Merger discussions flare again

Delta seems to be back out doing the merger dance again, this time looking at both NorthWest and United as potential partners. The CEO is actually planning on talking to both other companies and planning on picking which one he thinks is better and then moving forward with the merger that way. I like the idea of having potential bidders competing for a “prize” (assuming that Delta is one), but it is certainly strange for a public company to admit that they are actively soliciting mergers with multiple parties.

Anyways, the most recent wave kicked off with Lufthansa buying in to JetBlue, and this one seems to be pretty serious. But most of these mergers are based on financial expectations and not the real world. In the real world the integration of airlines (and other unionized companies) has huge implications on union contracts and seniority and other things that all have to actually be worked out with real people, not just on a balance sheet, and that is one of those things that is a huge wildcard in any of these mergers. When USAir and America West merged a couple years ago they anticipated a quick and seamless integration of their reservations systems and their unions. The reservations systems merger resulted in a complete check-in kiosk system failure for ~5 days, and they are still negotiating their pilot contracts after almost two years. Easier said than done, I suppose.

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Seth Miller

I'm Seth, also known as the Wandering Aramean. I was bit by the travel bug 30 years ago and there's no sign of a cure. I fly ~200,000 miles annually; these are my stories. You can connect with me on Twitter, Facebook, and LinkedIn.