Delta Creditors Committee May Ask US Airways to Extend Deadline

[aquagreen73s]

Yes, that is the easy way... and it very may well be the way that that the Committee chooses to act if it wants to further delay the process. But the judge is going to want reasons... and these types of things occuring within the Committee may be a part of the decision-making process for the court to determine that cause exists to postpone the proceedings.

But in asking for a continuance, wouldn't that open the door for DAL then getting involved because it's a party in interest? On the other hand, if the committee went the "conflict of interest" route, then that would disqualify anybody outside of the committee from litigating that matter because it would concern the committee itself. In the meantime the clock ticks, exclusivity runs...and then the committee can really exert some muscle. I really have no idea because this is way outside of my realm. But you seem to have some firsthand experience with this. Am I close?

 

[USA320Pilot]

Delta bondholders want US Airways talks

See Story

Regards,

USA320Pilot

 

[BoeingBoy]

Gilding,

Just seems to me that the Committee, which represents all unsecured creditors whose interests are what the judge is supposed to consider, told the judge (in nice legaleze) "We need more time to evaluate the competing offer", the judge would be unlikely to deny them that time.

If this "hinting" and "leaking" is truly an effort to delay the process enough to run out the exclusivity period, just seems there's a much simplier and more direct way to accomplish that goal.

After all, how much weight is the judge going to give media reports if the Committee officially stays silent?

Now, if the purpose (assuming these "leaks" are even accurate) is to gain a few more days for consideration of the US offer before deciding whether to ask that the hearing be delayed, it makes a little more sense.

Jim

 

[Gilding the Lily]

But in asking for a continuance, wouldn't that open the door for DAL then getting involved because it's a party in interest? On the other hand, if the committee went the "conflict of interest" route, then that would disqualify anybody outside of the committee from litigating that matter because it would concern the committee itself. In the meantime the clock ticks, exclusivity runs...and then the committee can really exert some muscle. I really have no idea because this is way outside of my realm. But you seem to have some firsthand experience with this. Am I close?

I would imagine that if such a scenario was to present itself, the Committee would first file a motion to postpone the proceeding, citing various reasons, including that possibility of a breach of fiduciary duty by one member of the committee and that the committee needs time to investigate and sort out the details before such proceedings. Then the Committee may go the route of "breaching the fiduciary duty" to toll more time as you mentioned. Fiduciary duty is a more accurate term, because absent a 100 percent recovery, everytime another creditor's claim is reduced or eliminated, the other creditors get a bigger piece of the pie.. creating a conflict of interest between all of the creditors. Thus, the committee and the members who serve on it only have a fiduciary duty to the class represented: the unsecured creditors.

In all of this, it may be that only 1 creditor on the Committee actually wants a US/DL deal and is using these careless tactics to delay the proceedings to toll the exclusivity period. In this case, I believe that the Committee would forgo any actions until after the voting is known, and then, would only enter such actions if the vote went the unexpected way.

 

[aquagreen73s]

Could DAL request that their exclusivity period be tolled and if so, do BK judges normally grant that type of motion in light of the committee working its own issue out?

I was also wondering that if Boeing is on the committee (or is it?), that whether their presence is a conflict of interest. I would guess they have secured claims that are impaired as well as actual unsecured claims. So it goes to reason that wouldn't having a creditor on the committee who also is a secured creditor in a major way create a conflict of interest as to the other class members who are probably genuine unsecured creditors?

 

[BoeingBoy]

Technically, it's not Boeing that's on the committee - it's Boeing's financing arm. Probably doesn't matter in practice, however, since I suspect their vote would go the way that Boeing wanted.

Without looking up all the various claims, I suspect several members of the Committee have claims in various catagories.

Jim

 

[BoeingBoy]

aquagreen,

I looked up the claim - Boeing Capital and Boeing both have only unsecured claims.

Interestingly, though, one of the members of the "unofficial" unsecured creditors committee is also one of the 10 largest holders of US stock. Wonder if they have a conflict of interest?

Jim

 

[aquagreen73s]

Very interesting. I wonder if that is typical of Boeing...to stay out of the business of being a secured creditor. I once worked with a guy who had been a salesman for Catepillar and one of his additional jobs was to repossess equipment. It was a really messy thing to have a salesman do and God only knows why a huge company would try to save a few pennies by having the salesman of all people go out and get the goods back. But I guess in the era of modern finance where employees are "liabilities" and the goal is to make the "liabilities" as efficient as possible, then it makes some sense.

