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
Flight 891 from Buffalo. This plane was delivered to Eastern Airlines on 11/30/1979 and transferred to Delta in 1991
Although it is frustrating at times, I understand when airlines have had to send jobs overseas to help them survive.
Delta, in a rare showing, is now doing the opposite — and at a good time nonetheless! They are no longer outsourcing their reservation call center to India and will be moving the jobs back to the US.
There will still be call centers in Jamaica and South Africa, but staffing would most likely be reduced there as well in the future.
When Delta outsourced their call centers to India in 2002, they estimated saving $25million per year, which is nothing to sneeze at.
However, customers made it clear they weren’t happy with the service they received from the call centers in India. “The customer acceptance of call centers in foreign countries is low, and our customers are not shy about letting us have that feedback,” said Richard Anderson, Chief Executire of Delta Airlines.
I would imagine the number of reservation calls has greatly decreased since 2002, with most people choosing to reserve tickets online. Source: AP Image: AV8NLVR
Old Delta and Northwest Uniforms
If you were flying Northwest (recently merged with Delta) or Delta airlines at the end of march you might have found some of the flight attendants seemed a bit retro. No, I am not talking about giving you large free meals or free blankets and pillows, I am talking about the way they looked.
To celebrate the new Richard Tyler uniforms, they wore Delta and Northwest uniforms of previous years.
I have to say, I kind of like the new uniforms! Source & Image: Delta Airline Blog
Federal safety officials have some concerns about Pratt & Whitney engines and are requesting that the FAA orders inspections. The concern stems from when a Delta Airlines plane loss power at the time of take off and had to turn to the gate back in August. However to date, no inspections has occurred. Personally I kind of want to know my engines are working fine. Both of them.
Source: MSNBC Image: F18E777