Delta Air Lines Considering Purchase of US Airways?

The tail of Ship 638 on April 30, 2007 as it leaves the hangar and prepares for its maiden voyage around Atlanta, sporting its new livery. Photograph ©2007 by Brian Cohen.

What goes around comes around, eh?
The Wall Street Journal reports that Delta Air Lines is considering a deal to acquire US Airways, almost six years after US Airways attempted to acquire Delta Air Lines in a hostile takeover bid led by Doug Parker, its chief executive officer.
Delta Air Lines was reorganizing under the protection of bankruptcy back in 2006 when US Airways announced its attempt of a hostile takeover of Delta Air Lines. Christopher Muise — who at that time was on The Delta Board Council and was one of many Delta Air Lines employees who did not want to see Delta Air Lines become a part of US Airways — launched the Keep Delta My Delta campaign, which ultimately rallied the entire workforce of Delta Air Lines, as well as politicians, dignitaries, celebrities, companies associated with Delta Air Lines and — most importantly — the customers of Delta Air Lines.
US Airways lost its bid of a hostile takeover, and Delta Air Lines successfully emerged from bankruptcy protection on April 30, 2007. I was on the special flight of Delta Air Lines flight 9998 with service around Atlanta and service from Atlanta to Salt Lake City to Los Angeles on Ship 638 — which is a Boeing 757-200 aircraft that was the first to sport the new livery now currently in use by the fleet of Delta Air Lines aircraft — and “blogged” about the entire experience, which I intend to re-post here at The Gate for those who are interested.
While on that aircraft which flew twice around Atlanta, I sat next to a Delta Air Lines employee. During the taxi of the aircraft before making its way up the ramp towards the runway, the Delta Air Lines employee sitting in seat 41A suddenly wondered aloud, “Imagine if all this was not here.”
It took me a moment to understand and realize what she was saying. Imagine if Delta Air Lines failed to emerge from bankruptcy and went out of business. What would the airport in Atlanta be like without Delta Air Lines?
I replied, “Even worse: what would all of this be like if all of this was US Airways instead of Delta Air Lines,” referring to the failed hostile takeover of Delta Air Lines by US Airways.
Now I will ask the question: what if Delta Air Lines attempted to take over US Airways?
With my limited knowledge about the entire story, I would say that it is a bad idea because:

  1. From what I understand, the integration between America West Airlines — which US Airways took over several years ago — has been a nightmare and still has not been completed. Delta Air Lines acquiring this potential quagmire would be nothing like its recent yet smooth integration with Northwest Airlines.
  2. Gerald Grinstein said to me in 2007 while he was still chief executive officer of Delta Air Lines that US Airways was the biggest competitor of Delta Air Lines. If this is still true today, I do not see the approval of the United States government for such an integration.

I could be wrong, but I am not sure how Delta Air Lines would execute a takeover of US Airways any better than US Airways taking over Delta Air Lines. It would be a mess either way, in my opinion. Delta Air Lines might actually be better off pursuing American Airlines as an acquisition target rather than US Airways.
What do you think?

  1. Either way, us,…the consumers are the losers which equates to less competition. At the end there will only be united, delta, and american, and who knows how much less

  2. American is a much larger airline, and an acquisition of USAirways would not harm competition between the three big alliances.
    So, no, I disagree — an acquisition of USAir by Delta would be more likely to be approved.

  3. Brian, the word “irony” is as misused today as the word “acronym.’ But I think your post fits the definition to a “T” in that Doug Parker was salivating to get his hands on Delta and run the biggest airline in the world. People may forget the Herculean effort it took to fight off an $11B takeover offer that was pulled off by the likes of Jerry Grinstein and Jim Whitehurst despite near fistfights by bondholders determined to sell off Delta to the highest bidder. At the time, no one at Delta could imagine pairing the 2005 JD Power Award winner for overall customer satisfaction with the the fractured Airways that was facing significant labor strife from the merger between Airways and America West. But this is a new Delta and Richard Anderson is no Jerry Grinstein. Under the scenario apparently being considered, Parker would be out at Airways and Richard Anderson would be at the helm.
    I see this as a power play by Delta to keep Airways from buying AMR and leapfrogging Delta to become the world’s number 2 airline. Airways would be a much more manageable acquisition because of its size than AA. Also, Airways has already dumped its pensions on the PBGC and its operating costs reflect two trips through BK. AA is just getting started.
    Given the labor strife at Airways, I think this is an extraordinary risk for Delta. Already smarting from annual drops in the Power survey, buying a company at the bottom of virtually any customer sat rating is extremely risky. And those labor woes have only gotten worse.
    But I know that Anderson is a megalomaniac and likely is already envisioning the mantra “World’s Biggest Airline” on his signpost again. While he’ll either never admit or outright lie about it like he did when he said he wasn’t brought to Delta to merge with NW (what a gasser that one was) I’m sure he’s salivating once again at the possibility of being at the helm of the world’s biggest monolith…regardless of what it does to his operation and customer sat scores.
    Yes, irony and acronym are both hackneyed terms in today’s world, so why not borrow yet another to describe the proposed marriage of Delta and Airways: Be careful what you ask for.

  4. Just want to correct the common misconception that US Airways purchased America West, when in fact it was the other way around. US was about to go under at the time. I worked for America West then, and even many employees forgot who bought who – especially US pilots, whose arrogance was palpable and made things difficult from the start. Doug Parker was the head of America West at the time and took over Bill Franke’s job as CEO. Doug is the most down-to-earth CEO one could ever hope to meet, and he always believed airline consolidations were the only way to survive, not because his ego drove him to head the world’s largest airline. He was obviously correct in his belief that mergers were necessary, because they’ve been underway for a while now.

  5. “Doug is the most down-to-earth CEO one could ever hope to meet, and he always believed airline consolidations were the only way to survive, not because his ego drove him to head the world’s largest airline. ”
    Sounds like you’ve got a huge dog in this fight…hmmm, just a tiny bit biased Peggles??? US Airways has not been able to merge, nee, has been left at the altar, by several airlines because your level-headed CEO runs the worst airline in the world. Last in JD Power and virtually any other metric. Airways is a basket case end of story full stop. As for your “saving” Airways, obviously, having experienced its own trip through BK, AW was not exactly poised to survive on its own either. And if AW was so strong, why’d it take Airways already sorry brand? Cuz yours was even worse. But, please, do not let the facts get in the way of your ego-fuelled opinion.

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