Northwest Airlines Boeing 757
There has been a lot in the news about airline mergers and buy outs. Delta & Northwest, United & Continental and most recently AirTran & Southwest. Some in the media throw around “merger” and “takeover” interchangeably, but they are very different. When two airlines come together, there are two types of sale agreements: the merger and the takeover.
I got an email from a reader (thanks Jay) asking about the difference between an airline merger and take over. I am not a financial professional, but I want to try my best to point out the major differences. If you have any more to add, please feel free to leave a comment!
This is when two companies come together blending their assets, staff, facilities, and so on. After a merger, the original companies cease to exist, and a new company arises instead. Sometimes the new entity will take the name and brand from one of the airlines, but sometimes an entirely new brand can be created.
Delta and Northwest merged, leaving the Delta brand. United and Continental merged, which will leave the United brand. In mergers like these, management needs to work hard to come to certain agreements, figure what/who will be cut and how the new airline will operate. Of course, this can be a very complex process for both airlines to undertake.
TAKE OVER / BUY OUT / ACQUISITIONS
In a takeover, a company is purchased by another company. The purchasing company owns all of the target company’s assets including company aircraft, trademarks, routes and so forth. The original company may be entirely swallowed up, or may operate semi-independently under the umbrella of the acquiring company.
In the case of Southwest buying out AirTran, the AirTran brand will disappear and be absorbed by Southwest. It is not a merger and Southwest will own the assets of AirTran and have complete control. This process is easier than a merger, since management at Southwest has the final say, but they need to successfully share their culture with the employees at AirTran and make sure they feel welcome.
Alright, I hope that helps some! Image: fiveholer
Does Southwest Airlines giving out free drink coupons help them to acheive #1 status?
According to the Customer Service Satisfaction Index, airline passengers feel the airlines are doing a 3.2% better job in customer service compared to the year before.
Although fees are up, the numbers of passengers are down. This means less lines, fewer bumped people, and more room since you might have no one sitting in the center seat.
Southwest Airlines was #1 for customer satisfaction for the 16th year in a row with it’s highest rating ever. The biggest gainers were Delta Airlines, US Airways, and Continental who improved by margins of 6.7% to 9.7%. American Airlines saw the largest decrease (3.2%) and United Airlines ended with the lowest overall score for the year.
It will be interesting to see if the airlines can keep this positive trend going, since hopefully by next year we’ll have a strong economy and fuller planes (and lines). Source: USA Today Image: tsmyther
Continental Airlines in Hawaii
Sometimes I come across stories that are somewhat interesting, but don’t know how to approach the subject and I end up moving on. This is one of those that I almost did, but I can’t help but making a post about it.
Imagine for a moment you are on a flight from LA to Honolulu for a nice little scuba diving vacation. You are in the middle of your in-flight movie wasting the time away. Then your seatmate stands up next to you and…well…starts to urinate on you. Then you push him to get him to stop, but he keeps going.
I wish this was a crazy fictional story, but this happened to a 66-year old woman on Continental flight 3. A 28-year old, well intoxicated gentlemen (well I guess not so much of a gentlemen) either couldn’t make it to the bathroom or didn’t care. Some-what luckily there was an Alcohol, Tobacco, Firearms agent behind this incident and was able to restrain the man.
He has now been sentenced to 3 weeks in prison and six months of probation after wards. This kind of story makes sitting next to a snoring person not too hard to handle!
THANKS FOR THE TIP CHRISTINA! Source: Honolulu Advertiser Image: indyinsane
Continental Airlines Dash-8 Q400 Image: lindsaywp
I notice I seem to avoid having to write about stories in the news that aren’t so positive in the airline business. I know those of us interested or that work in this business hate to see when a plane goes down and lives are lost.
Flight 3407, a Bombardier Dash 8 Q400, crashed at about 10pm on February 12th.Â It crashed into some houses, killing a 61-year old man who was home at the time and all 48 people (44 passengers, 4 crew) that were aboard the plane.
It appears at this point the plane lost forward momentum and came down flat on its belly. Some indicators are pointing to icing that was reported before the crash.
Even though ice could turn out to be the main factor of this, the Dash 8 is well known to handle the ice well and ability to get through almost anything. From what is reported now, it seems this accident happened very quickly, giving very little opprotunity for the pilots to save the doomed plane.
My thoughts go out to the families of those affected by this tragic loss.