• 15 Nov 2006 at 2:03 PM
  • Airlines

Deal of the Day: Uncovering Hidden Delta-US Air Synergies

By John Carney

deltausairmerger.jpgWe’ve been running through our financial models here in DealBreaker HQ. Okay. Not really. We’ve been doodling on cocktail napkins at Harry’s while we enjoy our liquid lunch. But we’ve none the less managed to uncover one potentially valuable and unreported synergy in the Delta-US Airways merger.
The two airlines have three recent bankruptcies between them—and after the merger both will continue to face challenges from fuel costs, employee costs, competition from cut-rate carriers and terrorism risks. So there’s a not to far-fetched chance that the combined company will face bankruptcy again.
And you know what? Bankruptcies are expensive. Everyone—debtors, creditors, purchasers—hires lawyers, and the lawyers get paid out ahead of almost everyone else. So next time around, instead of paying two sets of lawyers for Delta and US Airways, they can pay just one. Synergy, baby, synergy!

Comments (9)

  1. 1
    Posted by Lee D | November 15, 2006 at 2:26 PM

    Well put, Mr Carney.

  2. 2
    Posted by Cheezy Peas | November 15, 2006 at 2:31 PM

    I’d like to uncover her hidden delta synergies…

  3. 3
    Posted by John Carney | November 15, 2006 at 2:35 PM

    Lee,
    Just saw you anticipated my post. You make a great point there. Thanks for your comments. Keep them coming. I’m very happy we have some of the best commenters on the internets!
    –JC

  4. 4
    Posted by Timothy Price | November 15, 2006 at 2:59 PM

    Drinks for lunch at Harry’s? When did you start hanging out with Bateman and the guys from P&P?

  5. 5
    Posted by John Carney | November 15, 2006 at 4:47 PM

    Yeah. Sorry for living the cliche. We were working out of our Wall Street base station this morning, so we decided to make a trip down to see Nick the bartender.

  6. 6
    Posted by AG | November 16, 2006 at 8:19 AM

    Absolutely fantastic.
    This sector has destroyed more value than any other in the last 50 years.
    The only people who make money out of the airline industry is the oil industry
    Great call JC.

  7. 7
    Posted by AG | November 16, 2006 at 8:20 AM

    Sorry.. there is one other industry that makes money out of it as you mention… the bankruptcy lawyers!!

  8. 8
    Posted by Lee D | November 16, 2006 at 9:51 AM

    John, you guys do great work! Above and beyond the great info and analysis, your introduction of the expression “fighting like ferrets” leaves me with a debt I can never repay.
    http://businessopinions.blogspot.com/2006/11/sony-divisions-fighting-like-ferrets.html

  9. 9
    Posted by LeeD | November 20, 2006 at 5:15 PM

    On the subject of airlines, Air Canada re-emerged from it’s court-ordered cocoon on November 17, and it’s share price on TSX (symbol AC.A) has been on a steady, stately slide downhill ever since as the market looks around, trying to find a bigger fool.
    http://www.canadianbusiness.com/markets/stocks/article.jsp?content=20061120_83096_83096

Leave a comment

You can log in with your account or comment as a guest below.

   or