So Whats The Next Merger?

Max Q · Sun Apr 03, 2016 10:19 am

I think the VX and AS merger is the beginning of the last round of consolidation in the US.

It seems inevitable that Frontier and Spirit will tie the knot but what about Jet blue ? all these are AB operators of course
so any combination seems possible now.

Don't see Allegiant joining in but who knows ?

Mortyman · Sun Apr 03, 2016 11:03 am

What is it with you Americans and mergers ... ? Is it proven that they make for a better product ?

hOMSaR · Sun Apr 03, 2016 12:43 pm

Quoting Mortyman (Reply 1):

Corporations in the US don't do anything for the sake of a "product." They (theoretically) do what is in the interests of their shareholders.

stlgph · Sun Apr 03, 2016 12:55 pm

Quoting Max Q (Thread starter):
Don't see Allegiant joining in but who knows ?

for the love of Jesus, does no one around here understand the concept of Allegiant?

Quoting HOMSaR (Reply 2):

that about sums it up. moving on...

Burkhard · Sun Apr 03, 2016 1:38 pm

Quoting HOMSaR (Reply 2):
They (theoretically) do what is in the interests of their shareholders.

Mergers and split ups are the easiest way to put MANY millions from shareholder pockets to management pockets, and that is their major reason. You will see once all possible mergers are done the airlines will get split again.

BlueShamu330s · Sun Apr 03, 2016 1:40 pm

Airbus Americas buying Boeing

Well, you asked...

werdywerd · Sun Apr 03, 2016 4:10 pm

All of this speculation without official statements from anyone drives me bonkers.

MaverickTTT · Sun Apr 03, 2016 4:11 pm

I still think HA is ripe for a merge with either B6 or WN. That's just little more than a personal observation, though...

mtnwest1979 · Sun Apr 03, 2016 4:41 pm

Quoting Max Q (Thread starter):
I think the VX and AS merger is the beginning of the last round of consolidation in the US.

Hardly a merger. Just a sellout by VX/buyout by AS.

readytotaxi · Sun Apr 03, 2016 4:57 pm

How about EK and U2 , will it might float.

Italianflyer · Sun Apr 03, 2016 5:19 pm

Next Big Thing will be Silver merging with Great Lakes :P

Seriously, a serious rearranging of the deck chairs on the regional side will be the big US story of 2016 or early 17.

TWA772LR · Sun Apr 03, 2016 5:52 pm

AA DL and UA joining forces to rebrand as PanAm.

Maybe WN can buy out SY for a quick acquisition of planes. IIRC a lot of the SY fleet is ETOPS certified.

Or one of the ME3 buying a 25% stake in the new B6 or AS after the VX takeover.

GatorClark · Sun Apr 03, 2016 6:50 pm

Quoting Mortyman (Reply 1):

Personally I hate all of them.. Less options for me and occasionally, (and from what I've read on here) it results in higer fares on routes that I can usually get good deals on. US Airways was my most preferred airline (pre-AWE merger) and now I'm pretty fond of WN and DL. I wish they would stop merging.

EA CO AS · Sun Apr 03, 2016 9:56 pm

Quoting Mortyman (Reply 1):
What is it with you Americans and mergers ... ? Is it proven that they make for a better product ?

Fly us and you be the judge of that.

Signed,
Delta Air Lines

tortugamon · Sun Apr 03, 2016 11:31 pm

Quoting Burkhard (Reply 4):
You will see once all possible mergers are done the airlines will get split again.

Where has that happened successfully?

Quoting Mortyman (Reply 1):
What is it with you Americans and mergers ... ? Is it proven that they make for a better product ?

An airline that flies throughout the country is a good thing. Not having to pick a regional player every time you fly to a new place doesn't sound ideal for frequent fliers.

I think it has shown that it has allowed them to be profitable. And with profitability there appears to be significant investment in the product. I, for one, count that as a good thing.