 

[delta777]

Delta bondholders want US Airways talks

See Story

Regards,

USA320Pilot

Wow, USA320Pilot, how many times can one person copy and paste a link to the same story? Oh well, i guess i'll rehash the same information i did the last 43 times you posted the link.

This is a small group of 9 bondholders/hedge funds that have claims of appx. $2.3 billion, or about %15 of the total claims. Which is to say, these guys are in it for the quick buck, hence the reason they were all over the first LCC offer. Why should anybody be surprised that they would pressure the official creditors committee once a second offer was made??? These guys think in terms of weeks, not years. Unfortunately their clout is all but cancelled out by DALPA's claim.

Here's the more important paragraph from your link, "

Meanwhile, Delta's official creditors committee -- which includes companies such as Boeing and Coca-Cola -- are believed to be more sympathetic towards Delta. They are considering the US Airways offer, but are weighing that against their long-standing business ties with Delta."

 

[USA320Pilot]

Delta777,

With all due respect, the the last hyperlink I posted was a new story, but it did reference some information previously discussed, but had new information too.

For example, US Airways president Scott Kirby indicated Wednesday that the Tempe-based airline "could increase their offer a second time."

Meawnhile, US Airways has been in negotiations with both Boeing and Airbus on a narrowbody replacement aircraft order. Disccussions have centered around the B737-800 and A320 family aircraft. Furthermore, US Airways is not happy with Airbus' problems associated with their widebody program.

Do not be surprised if US Airways cuts a deal with Boeing for new aircraft for US Airways (to replace B737-300s) and the New Delta (to replace rejected MD-88's) in exchange for merger support.

Regards,

USA320Pilot

 

[BoeingBoy]

Meawnhile, US Airways has been in negotiations with both Boeing and Airbus on a narrowbody replacement aircraft order.

Ya know, those "negotiations" have been going on since before August of last year. Since those "negotiations" started, US has moved up deliveries and added orders for narrowbody Airbuses and ordered the A350. Seems like US has made it's choice, at least for the short term....

Jim

 

[zethya]

Ya know, those "negotiations" have been going on since before August of last year. Since those "negotiations" started, US has moved up deliveries and added orders for narrowbody Airbuses < and ordered the A350 >. Seems like US has made it's choice, at least for the short term....

Jim

When did US (re)Order the A350(XWB) and consequently dismiss the escape clauses in the original contract with Airbus? Are you certain of that statement?

 

[BoeingBoy]

I'm only certain of what's been made public, but haven't seen anything that indicated that we've cancelled that order. The aviation media is usually pretty good about picking up on that type of thing - witness FedEx's cancellation of the A380 orders.

So unless someone knows differently, they're apparently still on order. We'll probably know something definitive next week - the annual report will have something about future deliveries.

Jim

 

[USA320Pilot]

Last year US Airways ordered seven additional A321 aircraft, which are effectively going to be used in place of domestic B757s. According to the Fleet Plan provided to ALPA, three B757s will be returned to their owners in February/March and other B757s will be used for additional service to Europe. In addition, US Airways has ordered seven B757 winglet kits and the modified aircraft will be used for transatlantic and Hawaiian operations.

According to Flight Training Department personnel involved in the talks/equipment evaluations, US Airways is in discussion with both Airbus and Boeing for replacement aircraft.

It will be interesting to see which supplier obtains the new aircraft order and if it will have any bearing on the proposed Delta merger.

Regards,

USA320Pilot

 

[NYCDelta]

I'm only certain of what's been made public, but haven't seen anything that indicated that we've cancelled that order. The aviation media is usually pretty good about picking up on that type of thing - witness FedEx's cancellation of the A380 orders.

So unless someone knows differently, they're apparently still on order. We'll probably know something definitive next week - the annual report will have something about future deliveries.

Jim

I think it's smarter to deal with Boeing AND Airbus. You could still save money with commonality issues, and get the "best deal" from both suppliers. The "New Delta" (if the merger goes) could have a domestic fleet of A318/319/320/321 and an International fleet of B757/767/777/787. I would like that. I prefer Boeing on long haul, but don't mind the Airbus on shorter flights (if the interior looks nice and has VOD), IMO. Of course, I don't know where the EMB would come in?