Log #2 - externalities that negative in the long run. The...

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Kasra Saidi 810-80-7233 BCOR 1010-112 Delta-Northwest Deal Looks Near Delta Airlines and Northwestern Airlines are finalizing a merger deal that would be the largest airline merger in history. The hope is that with a larger company they can “mitigate” the rising fuel prices and have greater market power. A few kinks need to be worked out before the deal is set in stone, at the moment the pilot union form both companies are meeting to discuss seniority ranks, equity statuses, etc. Shareholders will also be able to vote on the matter in the coming weeks, some fearing that this acquisition might only hurt stock and company value. Another reason for concern that was brought to light by this article is it would spark other large airline companies to merge, such as continental and AMR corp who have already sought preliminary meetings. I feel that this merger is not beneficial for either company and could lead to
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Unformatted text preview: externalities that negative in the long run. The article sites that if this merger is made it may lead to other airline companies to follow, which would lead to an even more inefficient oligopoly. With less airlines competing with one another, prices will most likely rise. With the only goal of this merger stated is to be able to mitigate fuel prices and have greater market power, I feel that this is a dangerous move and could be negetive for its shareholders. A merger of this size is a risk, with many components trying to mesh a small problem, say within the unions, wages, and coordination, one faulty component could create large problems. Why should this risky merger take place if there is no overriding problem that either company is facing, with no viable answer I strongly disagree with this merger....
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This note was uploaded on 09/30/2009 for the course BCOR 1010 taught by Professor Latier,jef during the Spring '07 term at Colorado.

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