Monster Mash

Delta and Northwest are trying to merge. What does that mean?  I dunno.

How does this affect the valued customer?  I dunno.

Who stands to benefit from this?  I dunno.

What will happen if the maneuver doesn’t work? I dunno.

What could possibly go wrong?  I dunno.

Where does all this lead? I dunno, and niether does anybody else.  So, here are my semi-informed guesses.

A merger can be any number of different arrangements. It really doesn’t seem intuitive that the joining two failing organizations could result in a great improvement.  It never has before.

There might be some “economy of scale” savings to be made but these would probably only be effective at the highest levels of management. This never .. ever .. happens in American corporate culture.

Delta and Northwest have both screwed thier pilots in a big way already. I think that as passengers everyone would want the pilots to be happy, healthy, and worry free.  They aren’t. Neither are the mechanics, flight attendants, or anybody else.

The valued airline customer can probably expect to be served by employees that are far more worried about the future.  And they have plenty to worry about.

The only direct beneficiarys of this “merger” are likely to be the deal makers themselves. Investment bankers, underwriters, consultants, and other specialists that neither bank, invest, underwrite, or consult will make tons of money. These are guys that think Mont Blanc pens are disposable.

With the exception of the wierd one that always seems to make a profit  airlines don’t really own much of anything anymore. General Electric, for example, owns most of the engines on most of the big guy’s airplanes.  When an airline can’t make the payments for equipment the creditors turn around and “loan” it more money.  In return the creditors like G.E. or American Express get special kinds of promises and stock that simple people like us would not understand.

If an airline were to stop operating and park the planes in the desert cash flow would stop. Even if the river of cash is running dry  when it is flowing there is still something to drink from, so the creditors will do anything possible to keep ’em flying.

If the desert becomes full of parked airliners the big creditors will be holding empty promises and interesting classes of worthless stock. They have known this for a long time.

The “Deal” in and of itself creates considerable economic dustup. Both companies have all manner of diligence to do duly, audits to be approximated, assets have to be misstated

The airlines have already betrayed a fiduciary trust promised to the employees in an attempt to remain viable in these trying times.

These mergers are a means through which the stockholders will get their share of the screw job, it should be really interesting.

One thing that never works during a merger is combining the pilots from two established carriers in to one big pilot group. They can be put together in an amazing number of ways that are never really fair to everybody but nobody has come up with a compromise that has enjoyed full support from all of the pilots involved.

 So what will happen … If the thing is approved the airline will begin to merge. This is a little like the way spiders mate. Maintenance gradually is taken over between the two fleets, and pilot seniority lists must be combined through negotiations,  this will take a while. During the five or six year transition period the attitude of the employees might be great. It might not.

 Happy Landings



























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