Air France and Delta might become closer

photo courtesy of caribb

The AFP and the French newspaper Les Echos are reporting that Air France is in joint-venture talks with Delta Air Lines, which is a fellow SkyTeam partner. A spokeswoman for Air France said that it "is still in negotiations with Delta, but nothing has been finalized". She also said that "the agreement being negotiated should be signed in the autumn."

The joint venture would happen in two stages - the first would start in April 2008 and include New York - Paris flights, as well as flights from Heathrow airport in London to cities in the US. In 2010, the second stage would cover the rest of Air France and Delta's trans-Atlantic flights. Les Echos reports that both airlines would split their profits from their main trans-Atlantic routes 50-50.

Air France-KLM, Northwest, and Delta have also applied for a joint venture agreement. Northwest and KLM have been close partners for more than 15 years, and this venture, if successful, will bring the four much closer together than they already are (all are SkyTeam members).

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Delta's New Look

Some of you are probably familiar with Delta's 'new look' and paint scheme. The reactions to it have been decidedly mixed, with the majority (at least on the online community) against it. I've heard people call Delta the Official Airline of Hugo Chavez due to the logo's resemblance to that of Citgo, the Venezuelan state-run oil company. There have been calls for the airline to switch back to the old 'widget' livery as well.

The new livery, officially launched on May 1, was part of Delta's new rebranding effort and 'Change' campaign. The airline has even launched a website focusing on its efforts to change, and aired the following TV ad:


So what are your opinions on Delta's new rebranding campaign? Do you like the 'new widget' or do you prefer the old one? Personally, I like the old, but I must admit that the new one is growing on me.

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US Air and Delta - merger tidbits

A little update on the US Airways/Delta merger situation. I read over the letters that the CEOs of the two airlines sent each other. I chuckled at the fact that US Air CEO Doug Parker called his Delta counterpart as "Jerry". (You can read the two letters here and here.)

Yet despite all the amicable talk, Jerry isn't giving in to Doug's request. Instead, both sides have launched massive PR campaigns in order to try to sway public opinion towards their sides. US Airways has hired the firm of Joele Frank, Wilkinson Brimmer Katcher in order to show its case for a merger (read: takeover), while Delta has hired Kekst and Co.

According to USA Today, US Airways has created a newsletter called For the Record, which will present news about the merger, although obviously in a pro-merger way. For its part, Delta has carried out a full page ad in Atlanta's Journal-Constitution going against the merger. It has also given out 50,000 lapel buttons that say 'Keep Delta My Delta'.

But lapel pins might not cut it. Delta faces an uphill struggle to stay independent from US Airways. Jerry can try as hard as he can to avoid a merger but in the end, it's up to the creditors. And if the US Airways team can convince them that the merger will be the most beneficial for them, then it will probably happen. Here's my advice for both - or rather, my opinion on what they might do, since I am probably unqualified to give any real advice:

• Delta should explain clearly why this merger is a bad thing - or rather, isn't beneficial. The lapel pins and a full-page ad may foster some sympathy, but it's probably not enough in the end. The consumer should be aware of the downsides of such a merger (frequent-flyer program hassles, integration hassles in general, decreased competition, higher fares, etc.).
• US Airways should explain in its campaign about why this merger might be beneficial. An increased route network means more destinations on the same frequent flyer program, which is something that travelers look for.

Feel free to leave comments!

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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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US Airways/Delta merger update

Here’s a mid-day update (done during lunch break) about the possible Delta-US Airways merger. CNN talked to US Airways’ CEO Doug Parker, who said that his airline’s hub in Charlotte, North Carolina would remain if the two airlines were to merge. Delta’s hub in Salt Lake City would also stay, although each hub is rather close to an existing one: Delta’s in Atlanta and US Airways’ in Phoenix, respectively.

Delta has stated that it wants to remain independent, at least during its stay in bankruptcy. Delta’s CEO said that his airline’s plan “has always been to emerge from bankruptcy in the first half of 2007 as a strong, stand-alone carrier. Our plan is working and we are proud of the progress."

It increasingly looks like any takeover (or merger) of Delta by US Airways will be a hostile bid. Yet Parker thinks that he will convince Delta’s bosses and creditors that the deal is a good one: "What you're hearing right now is reaction from people who haven't yet been able to digest the offer.”

Analysts have said that in addition to US Airways, United and American could potentially be bidders for Delta as well, or at least play a part in the consolidation of the industry.

So will the merger go through? Delta says no, and the fact that it’s in Chapter 11 bankruptcy certainly complicates things. Antitrust laws are another thing to consider; an example of this is the fact that Delta and US Airways are the only two airlines flying the New York-Washington shuttle route. But if the two are merged, it would create the nation’s (and perhaps the world’s) largest airline, beating American for the number one spot.

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US Airways seeking to purchase Delta

US Airways has just announced this morning that it would make an $8 billion bid (with cash and stock) for Delta Air Lines once the latter emerges from Chapter 11 bankruptcy protection. Delta creditors would get about $4 billion cash and and 78.5 million shares of US Airways stock which, based on yesterday's closing stock price, has a combined value of about $4 billion.

There isn’t much information available at this time, since the story was just released about an hour ago, but US Airways said that the deal would ‘generate $1.65 billion in annual synergies’. The combined airline would use the name of Delta, which according to US Airways' CEO, has a slightly higher brand awareness.

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