Not many countries' networks have 4 major players.

tortugamon

FlyHossD · Mon Apr 04, 2016 12:13 am

Quoting Mortyman (Reply 1):
What is it with you Americans and mergers ... ? Is it proven that they make for a better product ?

Quoting Burkhard (Reply 4):
Mergers and split ups are the easiest way to put MANY millions from shareholder pockets to management pockets, and that is their major reason. You will see once all possible mergers are done the airlines will get split again.

&

Quoting HOMSaR (Reply 2):
Corporations in the US don't do anything for the sake of a "product." They (theoretically) do what is in the interests of their shareholders.

As you said, that's the theory. But the reality is very often something different as Burkhard stated in reply 4. Generally, the mergers are structured with bonuses for the senior management and brokers if completed and "break-up" fees when they aren't. In other words, it's a win-win situation for the top players. Don't believe me? Check for yourself.

[Edited 2016-04-03 17:13:47]

[Edited 2016-04-03 17:14:24]

tortugamon · Mon Apr 04, 2016 12:36 am

Quoting FlyHossD (Reply 15):
As you said, that's the theory. But the reality is very often something different as Burkhard stated in reply 4. Generally, the mergers are structured with bonuses for the senior management and brokers if completed and "break-up" fees when they aren't. In other words, it's a win-win situation for the top players. Don't believe me? Check for yourself.

These guys created a product that another entity was willing to pay $2.5 Billion for. All of the key players should benefit from that success story.

tortugamon

redadeco · Mon Apr 04, 2016 1:11 am

Speculation threads are

Next merger: Air Koryo & Hawaiian.

trent1000 · Mon Apr 04, 2016 2:54 am

Quoting redadeco (Reply 17):
Next merger: Air Koryo & Hawaiian.

Not a bad suggestion... but closer to home:

Japan Airlines and Korean Air, as part of a common free-trade, visa-free Asia bloc with a common Asian currency, no negative work union interference, where all workers are happy, we cure cancer and travel to the moon before colonising other planets. Simple.

LAX772LR · Mon Apr 04, 2016 4:10 am

Quoting Burkhard (Reply 4):
You will see once all possible mergers are done the airlines will get split again.

There's essentially nil evidence to suggest that. Just wishful thinking on your part.

Quoting Mortyman (Reply 1):
What is it with you Americans and mergers

BETTER QUESTION: what is it with you thinking mergers are in any way inherent, limited to, or preferred disproportionately by "Americans"...?

Guessing you haven't paid much attention to the Lufthansa Group, IAG, AF/KLM, throughout the last few years?

And tell us, how are those merger attempts with the likes of Orange/Bouygues, Tata/Thyssenkrupp, Telenor/TeliaSonera, Siemens/Dresser-Rand, Pirelli/National Chem, Alcatel-Lucent, etc all going?

Quoting tortugamon (Reply 14):
I think it has shown that it has allowed them to be profitable. And with profitability there appears to be significant investment in the product. I, for one, count that as a good thing.

ordell · Mon Apr 04, 2016 4:12 am

After Allegiant gets a bunch of people killed, someone will buy it for the routes/slots.

Like AirTran did to ValuJet, basically.

MKIAZ · Mon Apr 04, 2016 4:21 am

Quoting BlueShamu330s (Reply 5):
You will see once all possible mergers are done the airlines will get split again.

Businesses don't get split up anymore. Not since they figured out how to buy off politicians. Example, look at the banks and the 2007 financial crisis. So much for "too big to fail".

The only mergers left are going to be between LCC's and smaller players.

If the political climate shifts and Republicans come into power we *MIGHT* see some possibilities for the US3 to buy smaller airlines.

mayor · Mon Apr 04, 2016 4:33 am

Quoting FlyHossD (Reply 15):
Don't believe me? Check for yourself.

Hard to tell.......every merger that DL has been involved in has been successful.

