Airline Merger of Inconvenience Equals Stock Value Loss
The facts are upfront and bare. Northwest and Delta will not reduce the numbers of their hubs. They will not force any personnel to leave. This is great news if you work for either airline. It is time to parachute out of either stock as well. There is no joy in owning any slice of the world’s largest airline.
Business and vacations are the two genres of cannon fodder for commercial airlines. Video conferencing and the recession are wet blankets for business class. Sheikhs and celebrities will still take the first class beds until they qualify for private jets. However, you have to be crazy to pay for business class from your own pocket. Luxurious executive travel has to be the first budget cut in lean business times.
Most people vacation for at least a week. Who cares about peak-time outbound departure when dressed casual? Parking slots on busy routes mean less for folks on vacation than they do for eternally rushed business types. Cabin service in coach class is fine as long as you have a cheap ticket. Differentiate on service by all means, but there are no dollars in it.
Value engineering is what it takes to make money in today’s Airline Industry. There are greener pastures in the Transportation Sector anyway. Northwest and Delta have to meet their roughly 90 thousand head count head on. The imagined benefits of every conceivable model of passenger aircraft need fresh eyes. The generation which appreciated Michelin-grade service on board has retired. New kids on the passenger block will not pay for the fancy stuff.
It is the stuff of a business school case on why mergers can fail.
More to the point-please watch your pension fund.