The Latest Merger News 
April 14, 2008
It's in all the papers…and
if you're a Northwest WorldPerks member or Delta SkyMiles member…you've already
received an e-mail touting the great new opportunities the merger will bring.
At Passageways, we think that's largely true. Of course, this will play out over
time with regulators- including the Congress- picking at the agreement, union
groups on both sides- especially the challenging pilot groups who could not deliver
a combined seniority list on their own- pushing and pulling here and there, and
two already huge organizations struggling to combine the best of each into an
organization that really delivers the synergies everyone talks about. It will
continue to be challenging for some time…but we wish both carriers much success
in this combination.
Honestly, the basics are pretty impressive. - The
combined airline will carry the Delta name and be headquartered in Atlanta. Delta
CEO Richard Anderson will lead the combined company. As noted here previously,
Northwest CEO Doug Steenland will be well compensated as he departs.
- The combined
value of the airline will be $17.7B. The biggest challenge there will be that
they face the same sobering fact at the pump that we do…oil just cracked
$112 a barrel.
- The combined Delta Air Line will offer access to 390 worldwide
destinations in 67 countries. This combined airline is almost a "do it yourself"
entity…that could minimize further sketchy and uneven code-shares that often
mean uneven and frustrating services. Certainly, they'll want to maintain and
enhance their individual joint ventures with KLM and Air France (Air France already
owns KLM). And, they are both already members of the SkyTeam alliance.
- One
Delta announcement I received notes that all hubs will be retained…Atlanta,
Cincinnati, Detroit, Memphis, Minneapolis/St. Paul, New York, Salt Lake City,
Amsterdam and Tokyo Narita. I'll give them that short-term, but unless significantly
lower operating costs are in place in Cincinnati and Memphis, I'd be concerned
for at least those two. The future for Detroit Metro looks great. Just as Delta
has concentrated on growing Atlanta's international reach, Northwest has focused
more and more in Detroit with a world-class facility (Anderson was at Northwest
as this investment was made), growing Detroit's international services and enhancing
connecting opportunities with additional regional jet service as well as a commitment
to upgrading the fleet with the 787 and more..
From Detroit Metro, Delta and
Northwest overlap on only four markets- New York, Atlanta, and Cincinnati - and
as soon as Northwest's announced non-stop begins, Salt Lake City. Delta's other
service points in Michigan, Flint, Grand Rapids, Kalamazoo, Lansing, and Traverse
City seasonally; do not overlap Northwest non-stop services. - The combined
carrier will employ nearly 80,000…at least to start. While preserving jobs
is important, the bottom line will demand that overlapping areas be trimmed. That
will happen- headquarters, maintenance and elsewhere. It has to. A unique challenge
will be posed there by Minnesota Congressman Jim Oberstar, chairman of the House
Transportation and Infrastructure Committee who has already announced he opposes
the merger and will fight to save jobs in Minnesota…especially his home 8th
District. Full regulatory approval will probably take the balance of the year.
So
what can you do? Right now, just bring your seat to the full upright position,
stow your tray table, fasten your seat belt…and know that both current carriers
want to keep you as a frequent flyer…and your miles are safe… Both carriers
and then the new Delta will be looking to take care of you…and Passageways
will be there to help you along the way. Anticipate that both programs will continue
separately for well over a year. If they get back to valuing each and every customer…and
recognizing that frequent customer…they could exceed expectations…ours
and theirs.
Every time a customer makes a reservation, checks in or shows
their boarding pass to the flight attendant, they offer their name. So, "Delta",
let's start by taking advantage and showing some appreciation by saying "thanks
for flying with Delta today, Mr. Rockne"...As noted, Delta CEO Richard
Anderson is also a former CEO of Northwest, so he literally knows these two carriers
better than anyone. Add to his accumulated airline knowledge, his experience in
raising his two younger sisters after the deaths of his parents, a stint in the
prosecutor's office in Houston and you have a leader who just might be able to
pull this off. Tom Rockne
President
Passageways Travel |