Quoting LAX772LR (Reply 19):

BETTER QUESTION: what is it with you thinking mergers are in any way inherent, limited to, or preferred disproportionately by "Americans"...?

Guessing you haven't paid much attention to the Lufthansa Group, IAG, AF/KLM, throughout the last few years?

Yeah, I wondered where he had been, too

DocLightning · Mon Apr 04, 2016 4:42 am

Quoting trent1000 (Reply 18):

Japan Airlines and Korean Air, as part of a common free-trade, visa-free Asia bloc with a common Asian currency, no negative work union interference, where all workers are happy, we cure cancer and travel to the moon before colonising other planets. Simple.

Is this before or after Cubana eclipses UA as the world's largest airline and purchases DL?

Mortyman · Mon Apr 04, 2016 4:48 am

Quoting EA CO AS (Reply 13):
Fly us and you be the judge of that.

Signed,
Delta Air Lines

I have flown with you and you can't compete with European carriers like Lufthansa, KLM, Air france etc

Quoting LAX772LR (Reply 19):
BETTER QUESTION: what is it with you thinking mergers are in any way inherent, limited to, or preferred disproportionately by "Americans"...?

Guessing you haven't paid much attention to the Lufthansa Group, IAG, AF/KLM, throughout the last few years?

I'm sorry, but I just feel that is far more common in the US. I am ofcourse aware of the mergers that you mention. Maybe it only seems that way, because there seem to be a new such thread here on the forum every month ...

Quoting LAX772LR (Reply 19):
And tell us, how are those merger attempts with the likes of Orange/Bouygues, Tata/Thyssenkrupp, Telenor/TeliaSonera, Siemens/Dresser-Rand, Pirelli/National Chem, Alcatel-Lucent, etc all going?

This is the airline thread

grbauc · Mon Apr 04, 2016 5:07 am

Quoting GatorClark (Reply 12):
Personally I hate all of them.. Less options for me and occasionally, (and from what I've read on here) it results in higer fares on routes that I can usually get good deals on. US Airways was my most preferred airline (pre-AWE merger) and now I'm pretty fond of WN and DL. I wish they would stop merging.

The General state of airlines has not been this good in 20yrs or more. The landscape has changed but there is plenty of competition and air fare is yes with inflation taken in to account lower. I'm paying for FC for some of what i use to pay coach fares.

http://www.aei.org/publication/arent...her-today-than-10-or-15-years-ago/

Not the most up to date article.

[Edited 2016-04-03 22:09:19]

http://www.usatoday.com/story/travel.../how-to-find-airfare-deal/7122673/

No question about it, airfares on some routes are higher than they were four or five years ago, although Airfarewatchdog airfare searchers frequently find hundreds of fares crisscrossing the country for $250 or less round-trip. And even though fares seem higher, let's not forget that, adjusted for inflation, most fares are actually lower than they were 10 or 20 years ago. That said, here's my best advice for making your airfare dollars go further.

I'm Sad to see some of the names go, US Northwest Airtran AmericaWest etc.. but I really do believe these mergers were good and consumers are benefiting from them.

[Edited 2016-04-03 22:15:55]

[Edited 2016-04-03 22:17:09]

tortugamon · Mon Apr 04, 2016 5:16 am

Quoting Mortyman (Reply 24):
I have flown with you and you can't compete with European carriers like Lufthansa, KLM, Air france etc

Really? DL has higher profitability than the airlines mentioned and I would put the quality of service certainly competitive with KLM and AF. DL is improving while LH is declining. Much more competitive than it once was. Regardless when you talk about 'compete'....DL's $4.5 Billion in Net Income which is 2.5 times what LH and AF and KL make combined. Compete....clearly.

tortugamon

MAH4546 · Mon Apr 04, 2016 5:22 am

Quoting ordell (Reply 20):
After Allegiant gets a bunch of people killed, someone will buy it for the routes/slots.

