Thursday, November 16, 2006

Could a United-Delta merger happen? It might

United will probably enter this merger madness that's gripping the industry at the time, some analysts predict. At a Citigroup investor conference yesterday, United's CFO, Jake Brace, said that "the industrial logic of mergers in the airline industry is so compelling... We believe mergers in the airline industry have significant synergies, and we believe the industry needs to consolidate."

He also wouldn't say much about the subject of Delta, but wouldn't rule out anything in way of a merger. "We're going to do what makes sense for our company, and we'll be interested to see what happens with US Air and Delta," Brace said.

A United-Delta merger would make much more sense from a variety of standpoints. The two airlines have more compatible fleets - both predominately Boeings - as opposed to US Airways, which has an almost all-Airbus fleet. There is also less overlap between the two airlines' hubs, compared with US Airways. United has hubs at Los Angeles, San Francisco, Denver, Chicago, and Washington, while US Airways has hubs at Phoenix, Las Vegas, Charlotte, and Philadelphia. In contrast, Delta has hubs at New York JFK, Atlanta, Cincinatti, and Salt Lake City.

Could a merger happen? It might. Analyists predict that United will place a bet for Delta, and will do so sometime soon.

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