What works for two airlines should work for two others. At least that is the thought process behind a possible merger of United (NASDAQ:UAUA) and Continental (NYSE:CAL). They believe that if there are financial and marketing advantages to the Delta (NYSE:DAL) merger with Northwest (NYSE:NWA) that they should go next.
According to Reuters the two carriers "have laid most of the groundwork for a merger, two people briefed on the matter said, and could have a deal ready "pretty quickly" if Delta Air Lines and Northwest Airlines announce a tie-up." Now that the Delta/Northwest deal is done, they are likely to speed up that process.
While the value of airline mergers is dubious, two big mergers could cause regulators to turn down both. The marriages are based on the idea that airlines can cut costs in personnel, marketing, and route consolidation. If the is true, it means lay-offs and service to fewer cities. It also could help an airline to raise ticket prices as it becomes the sole providers to air travel out of some cities.
Two big airline mergers have to make the US government looks at whether it is good to have only three large airlines in the US, including AMR (NYSE:AMR) instead of five.
Douglas A. McIntyre is an editor at 247wallst.com.
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Reader Comments (Page 1 of 1)
4-15-2008 @ 9:56AM
allan pochop said...
Remember the 70's? Ozark, North Central airlines etc. Regional carriers, feeder airlines for the major trunk airline. Could fly into any small city in the nation. Then came de-regulation. Best airline service in the world, gone. Do not like government intervention, but past history of the airline business required government control to insure progress. Airline travel in america today, is progress going backward.
Government, needs to step back in and control this industry.
4-15-2008 @ 10:15AM
Vincent said...
Government intervention is never the solution. The government doesn't know how to run things better than the individuals. They are only there to prevent abuse which they do poorly. Everything the government touches turns to crap. No government has ever been able to run something better than the free market. We need much much much less government and get back to our roots. Our system has been anything but free in the last 100 years. Maybe one day we will have the system intended by the founders, but the government always tries to grab control of something and here we are, on the verge of collapse. How did the fed controlling rates work out? I'll tell you, every bank under the sun gave out dangerous loans, now we have simultaneous failures of every loan out there. In a truly free market, you don't have everyone failing at the same time, only when control is applied do these things happen. Now watch as all the big guys gobble up the small guys, watch as middle class wealth is transferred to the rich. That's why it should be hands off, the government should protect a free market and a free society and THAT IS ALL. A hive minded society is de-evolution. Look what we have let happen, and what does the government want now? More control. Wrong direction.
4-15-2008 @ 11:13AM
Crafty said...
Can you do this out the window of an Airplane?
http://www.revver.com/video/792524/dippity-dip/
4-15-2008 @ 1:39PM
Mike said...
Let's hope that this merger goes far more smoothly than the Northwest Orient - Republic merger about 20 year ago. That merger was about the biggest most prolonged puster cluck of a disaster of any merger ever done between two companies.