Name: These Are the Consequences of Major Airline Mergers
Uploaded: 2016-08-11
Duration: 2 min 50 s

[ SOUND ] Delta's CEO had some quite a week. [ LAUGH ] Well, an analyst said about Delta, okay. So Delta cancelled plenty of flights this week and the analyst said we think that as long as there are no repeat occurrences of the issue, Delta should not see major customer defections or investors adding an extra risk premium to the shares. Do you guys buy that? All these problems. I mean there were, what, 2, 100 flights over three days canceled this week including my wife's. So, what- [ LAUGH ] Do you really think this is not gonna be an adverse impact on Delta? That's right. I mean I think he's right about the customer Customers I think you have a hard time. I mean, delays and cancelled flights are [ UNKNOWN ] problem in the airline business. So I don't necessarily think he's gonna lose customers, but I think the airlines are hitting a bigger problem. They've had a little bit of a good run here. But now price competitions are coming back and this clearly shows that they need to spend more on technology. It's gonna hurt the bottom line. Right. I basically agree with that. People are worked up about it this week and they're upset. I mean I flew Delta twice recently and I had delays both ways and that was before the computer problem. Which actually Delta has an older fleet of planes which is a conscious decision they made compared to their big competitors It's particularly tough for the CEO cuz he's only been on the job for a few minutes. The previous CEO retired and the president was promoted and now he's got this mess. But I do think people tend to move on, they're really, really worked up but there's only so many choices and they go on Orbitz or whatever and they look for the best flight for them. And they hold a grudge but at some point they'll fly it again. Yeah, I want to come back to what you said earlier, Steven, about the technology. I mean, this. That's what really surprised me. Even despite the old fleet, the Delta flights I've been on they clearly rehabbed the planes very well and all that. But I wrote down here what actually happened, at least up to date. And they said a part failure To cause the power outage, that caused a small fire, that caused a transformer in the data center to blow. That the power to go out, then it was restored to critical systems, didn't switch over to backups. The whole thing basically crashed, and then they had to reboot, and that didn't go so well. I mean, if you're looking at this, are you asking yourself, how could you not have that kind of redundancy? Was a major corporation. I mean I think what has happened is that a lot of these airline mergers happened and when the mergers happened, they promised share holders a lot of cost savings but what. At the same time they have to patch together two computer networks. Right. And they're not spending a lot of money doing that. They're just kind of playing with duct tape And I think that with that, you run into issues like this. Yeah. But I also think it kinda happens in all kinds of industries. You don't know big of a problem you have until all of a sudden you have that problem. You're like, whoop, we didn't plan for that redundancy. And I think that's what is scary about this. [ LAUGH ] You see these old technology. Causing a huge blackout. If there were hackers, if there was something beyond just a power outage, [ CROSSTALK ] this could be really bad. [ SOUND ] [ BLANK_AUDIO ]