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“Premier Global Airline”: liveblogging the Delta-NWA press conference

April 15, 2008 by Evan Sparks

The press conference is streaming live at www.newglobalairline.com. It got started about 10 minutes late.

Richard Anderson (Delta CEO): this is a financially powerful merger. Also: it’s especially necessary due to record-high fuel prices. He claims Delta-NWA will be “better able to handle the volatility of fuel” than as standalone carriers. Transaction creates over “6,000 new city pairs.” HQ in Atlanta but will retain strong operational and executive presence in Twin Cities.

Doug Steenland (NWA CEO): “combination is focused on sustainable growth and expansion.” Delta-NWA will fly to every major business center in the world. “No hub closures. We remain committed to the communities we serve.” “As a result of our complementary, overlapping route network, competition in the airline industry will remain.”

Q&A:

  • Can NWA pilots scuttle the deal? Will Air France-KLM invest in the new Delta-NWA? Anderson: Air France is excited about seeing their European merger hook up with a comparable U.S. merged airline within the Skyteam alliance. Mentions antitrust immunity recently granted for Delta-NWA-Air France-KLM in transatlantic scheduling and fares. Mike Cooper of Delta: “we tried to bring pilot groups together at the beginning.” We have eight to nine months of regulatory processes to bring NWA pilots around. “Game changer” if they can do it, Cooper says.
  • Can Delta-NWA achieve profitability regularly? How can the combo offset rising fuel prices? Airline profitable in first year of operations. Expecting fuel prices to rise, so we’re planning for it.
  • How and when did the decision to merge first come up? Steenland: first serious discussions began in December.
  • How will merger affect airline service? Anderson: both airlines are at the top of airline quality [Ha! Northworst -ed.] The improved connectivity, he says, will improve the traveler’s convenience and experience. “Capital structure to continue to make significant investments to enhance the experience of our customers.” Steenland: focus of airline industry recently is not on premium service but on “survival.”
  • Why not shed hubs in Memphis and Cincinnati? Steenland: Memphis is smaller city, “but we’ve found the right size of operation in Memphis to make that hub profitable.” MEM is complementary to Atlanta. We can offer good service from these cities. [See here -ed.]
  • If oil had remained at $60, would merger have happened? Anderson: “sound strategic basis” for merger regardless of oil price. Creates first airline in the United States with truly global scope and seamless ties.

Sorry — that’s the end of this liveblog. I had technical difficulties that cut off the broadcast until picking up at the very end. I’ll have more commentary on this later.

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Posted in Evan's Commentary | Tagged business, competition, delta, Merger Mania 2008, mergers, northwest | 3 Comments

3 Responses

  1. on April 15, 2008 at 10:19 am elliottdotorg

    Thanks for liveblogging the press conference. It’s far and away the most comprehensive and immediate coverage I’ve seen on the merger. I agree with your comments about airline service. In fact, combining Delta and Northwest will create the most complained-about airline in the United States. Look out, US Airways!


  2. on April 15, 2008 at 12:53 pm BB

    What ever happen to anti monopoly laws in this country. and about rules against predatory pricing. It seems to me that nobody wants to enforce any laws anymore. I can understand why the to big giants now want to be a mega giant, but is this wise in a time when the buzz in both the House and Senate is “should we re-regulate the airlines?” Or is Delta and Nothwest setting up for that enivatablitly by controlling large sectors of the routes and gates?

    In the end I feel that the $65 seat to Chicago days are going to end soon. Well maybe the days of shorts and flip flops on planes is over to.

    Thanks Evan for the info.


  3. on April 15, 2008 at 1:22 pm Evan Sparks

    BB,

    There are antitrust laws, and they are enforced. Before Delta and NWA will actually merge, their tie-up will be analyzed by the Justice Department. If the Justice Department announces its intent to sue to stop the merger, it will probably break up, just as the United-US Airways proposed merger in the late 90s did. See https://evansparks.wordpress.com/2008/02/06/delta-northwest-merger-on/ and https://evansparks.wordpress.com/2008/01/30/airline-mergers-a-guide-to-the-antitrust-landscape/.

    As for shorts and flip-flops on planes, I’m with you — let’s see some simple good taste!



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