Filed under: Deals, Industry, AMR Corp (AMR), Contl Airlines’B’ (CAL), Delta Air Lines (DAL)
What works for two airlines should work for two others. At least that’s the thought process behind a possible merger of United (NASDAQ:UAUA) and Continental (NYSE:CAL). They believe that if there are financial and marketing advantages to the Delta (NYSE:DAL) merger with Northwest (NYSE:NWA) that they should go next.
According to Reuters the two carriers “have laid most of the groundwork for a merger, two people briefed on the matter said, and could have a deal ready “pretty quickly” if Delta Air Lines and Northwest Airlines announce a tie-up.” Now that the Delta/Northwest deal is done, they’re prone to speed up that process.
While the value of airline mergers is dubious, two big mergers could cause regulators to turn down both. The marriages are based on the idea that airlines can cut costs in personnel, marketing, and route consolidation. If the is true, it means lay-offs and service to fewer cities. It also could help an airline to raise ticket prices as it becomes the sole providers to air travel out of some cities.
Two large airline mergers have to make the US government looks at whether it is good to have only three large airlines in the US, including AMR (NYSE:AMR) instead of five.
Douglas A. McIntyre is an editor at 247wallst.com.
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