What on earth are you talking about? Allegiant flies to zero slot controlled airports and therefore owns no slots. Domestic U.S. routes can be flown by any U.S. commercial carrier and therefore, outside of DCA beyond perimeter flying, are not assets.

seahawk · Mon Apr 04, 2016 5:22 am

I personally expect that in the end there will be 4 major players

DL
AA
UA
WN

the rest will fold or be taken over.

tortugamon · Mon Apr 04, 2016 5:28 am

Quoting seahawk (Reply 28):
I personally expect that in the end there will be 4 major players

DL
AA
UA
WN

the rest will fold or be taken over.

I disagree. I think there is room for a VX/AS/B6 merger and I think there is a ton of room to run for F9/NK to get big.

tortugamon

deltal1011man · Mon Apr 04, 2016 5:33 am

Quoting Mortyman (Reply 1):

What is it with you Americans and mergers ... ?

Well in general we do think operating a company and doing so profitably is a good idea.

what is it with Europeans and having money pits like AF, AZ and AB?

Quoting Burkhard (Reply 4):
You will see once all possible mergers are done the airlines will get split again.

no we wont see that.

Quoting Mortyman (Reply 24):

I have flown with you and you can't compete with European carriers like Lufthansa, KLM, Air france etc

Really? what part, is it the 28 in pitch in short haul C class?

Yeah I agree 2-2 with high 30s pitch does suck compared to 3-3 and 28 inch. terrible.

Oh and since you bring up AF, might want to look into the above statement. Companies in the US aren't generally expected to operate at a loss all the time.

flyby519 · Mon Apr 04, 2016 5:35 am

Quoting tortugamon (Reply 29):

Is there room for WN to merge with B6? Or WN + AS/VX?

And what happens to HA?

LAX772LR · Mon Apr 04, 2016 7:51 am

Quoting ordell (Reply 20):
Like AirTran did to ValuJet, basically.

You have it backwards, Valujet bought Airtran, not the other way around.

Quoting Mortyman (Reply 24):
I'm sorry, but I just feel that

You can stop at that point right there: do you not see what the issue is with that statement?

Quoting Mortyman (Reply 24):
This is the airline thread

...mergers aren't limited to airlines.

Quoting Mortyman (Reply 24):
Maybe it only seems that way,

Ya think?

[Edited 2016-04-04 01:15:37]

EA CO AS · Mon Apr 04, 2016 7:55 am

Quoting Mortyman (Reply 24):
Quoting EA CO AS (Reply 13):Fly us and you be the judge of that.

Signed,
Delta Air Lines

I have flown with you

I guess you don't get how "signed by" posts work.

I don't work for DL.

Quoting flyby519 (Reply 31):

And what happens to HA?

Hopefully, at some point, they become a wholly-owned subsidiary of Alaska Air Group, retaining their unique brand while working alongside Alaska Airlines and codesharing across both networks.

(Jay Schaefer, are you listening? Pitch this idea already, man!)

Bluewave 707 · Wed Apr 06, 2016 7:51 pm

Hawaiian Airlines and jetBlue … they already code-share … both have Airbus fleets ... and have slots at JFK, LAX, & SFO.

Hawaiian could expand operations on the Continental US, and feed more tourists to Hawai‘i. With Hawaiian's A321neos due in late 2017, and jetBlue's current ETOPS A320s and A321s, from smaller west coast markets to the islands has endless possibilities for Hawaiian.

cageyjames · Wed Apr 06, 2016 7:58 pm

Quoting Bluewave 707 (Reply 34):

Hawaiian Airlines and jetBlue … they already code-share … both have Airbus fleets ... and have slots at JFK, LAX, & SFO.

Hawaiian can codeshare to fill that gap, what does HA bring to B6 that they don't already with code share? HA's 321s will give them endless opportunities without the need of B6.

toltommy · Wed Apr 06, 2016 8:35 pm

Quoting Mortyman (Reply 1):
What is it with you Americans and mergers ... ? Is it proven that they make for a better product?

