8:04 a.m. Richard Anderson of Delta and Doug Steenland, boss at Northwest, are holding a conference call for investors.
(Latest factoids are added at the bottom)
8:04 – Anderson: “With fuel prices what they are, the changes in the open skies area, we think it’s a really good fit. The balance sheets are in great shape. The route structures have been rationalized. Strong cash position with about $7 billion in liquidity.”
8:07 – Steenland: “Merger by addition.” He cites relatively little route overlap.
8:09 – Steenland: “Combining functions such as I.T.” There’s your first clue of whose jobs are in peril, I guess.
8:13 – Steenland tries to downplay anti-trust concerns. Here’s a graphic he used:
8:15 – Anderson: “No need for hub closures.”
8:19 – How long will this merger take. “We plan to achieve all synergies by 2012,” Anderson says.
>> $$$ Alert! NWA stock preopen price up $1.03 at $12.25. Delta opens up .27 at $10.25. The premium is now down to 56 cents based on Northwest stockholders getting 1.25 shares for every share of NWA stock owned. It was $1.88 based on the closing numbers yesterday. This number is changing quickly. See Delta stock details here. See NWA stock details here. << 8:28 - Anderson expects regulatory approval by the end of the year. 8:29 - Time for questions (Operator: It's not pronounced AX a question!)
8:30 – Company anticipates more use of 100-seat airplanes. But that’s not good news for aircraft manufacturers. It’ll involve use of existing aircraft. Plans to use DC-9s more; that’s the plane Northwest had been trying to phase out.
8:38 – Both of Northwest and Delta coming up on “affinity card relationships.” “We’ll be in a position to maximize our position for our shareholders.” English translation: Between U.S. Bank (Northwest) and American Express (Delta), someone’s going to lose some money.
>> The best-laid plans alert!! — Oil just passed $113 a barrel — up $1.57. A new record high. << 8:45 - Steenland: Would like Continental to stay in the "Sky Team" relationship (frequent flier miles and code sharing). 8:54 - "Revenue synergies" (i.e. saving money) depends on pilots getting on board. 8:56 - Analyst Ray Niedel asks "what made you finally decide to do this merger" considering failure of other airline merger attempts. "Not all mergers are created equal," Anderson said. Says two airlines already have alliance "so we're already well down the road and unlike a lot of the mergers you're talking about, those mergers involved carriers -- one or the other or both -- that were in distress." Says the two different "fleets" work better because 'we don't have to sit down and merge a lot of maintenance operations." Large differences in fleets (types of airplanes) gives the new airline more ability to size the jet to the market being served. 9:02 - >>> Disappearing dollars alert!! NWA stock now down 72 cents to $10.50. Delta down almost a $1 a share. That’s what a runaway day in the oil market (now up almost $2 a barrel on the day) will do. <<< 9:07 -- End of conference call. During the conference call Delta's stock dropped $1.35 from the preopen price. Northwest dropped $1.65 a share.