Delta-AA

So that's why you continue to post more here than anywhere else and every post is in support of a U take over of AA. Blah, blah, blah, U rules and we will be taking over, blah, blah, blah.
You got it Mikey-Poo, I just love getting you all twisted up. Only a fool would remain a company loyalist while giving concessions.
I may be pro-merger, but certainly not pro-company. I have been thru 3 mergers in my career, and have said many times that I don't care what company name is on my check, as long as I get one. Horton and his boys laugh their asses of at your type, look we a screwing Mikey to death, and he still loves the company. Time to get rid of that goofy slogan on the bottom of you page too....My American Airlines, thats funny....Does that mean that you are scrwing yourself?
 
Bottom line is US got a non-disclosure from AA, DL did not, so AA is not interested in DL.
 
Bottom line is US got a non-disclosure from AA, DL did not, so AA is not interested in DL.
how do you know who has received non-disclosure agreements? Did you see a list posted somewhere?

I don't think US has returned its form anyway.

Further, a non-disclosure agreement does not preclude any party from making an offer for another company... they just wouldn't have the same information that would be available in a non-disclosure agreement.
 
sorry, Jim, but I fail to see how those statements are any different from what I stated above, all revolving around the theme that DL will bid for AA before it allows US to potentially win or else DL will wait until AA can successfully restructure and then pursue other strategic possibilities.

I have said that I believe DL would be satisfied with a standalone AA - in part because it would make it much more difficult for US. But DL sees enough value in key assets from AA and will pursue it if necessary to protect its interests. An independent AA does not change the competitive scene for DL; AA plus US most certainly does.
What would be the percieved reasonableness of DL outbidding US for the entire AMR? The combined company would never get through regulatory scrutiny. Why would the creditors accept a DL bid knowing that fact and the likely result that if approved by them, it would essentially mean that AA would be equivalenced to a Chapter 7 - i.e., broken up to satisfy regulators. If I were an AMR investor, I'd be very leary of forecasting a positive return on a fragmented AA, versus a new whole AA - either alone or combined with US. Summed, I can't really rationalize how even if DL outbid US by say 25%, it would be viewed as a viable indicator of eventual Return. Now if you're speculating that with DL's deep pockets, they would submit a bid for say just the MIA and JFK operations, which is higher than an overall US bid, I guess that could be viewed as positive by the creditors - BUT who would be foolish enough to partner with DL to provide the financing for such a bid, which would certainly be subject to severe overbid scrutiny against US's whole AA bid by DLs institutional investors?
 
sorry, Jim, but I fail to see how those statements are any different from what I stated above, all revolving around the theme that DL will bid for AA before it allows US to potentially win or else DL will wait until AA can successfully restructure and then pursue other strategic possibilities.

If you can't see the difference between your statements that DL would acquire all of AMR (that the regulators would allow) to keep AMR out of US' hands and your current statements that DL is NOT interested in AMR except for certain parts, you're blind - or just justifying your "I'm never wrong" ego.

Jim
 
I have said that I believe DL would be satisfied with a standalone AA - in part because it would make it much more difficult for US. But DL sees enough value in key assets from AA and will pursue it if necessary to protect its interests. An independent AA does not change the competitive scene for DL; AA plus US most certainly does.
DL would be satisfied? I'd be satisfied too if my foot was on my rivals neck.

Really think AA would give up a hub to DL? Only if they're being parted out like a junkyard clunker, IMHO. IMHO means in my humble opinion WT; try using it once in a while.

Last sentence....finally! an admission that AA plus US is a threat to DL. All these months of monster posts with faux concern for AA employees, the bottom line is finally disgorged. Good job! Thanks BB for pulling that one out.
 
If you can't see the difference between your statements that DL would acquire all of AMR (that the regulators would allow) to keep AMR out of US' hands and your current statements that DL is NOT interested in AMR except for certain parts, you're blind - or just justifying your "I'm never wrong" ego.

Jim
There is no inconsistency other than in your mind, Jim.
I never said DL would acquire AA in its entirety. You have inserted your bias into what I said. Period.
Move on.
DL would be satisfied? I'd be satisfied too if my foot was on my rivals neck.

Really think AA would give up a hub to DL? Only if they're being parted out like a junkyard clunker, IMHO. IMHO means in my humble opinion WT; try using it once in a while.

Last sentence....finally! an admission that AA plus US is a threat to DL. All these months of monster posts with faux concern for AA employees, the bottom line is finally disgorged. Good job! Thanks BB for pulling that one out.
If you really think that any two airlines CARE about each other, you truly don't live in reality. They are strong and viscious competitors - and that is what the law requires them to be.
That DOES NOT mean that I don't have compassion for AA people. I do care about AA people.

There is a big difference between understanding the nature of the business and not caring about the people in it.

