T-Bird76
2005-09-20, 03:07 PM
Well the rumors are already spreading around the industry that Delta and Northwest have already or will be exploring a possible merger deal following the likes of U.S Airways and America West. So could there be any truth to this rumor or is it just a rumor? When asked Northwest declined comment but Delta did indicate further consolidation in the industry is needed. Make of that what you like but its worth looking at a combined DL/NW giant which would eclipse American as the world’s largest.
On the surface a merger between the two looks ideal. Neither one compete head to head in most of their markets. A marriage of the two would truly create a global airline with strong presence in Europe, Asia, and a huge market right here in the U.S. Other benefits include Northwest doing away with the unions since if the merger was brought on by Delta, Delta is a union free shop and the hassles of unions wouldn’t be a major issue.
So on the surface the two look like an ideal pair but the problem and it’s a huge problem is with their fleets. Northwest and Delta probably have the two most uncommon fleet types in the U.S. Northwest is moving towards Airbus while Delta is moving towards an all Boeing fleet. In fact the only two birds they have that are common are the 757, and the 757 isn’t a hugely important type to Northwest like the A320s and DC-9s are. The task to manage a fleet like this is almost unimaginable and extremely costly.
The entire point of a merger is to reduce costs. While the two could reduce corporate, reservation, and airport staff the savings would be minimal in the management of such a fleet. A fleet like this would require two maintenance programs, two training programs, double the pilots since Delta’s pilots couldn’t fly Northwest’s planes and vice versa (at least not in the first year or two of the merger), double the simulators, double the spare part, multiple hanger facilities, various outside contractors, and this is only the surface. The costs would run into the hundreds of millions to manage such a vast fleet. With this in mind and no sign of profit for sometime this could destroy the two if they come together.
I’m 50/50 on a merger taking place and if Northwest can settle its labor issues I don’t think they’ll go for it. Out of the two Delta is the one who needs the savior and if they're losses keep up that Golden Knight may never show up.
On the surface a merger between the two looks ideal. Neither one compete head to head in most of their markets. A marriage of the two would truly create a global airline with strong presence in Europe, Asia, and a huge market right here in the U.S. Other benefits include Northwest doing away with the unions since if the merger was brought on by Delta, Delta is a union free shop and the hassles of unions wouldn’t be a major issue.
So on the surface the two look like an ideal pair but the problem and it’s a huge problem is with their fleets. Northwest and Delta probably have the two most uncommon fleet types in the U.S. Northwest is moving towards Airbus while Delta is moving towards an all Boeing fleet. In fact the only two birds they have that are common are the 757, and the 757 isn’t a hugely important type to Northwest like the A320s and DC-9s are. The task to manage a fleet like this is almost unimaginable and extremely costly.
The entire point of a merger is to reduce costs. While the two could reduce corporate, reservation, and airport staff the savings would be minimal in the management of such a fleet. A fleet like this would require two maintenance programs, two training programs, double the pilots since Delta’s pilots couldn’t fly Northwest’s planes and vice versa (at least not in the first year or two of the merger), double the simulators, double the spare part, multiple hanger facilities, various outside contractors, and this is only the surface. The costs would run into the hundreds of millions to manage such a vast fleet. With this in mind and no sign of profit for sometime this could destroy the two if they come together.
I’m 50/50 on a merger taking place and if Northwest can settle its labor issues I don’t think they’ll go for it. Out of the two Delta is the one who needs the savior and if they're losses keep up that Golden Knight may never show up.