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Old 05-09-2008, 05:15 PM   #1  
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Default Why the rush to merge?

Perhaps I missed something along the way but what was the rush to get these mergers done?
Most carriers are losing money and my question is what happens when 2 carriers merge into one and it still continues to lose money?
Kind of reminds me of killing two birds with one stone.
The way this economy is going it would be dicey as hell to merge with another carrier with the same problems.
Not being stupid here but it is just amazing how ppl are in a rush to get this done without looking 5,10,15 years down the road.


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Old 05-10-2008, 05:23 AM   #2  
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I think a big part of the timing is the Bush administration in Washington is regarded as being more friendly to business than whichever new president is elected. The next administration may say "no" to the deal or even "yes" with many stipulations.

In the case of DAL, and this is just my opinion, while still in BK the creditors were told they'd be much better off financially with DAL as a stand-alone carrier, as opposed to being purchased by US Airways.

The creditors bought DAL managements arguments and decided against the acquisition. Now, one year later, DAL's stock price is in the toilet and (I suspect) the creditors, who are now stockholders, are feeling they got hood-winked by DAL management. Their investments are worth a fraction of what they would have received in cash from US Airways, and they're not happy.

They want their money, and they don't care about DAL long term. I think Richard Anderson is trying to appease them, but also to do what's best for the company in the long run.

From what I understand, a significant portion of DAL's revenue comes from corporate travel contracts. Whereby DAL goes to let's say, GE and offers to be their sole source of air travel in exchange for discounted tickets, even the last minute variety.

With the DAL-NWA merger they can offer that client a pretty darn comprehensive network, especially when you factor in Air France-KLM. I don't think any other US carrier (as they presently exist) could offer such a network.
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Old 05-15-2008, 04:58 PM   #3  
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The biggest part of the equation is the time is ripe with the current admin to let the deal makers make S*it loads of money on the deals. It has nothing to do with "synergies" or "cost savings". What matters is these mis-managers want their cut of the cake while the cake is on the plate.

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Old 05-15-2008, 06:43 PM   #4  
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Quote:
Originally Posted by Worldguy View Post
The biggest part of the equation is the time is ripe with the current admin to let the deal makers make S*it loads of money on the deals. It has nothing to do with "synergies" or "cost savings". What matters is these mis-managers want their cut of the cake while the cake is on the plate.

WG
Kind of reminds me of robber barons
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