Given that there are huge numbers of AA's own people who state they want to burn the place down, I have a feeling their actions and beliefs will have far more weight on the situation than mine.



What would be the percieved reasonableness of DL outbidding US for the entire AMR? The combined company would never get through regulatory scrutiny. Why would the creditors accept a DL bid knowing that fact and the likely result that if approved by them, it would essentially mean that AA would be equivalenced to a Chapter 7 - i.e., broken up to satisfy regulators. If I were an AMR investor, I'd be very leary of forecasting a positive return on a fragmented AA, versus a new whole AA - either alone or combined with US. Summed, I can't really rationalize how even if DL outbid US by say 25%, it would be viewed as a viable indicator of eventual Return. Now if you're speculating that with DL's deep pockets, they would submit a bid for say just the MIA and JFK operations, which is higher than an overall US bid, I guess that could be viewed as positive by the creditors - BUT who would be foolish enough to partner with DL to provide the financing for such a bid, which would certainly be subject to severe overbid scrutiny against US's whole AA bid by DLs institutional investors?
first, go back and read through what I have written - none of which says anything about DL buying AA in entirety - even if Jimbo wants you to believe it does.
2. US won't buy AA in entirety either - because US is already at the max at DCA that the DOT has allowed for slots at that airport...
3. I presume the return you speak of is DL's ability to gain a return on its investment - and if so then yes DL will not bid for more than it can to achieve said return....

that said, here is a little review on how deals like this get financed.

1. Cash from the buyer - either on hand (no US airline has enough cash on hand to buy much of AA) or borrowed money from the buyer's ability to raise funds - issue corporate debt, borrow from banks.

2. Equity or stock in the buyer's company - ie.... the creditors could and likely would be willing to accept stock in DAL or LCC as part of the price of buying AA or its assets. After all, the creditors will obtain stock in the new AA when AMR exits bankruptcy. The difference in an acquisition is that they receive stock IN ANOTHER COMPANY instead of the new AMR.

3. Assumption of debt - or taking over AMR's debts. Companies still have lots of debt on their books when they come out of BK. Some is wiped out but there is a whole lot still there.

Now --- have can DL outbid US....

1. with cash for whatever part of the deal that is done in cash - and it will probably be a fairly small amount. DL has far more cash available to it than LCC. DL has an undrawn $1.8 billion line of credit. DL also as a largely company has far more ability to issue debt than US. Companies, just like you, can't just issue any amount of debt they want. They have limits based on their credit ratings, their ability to pay etc. DL has been paying off about $1.5 billion of debt per year - plus funding its frozen pension plans for more than $500 million per year. Based on its current business, DL is generating enough cash to pay down $2B in debt per year. They could easily stop paying down that debt and use those proceeds to apply to a purchase of AA or issue debt to raise the funds DL needs to buy AA or its assets.
US is making less than $500M in debt payments per year.

DL has a higher credit rating.

2. DLs market cap - the value of all the DAL stock in circulation is $7.7B as of today. US' market cap is $1.8B... less than 1/4 of DL's. AMR's value as a company coming out of BK - what the creditors are going to want in stock in the new company is likely $6-8 billion. It will be very difficult for US to convince the creditors that it can issue stock that is worth three times what LCC is currently worth, even considering the new revenue that LCC would be gaining in an AA merger.
By acquiring only part of AA - perhaps half - DL will need to provide much less - perhaps up to $4-5 in stock - much less relative to the size of DL today.

3. Assumption of debt....any deal will require the buyer to assume large portions of AMR's debt - it won't go away and has to be paid. DL already is managing and paying off more than US and has a higher credit rating.

It will be incredibly hard to argue how US can outbid DL given that DL will acquire (if it does) only part of AA and DL has deeper pockets and greater ability to pay down debt.


The creditors ARE the investors in AA right now.

The creditors will do whatever they have to do to obtain the maximum recovery.

The employees of AA - perhaps mostly the pilots at this point - will determine if AMR's board decides it is worth more to "part out" AA than to try to keep it running whole.

If DL buys AA assets, those pilots who go with the assets would end up making more than they would at AA or US. There might be alot of AA pilots who would rather support an asset sale to DL than either a standalone plan or a US merger.
 
There is no inconsistency other than in your mind, Jim.
I never said DL would acquire AA in its entirety. You have inserted your bias into what I said. Period.

So in the future, when you speak of an airline you really don't mean the whole airline but only parts of it...

So I guess that you really believe that only parts of AA will emerge from bankruptcy as a stand-alone carrier? That only parts of DL are performing well? I'll be watching for your mention of any carrier and assume that you really mean only parts of each of them...

Jim
 
how do you know who has received non-disclosure agreements? Did you see a list posted somewhere?

I don't think US has returned its form anyway.

