Delta Air Lines Inc. and Northwest Airlines Corp. have
finally reached a deal to combine into the world's largest carrier, and now it seems the airlines' top competitors, Continental Airlines Inc. and and United Air Lines Inc. also may be
in merger talks. This has, of course, prompted a lot of discussion in the blogosphere, social networks and chat rooms.
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Continental stock prices have already taken a dive from almost $23 at close Monday to $20.70, and United shares have dropped from $24.55 Monday to $22.52. Delta's and Northwest's stock have both sunk to around $10.
It appears that Continental and United may be at a disadvantage if they remain independent because they will have overlapping routes and duplicate costs for employees, planes and maintenance. This move could cause opposition to the Delta and Northwest deal, according to 24/7 Wall Street.
Activist groups and members of Congress are likely to oppose the deal, perhaps appropriately, because having only four large airlines in the US, including AMR and US Air , instead of six, might well hurt consumer choice and cause much higher ticket prices. The mergers of four airlines would almost certainly lead to many cities having only one major carrier, a move that almost always spikes up ticket prices. It would also cause tremendous lay-offs at a time when unemployment will be up anyway.
Another blog called Konagod states that the deal with Delta will most likely mean that there will be closures and layoffs in order to cut back on costs:
Although Delta said no hubs would be closed, that is by no means a statement that there will not be reductions, or eventual closing of hubs.
A post on The Huffington Post outlines the implications of airline consolidation on passengers:
The legacy airlines- American, United, Delta, Northwest, and Continental- are frantically plotting increased consolidation. And with the massive clout they wield in Washington, they usually get what they want. Nobody messes with the major airlines in DC. They are not allowed to fail. When one of them gets into trouble, they "reorganize" and, with large federal loans from Congress, go on as before.
For more comments, check out some anti-merger Facebook groups that are full of employees thoughts: Anti-Continental United Merger and Keep Delta My Delta. - Maria Woehr
See Dealwatch: Airlines
See TheDeal.com story: Delta-Northwest seal pact