I think it's proven to make the US airline industry more stable and profitable. The US industry has lost money in more years than it made money, by a huge margin.

flyby519 · Wed Apr 06, 2016 9:37 pm

Quoting cageyjames (Reply 35):
Hawaiian can codeshare to fill that gap, what does HA bring to B6 that they don't already with code share? HA's 321s will give them endless opportunities without the need of B6.

What domestic US airline will HA codeshare with? I doubt AS will continue the VX/HA partnership.

If B6 is serious about building a west coast presence then HA would provide nice support covering the mainland-Hawaii routes, and B6 could support those on the mainland end. HA also brings widebody operations to B6 which could be added to JFK/FLL for S.Amer flying, or TATL. The HA pacific network is impressive and would fit well.

winginit · Thu Apr 07, 2016 2:54 pm

Quoting mtnwest1979 (Reply 8):
Hardly a merger. Just a sellout by VX/buyout by AS.

This drives me nuts. Do people not understand that mergers and acquisitions are fundamentally different business transactions?

Mergers result in the creation of a new corporate entity, acquisitions do not.

AS/VX was in no way a merger - it was an acquisition.

Codasco · Mon Apr 11, 2016 12:21 am

Quoting tortugamon (Reply 26):
Really? DL has higher profitability than the airlines mentioned and I would put the quality of service certainly competitive with KLM and AF. DL is improving while LH is declining. Much more competitive than it once was. Regardless when you talk about 'compete'....DL's $4.5 Billion in Net Income which is 2.5 times what LH and AF and KL make combined. Compete....clearly.

tortugamon

Whole heartedly agree! It started out as a coincidence that I was frequently on Delta, buy now only try to fly Delta. And If I have to do a split carrier trip, I always make sure DL is one of the legs.

The one and only time I have had an issue with Delta (had a gate agent lose her cool with me at MSP and caused a scene), they made sure to make it right.

I also can't remember the last time WN turned out to be cheaper than DL for me. Even if it's $50-100 more a ticket, I'll still chose DL.

lightsaber · Mon Apr 11, 2016 2:39 am

Quoting tortugamon (Reply 29):
I disagree. I think there is room for a VX/AS/B6 merger and I think there is a ton of room to run for F9/NK to get big.

VX/AS/B6 would be an interesting competitor... .Far more potential than any of the three seperate.

NK is one to watch... The growth rate is enough to make some airlines nervous.
Last I looked, NK had the highest profit margins...

Warning, site has a TON of ads (I didn't find a better link):
http://247wallst.com/transportation/...-americas-most-profitable-airline/

Quoting cageyjames (Reply 35):
Hawaiian can codeshare to fill that gap, what does HA bring to B6 that they don't already with code share? HA's 321s will give them endless opportunities without the need of B6.

The issue is the NEOs give everyone opportunity. Before the 738 could just reach Hawaii (seasonal load limits) and only the A320 with winglets (or A319) could. With the NEO and MAX? Everyone. Oh, I think HA will do fine, no one else gets island hopping. But HA must keep growing with the market, which means finding another plane besides the 717 (eventually, not today).

Quoting seahawk (Reply 28):
I personally expect that in the end there will be 4 major players

DL
AA
UA
WN

And Yet AS, B6, and NK have grown profitably. I'm not sure why AS paid $2.6B for VX, but they did and now are a much bigger player.

As I already noted, NK has the highest profit margins. From my above link:
American Airlines Group Inc. (NASDAQ: AAL) performs best with a margin of 6.8%. United Continental Holdings Inc. (NYSE: UAL) and Delta Air Lines Co. (NYSE: DAL) both post profit margins of just 2.9%.

vs. 11.7% for NK at the article time.

Better link for top (and bottom) airline profitability, as through June 2015, higher profit for all the airlines:
http://aviationblog.dallasnews.com/2...lds-most-profitable-airlines.html/

Lightsaber

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