWA/AMR airline. In retrospect, AMR suffered economic hard times like almost all other airlines post 9/11 and the unions on the property slotted the TWA employees such that they would endure they bulk of any layoffs. 100% of the TWA F/As lost their job, and 1890 out of 2400 pilots lost their job.

Would TWA survived ? We will never know. Admitedly the future at TWA was bleak and survival was a long shot. But in simple terms, "wouldda, shouldda, and might have" are fictional statements. Empirical data of what actually happened represents one of the most lopsided mergers in airline history.

I have two final points to try to tie my response to the thread's theme.

First, in a deregulated industry the US Gov't should not be called upon to determine the integration of seniority lists. In the case of TWA/AMR they were called upon because of the glarring disparity in slotting TWA employees into AMR's seniority lists. In addition, you would hope that if Senators are called upon that they would use a dose of morality and ethics to determine legislation. You would also hope that the buyer in the case of a merger would also excercise some moral responsibility. It is my opinion, that the buyor union and the representing Senator from Texas displayed any of these qualities.

Secondly, as merger mania becomes the catch phrase, I would offer an educated guess that pilots at the weaker carriers are reminiscent of the fate of the TWA pilots and are speaking up that they don't want to merge. Some may argue, a merger will help keep me employed. I offer, as a 1995 hire at TWA, I was laid off in 2003, and my current airline is my third since. Two trips to the unemployment line, three ground schools, a divorce and a weakened retirement were all the "rewards" of my last merger.

I'm not asking for sympathy, just hoping the next round of mergers is characterized by moral and ethical behavior versus greed and arrogance. We are our own worst enemies sometimes.

FF

Well, if I'm not mistaken, the Allegheny-Mohawk Labor Protective Provisions used in 1972 by the CAB are federal law now. It is no longer possible (in theory) for one group to take advantage of another; at least to the degree that the AA pilots took advantage of the TWA pilots.

Too bad those LPPs were not applied to your merger with AA. Turns out a "promise" from the APA do treat you fairly instead of the Allegheny-Mohawk LPPs isn't worth much. You would probably be a mid-seniority FO I would guess. Of course, AMR claimed they would buy TWA only if the merger protective provisions in the ALPA contract were wiped out.

Except it is Justice and Transportation that approve/disapprove mergers. Not congress. And this administration is probably as pro-business as any. Look at the big push for changing the foreign ownership laws. Sure congress can call for hearings, they could even try to pass new laws forbidding airline mergers. But short of that, it is not the job of congress to approve mergers.
JMO

Yes...and no. Congress can apply quite a bit of pressure, and they have done so in the past. Here's another member of the hill weighing in.

http://www.commercialappeal.com/news...orthwest-deal/

In all industry, not just the airline industry, the vast majority of mergers to date have ended in failure.

That's just the facts!

Mergers are bad news!

AL

Sounds like Rep. Cohen is calling for hearings. Like I said in my post, congress can call for hearings. Sure, they can make noise and "apply pressure", and it does have influence - no doubt. But they have no legal means to stop a merger. Again, short of passing new laws.

Oh, I don't know. It has worked out pretty well for the oil companies and banks. Not to mention the railroads.

Personally, I think DAL/UAL would have DoJ problems.

That is probably the smartest thing said on this thread. One would think that having 9 DCI carriers has some overlapping costs involved. So let's merge and then have 12 or 13 connection carriers. And they can't seem to figure out why that operation doesn't run smoothly.

It would appear that would be the more difficult merger to pull off. However, Gordon Bethune and Pardus are saying that DAL/NWA would be more difficult. I don't think anyone has a clue what is going on. I think what is going down is gonna surprise us all and in the end I'll bet Air France will own at least 25% of whatever becomes of DAL/UAL/NWA. I'm starting to think maybe Air France is the entity that is pushing for the merger here.

Friggen Frogs !!! :)

Which banks? The ones that are currently being bailed out by Asian and Middle-Eastern intrests or the ones that are crying about how much money they're losing on the mortgage crisis?

The U.S. government hasn't stopped a merger in forty years.

If it weren't for Bush and his "cronies", you would be giving all your tax dollars to welfare junkies.

Why all the worries over mergers? If a merger makes companies stronger and a force in the marketplace, then it gives us more job security. Sounds like everyone has been listening to US Airways East guys too much.

From the Washington Post website:

"The US Airways-United Airlines $12.3 billion merger plan collapsed on July 27, 2001, after the Department of Justice said it would sue to stop the deal."

I would consider that the U.S. Government did in fact stop a potential merger.

http://www.washingtonpost.com/wp-dyn...air/index.html

[QUOTE=texaspilot76;303337]If it weren't for Bush and his "cronies", you would be giving all your tax dollars to welfare junkies.

Hope your intent isn't a defense of a 7 year to date administration that has very little to be proud of. If so, history might be a better judge of their accomplishments.
Oh by the way, what is a welfare junkie?

Good Point Texas!

I feel much better about our president giving our money (and our youth's blood) for Oil Company Barrons and Middle Eastern Despots!:confused:

Onfinal

In fact (I'm not sure about this), has there ever been a merger allowed between two top six major airlines when both were making money? The only big airline mergers I can think of have occurred when the one being acquired was deep in chapter 11 and about to go out of business (TWA, Pan Am, Eastern, USAir, etc.).

Here is a good review of what congress was thinking and doing just seven short years ago the last time the industry was "healthy" right before 9/11. It wouldn't surprise me to see some of this legislation dusted off and reconsidered.

http://democrats.senate.gov/~dpc/pubs/107-1-143.html

http://online.wsj.com/articles/business_world

another interesting perspective...

Good info, minor footnote, TWA was not in BK when they agree to be bought by AMR. AMR made it part of the deal to eject Carl Icahn and the high aircraft lease payments. In the BK preceedings, AMR was successful on both accounts. I know it's a "so what" footnote, but it's an accurate one.

Again, thx for your info,

FF

I wonder if the Delta-Western merger would fit your criteria? Neither one was in bankruptcy or even close to it, as I recall.

I don't think these mergers will be the companies we see today. Someone is going to get broken into pieces. Parts will be shed and auctioned.

I agree that TWA is a good example.

Mergers may never happen, but if they do, I believe someone's seniority list is going to be wearing more than one colour of uniform,

The one company I could see that happening to is United. Management would say it is all to "maximize shareholder value".

But left unsaid is that it would also maximize their pockets.

I have to respectfully disagree with all who believe the DOJ will stop a merger. This is not the industry of the past. The Low Cost Carriers are big enough to keep domestic prices competative. Open Skies unfortunately will have the same effect on the international markets. So the old argument of a merger preventing competative prices just doesn't work any more. The only Washington friction you will see in my opinion is from Congressmen trying to protect their Local interests. The "Shareholders" are speeking loud and clear and the Media is talking it up. I think the merger wave is going to happen, my .02 cents.

Merger is going to happen and very quickly. DAL will merge with NW and it will be done very fast. Anderson wasn't hired because they liked his looks. Guess where he lives? He hasn'tindicated he plans on a address change in the near future.

Where does he live?

Yes, that was the only one I could think of that would be close. I can remember flying Western as a kid.

Here's another article which kind of talks about both sides of the issue that I thought was interesting...

http://www.startribune.com/business/13905096.html

I think it's interesting that DoJ has still to aprove NWA's investment in Midwest Airlines. DoJ is looking at that transaction (I do expect them to approve it) as a buyout by NWA. They continue to hold up approval, although it appears to be on track for the end of the month. But if they are looking at a relatively small purchase in that level of detail, I wonder what a review of a Delta/NWA transaction would take...