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A: Large investment houses, according to h, an independent analyst in Phoenix. “The hedge funds and European airlines have been driving all of the merger talks you’ve been hearing the last few years,” he said this morning. “The hedge funds made big speculative investments in both Delta and Northwest and they’re hoping that all this merger talk will drive up stock prices so they can cash out, which unfortunately will leave the implementation mess to somebody else.”
A: “No, there’s no good news for consumers,” according to Horan. “We’re in an environment where a lot of airline routes will never make money at today’s fuel prices. There’s going to be less service, not more service. Fares are going up and not down. Delta-Northwest and these other megamergers that are going to follow create a whole set of new problems on top of that. They’re not going to get the industry back to profitability; there are not enough synergies. There’s a big risk of implementation-operational debacle which will make what American Airlines customers went through last week look like the proverbial Sunday picnic and there are big anti-competitive risks, primarily on long-haul international, where there is much more danger to consumers than there is domestically” he said on CBS’ Early Show.
Q: How long will it take?
A: “In order to get some savings out of this, they’ve got to go very fast,” Horan said. “But that creates the situation of an operational mess. I would say this will take at least a year from the time it gets approval.”
“You might execute this properly and not screw it up. But in the real world of these airlines in this kind of environment, there’s a huge chance that it does get screwed up,” Horan also told MPR’s Marty Moylan.
FMI: See Horan’s article, “Top 10 false claims about the need for airline mergers.”
A: “When we have talked to Northwest about that reservations center, they have decided to keep it open, when they close other centers in New York and Florida. And they comment on its productivity, the work ethic of the people. They’ve moved more and more complicated work there. It will certainly be on the list of the things we will fight for. But it’s from a strong position,” State Employment and Economic Development Director Dan McElroy said on Monday night.