The late Senator Everett Dirksen said, “a billion here, a billion there, pretty soon it adds up to real money.” When two airlines who cannot make it alone talk about merging and faced with these kind of losses, the question that is not asked but should be is, why? Most of their projections when in bankruptcy were based on $70 a barrel oil. Today it is nearly double that at $119.
.69 cents per share of loss does not sound as bad, but the market was expecting .49. So why would regulators let these two airlines clearly already on life support systems merge and can it happen in time to save either or both? Their unions are scared and don’t want the deal and living in the UK, your ground service and flight cleaning crews can do a lot of damage in a very short period of time. Imagine what your pilots and cabin crew can do? Especially since both pilot unions are very unhappy and Northwest’s group have gone on public record saying they will do everything in their power to kill the deal.
This has been a bad year to be in the airline business. Aloha Airlines and ATA were buried earlier this year and the predictions of higher fares have yet to take hold because in a recession, smart businesses are reluctant to raise prices too high, too quickly.
So half-filled airplanes criss-cross the globe costing more money than revenues taken in and one can still buy bargain airfares online for the summer holiday season about to launch itself. While most say candidate Clinton cannot figure out delegate maths, it seems airline marketing and selling strategies also need some reality checking.
It all reminds me of the joke where a guy buys a truckload of watermelons for .50 a piece, has a great day selling them 2 for a dollar and concludes that what he needs is a bigger truck. That would be OK here, except these two airlines are selling those .50 watermelons for .33 cents.
At least the guy in the joke broke even.