Tuesday, April 15th, 2008, 12:49 am
In what will be looked back upon as the beginning of the end for true US airline competition, Delta and Northwest have agreed to be the first in what is sure to be a wave of merger activity.
They are currently the nation’s 3rd and 5th largest carriers respectively by passenger enplanements, but if the DoJ approves the merger the new Delta will be the world’s largest airline.
Continental, the nation’s 4th largest carrier, is now finally free to buy back its golden share from NWA and find its own merger partner. It will undoubtedly leave the Skyteam alliance, from which it was for all intents and purposes snubbed from just last week.
I’d be extremely (and quite pleasantly) surprised if Continental and United don’t announce their own merger plans by the end of this month. I would venture to say that Continental and its more adept management team would be the one acquiring the much larger United, but will move to the Star Alliance and probably keep the United branding as well.
The funniest thing (well, besides for the idea that Delta and Northwest could possibly become America’s “premier carrier”) about the Delta/NWA merger press release is the notion that all hubs for both carriers will continue to be hubs under the new Delta Airlines.
I don’t think that there’s ever been a major merger in the history of aviation in which all exiting hubs survived.
Sure some hubs may remain as so-called focus cities, but that’s not much to brag about. Just ask Pittsburgh what happened when America West bought USAirways.
There’s simply no way that 2 carriers that are merging in order to have improve their operational efficiencies would operate 7 domestic hubs. Memphis and Atlanta? Cincinnati and Detroit? No way that’s happening.
At any rate, I predict that the next month will hold some very interesting M&A activity in the domestic aviation industry…