Further, a non-disclosure agreement does not preclude any party from making an offer for another company... they just wouldn't have the same information that would be available in a non-disclosure agreement.
http://aviationblog.dallasnews.com/
 
NDAs signed. That should set off an entire new round of wailing, gnashing of teeth, and 5000 word Unibomber-style posts from WT.
 
For those like Fluf, 700, and others who are very pro-AA-US merger,

1. The NDA process is not exclusive which means other carriers can engage in the process. AA sent out multiple invitations and we really don't know who except for US has returned one.
2. The NDA process does not lead to a merger. There is no assurance that acceptable terms can be reached - or that US can obtain the financing necessary to meet AMR's creditors' requirements.
3. No one should miss the fact that AA mgmt started the process w/ NDAs to retain control of the process. Note that one of the requirements of the NDA was that US mgmt stop communicating w/ AA labor groups. Would it be at all possible that AA inserted those requirements to shut Parker up, hang out the hope of a merger to the pilots as they go into the 1113 hearings, and then decide not to proceed w/ a merger - and allow AA to emerge as a standalone. AA mgmt would never do that!
4. An asset acquisition, which remains an alternative that the creditors will consider even if AA mgmt is against it, may not involve an NDA.
5. An NDA is a process of SHARING information. Part of the reason why B6 and others have already said "NO THANKS" is because they don't intend to share anything w/ AA mgmt that AA mgmt could turn around and use against them.

Even if a merger proceeds, it is far from certain that AA-US can merge the companies fast enough to gain the synergies they need while holding off an industry full of competitors who are ALL presently targeting AA and US markets quite successfully - and opportunities to continue that growth will only continue. While AA and US engage in a full fledged merger - even if it happens - there are other alternatives for DL and UA in Latin America including buying stakes in key carriers, adding their own flights at UA to Latin America; buying slots at LHR or parts of Asian carriers; adding flights into AA/US hubs here in the US where any number of competitors are quite successfully moving revenue from AA and US.

And it still doesn't change that AA/US employees will be paid considerably less than their peers in the airline industry. US employees might have grown content to believe one promise for a pay raise after another w/o any progress; AA employees are not so willing to jump on that train that has no promise of wage progression for them.
 
And, let's all remember that in short order, DFW may become less of a crown jewel than it is today. The Wright Amendment expires in 2014. When WN can fly anywhere it wants to from Love Field, there is going to be a serious realignment of domestic air traffic for the DFW metroplex.

And, for those of you who still like to imagine that the WN passenger is in the Ma and Pa Kettle category, I suggest you go to Love Field or East Terminal at STL or any other major WN operation and count the number of suits with computer bags lined up to board. They are more than happy to pay the extra fee to board first and get the seat of their choice. And, get a flight attendant who is not bitter about their unfair treatment by management, and who is very likely under the age of 40, cute, female, and not sporting a 30 year old hairdo. Yes, that statement is sexist and ageist. And, your point? I have friends here in Dallas that comment to me all the time about the advanced age of the flight attendants on their last flight to Europe or South America. (I guess they haven't noticed that I'm 67. :lol:) It is what it is.
 
... and by 2014, Spirit will likely have a nice-sized operation at DFW... they've already set up light housekeeping and DFW seems to be one of their favorite cities. Guess they are happy with how the market is developing and are doing quite well.

http://www.spirit.com/RouteMaps.aspx

Even if NK doesn't pull in the suits and briefcases, it is driving down average fares paid for the market as a whole including AA... even though NK serves most DFW markets with one flight a day.

And then we still have B6's new flights to BOS plus Virgin to the west coast, DL to LGA....

AA has long thrived in large markets - but almost always ones that had little competition or were restricted access. That is precisely why they did so well at LHR and in Latin America.

AA has not been very effective at defending its network from competitors since the time Crandall left.

Even the most profitable parts of AA's network - DFW and LHR are already up for grabs and MIA and Latin America will be soon as Open Skies agreements change the market.

US' track record for being able to stand up against competitors isn't much better.

How combining two airlines with that kind of track record against a sea of competitors who are hungry to take even more is going to be a success, I have yet to hear a decent explanation.

US might be able to borrow enough money to pay off the creditors who will wash their hands of AA and let the chips fall where they may... but the competitive assaults on AA and US are nowhere near close to ending - and it will take YEARS after an AA-US merger before they are capable of turning things around.
 
Please show me where I ever said I was in favor of this merger.

Hint, you wont, cause I have never said it.

US has survived against Midway in PHL and WN in PHL. How about Song and Delta Express, how did those fair?

And in a merger you dont have to pay off the debt, did DL and NW pay off all their debt upon a merger?

Did UA and CO pay off all their debt upon a merger?

Did US and HP pay off all their debt upon a merger?

And it US has all ready had talks about financing and it could just be a stock swap too.
 

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