LCC Proposes $8B merger with Delta

[Charlie_Tuna]

I smell another way to oust the unions brewing. Same deal as it was by keeping the US Airways name, and the BK contracts. Now they will rid themselves of a few unions on the property altogether.

Thats true you may not have to worry about a list anyway. You may have to worry about doing your job now or getting the boot or if not that a great job of brown nosing.

What are the chances of this thing happening with DL management against it? I doubt that the BOD at DL will go for something that management does not think is in the best interest of DL.

Actually what matters is whats in the best interest of shareholders thus reason for taking the offer public after being rebuffed.

CC link

LONDON (MarketWatch) -- U.S. Airways Group on Wednesday said it has made an $8 billion cash-and-stock offer for bankrupt Delta Air Lines in a move that would create the No. 1 carrier across the Atlantic. Under the proposal, which would take effect upon Delta's emergence from bankruptcy, Delta creditors would receive $4 billion in cash and 78.5 million shares of U.S. Airways' stock, with an aggregate value of approximately $4 billion.

The offer represents a 25% premium to the trading price of Delta's pre-petition unsecured claims as of Tuesday. U.S. Airways shares closed down 1.2% at $50.93 on Tuesday.

In a letter to Delta Chief Executive Gerald Grinstein, U.S. Airways CEO Doug Parker said the airline decided to launch a hostile bid after Grinstein declined to meet. The letter was released along with news of the bid.

"...the benefits of a merger of U.S. Airways and Delta are so compelling to both of our companies' stakeholders, we believe it is important to inform them about our proposal," Parker said in the letter.

Under the deal, which U.S. Airways said would create at least $1.65 billion in annual synergies, the two carriers would form a new airline operating under Delta's name. The "New" Delta would be the No. 1 airline across the Atlantic and the second-largest airline to the Caribbean, said U.S. Airways. It would fly to more than 350 destinations across five continents.

"In the U.S., the combination would create a leading competitor in the Eastern U.S. and an enhanced position in the Western U.S," U.S. Airways said.

Competitors would include low-cost carriers such as JetBlue Airways and Southwest Airlines Co. and traditional carriers such as AMR Corp.'s American Airlines.

U.S. Airways expects the $1.65 billion in annual synergies to be phased in over two years. That total includes $935 million in network synergies, which would come from the optimization of the airlines' networks and result in a 10% reduction in capacity.

One aviation expert said the merger could present some problems.

"It's a very tentative proposal," said Keith McMullan of London-based consultancy Aviation Economics.

"There are some complementarities in the networks, but unless some significant cost-cutting takes place I don't think the merger would have much chance of success. Delta still has a lot of union costs and legacy issues," McMullan added.

Consumers said to benefit

U.S. Airways emphasized that the deal would likely result in lower prices for travelers.

"Consumers will have the advantages of a larger, full-service airline with the cost structure of a low-fare carrier, and the communities we serve, as well as those Delta serves, will have access to a wider range of network options," Parker said.

Since its merger with America West, U.S. Airways said it has lowered fares in nearly 350 markets, with discounts ranging from 10% to 75%.

The downturn in airfares and high fuel prices sent Delta into bankruptcy in September 2005


STORY

 

[robbedagain]

I cant see this happening due to overlapping issues and other things but i could be wrong

 

[jimcfs]

In retrospect I think this may be a smokescreen for the real target--NW. A NW deal makes much more sense in my opinion--lower price, less overlap, easier government approval...and the Asian routes alone are worth the price of admission.

If this deal happens, more than a few hubs will go bye bye---and in my opinion, CLT would be the most vulnerable....

For some reason I don't see this one happening.

Before I read this thread this AM, I was thinking the same as you, Art. NW looks like a much better fit. I would hate to see CLT go away.

 

[hula-flyguy]

the big question is......do they board by DOH or FCFS???

 

[Smartest Loser]

I guess that's why Doug doesn't have any cash to cough up to the employees in the contract talks. I heard one person on CNBC say that Delta would be the surviving name of the merged carrier. I smell another way to oust the unions brewing. Same deal as it was by keeping the US Airways name, and the BK contracts. Now they will rid themselves of a few unions on the property altogether.
I hope there would be some kind of a vote, but one never knows around here. Even if there were, how many of those
DL diehards would vote in favor of a union anyway?

Wings...Your right, NO MONEY FOR THE EMPLOYEES. I can hear dougie right now. "I need that extra money for a takeover".

Once again the employee's will pay for it.

SL

 

[700IAM]

In retrospect I think this may be a smokescreen for the real target--NW. A NW deal makes much more sense in my opinion--lower price, less overlap, easier government approval...and the Asian routes alone are worth the price of admission.

If this deal happens, more than a few hubs will go bye bye---and in my opinion, CLT would be the most vulnerable....

For some reason I don't see this one happening.

Reading this topic and looking at the people reading it reminds me of a 25 car pile up on the expressway with tons of onlookers that have family involved in the mayhem.

A study should be done on airline workers to understand how they maintained sanity during their working careers. Airline workers are the toughest bunch of employees on the planet.

God be with you all, your only real hope.

 

[longing4piedmont]

I feel sick.....I just can not get away from these clowns....

 

[USCREW]

the big question is......do they board by DOH or FCFS???

I know that they automatically upgrade non-revs to first for free.
Their planes are immaculate.
My friends at DL say that there is rampant favoritism and unfairness due to lack of unions.
Ground employees can transfer into INFLIGHT and maintain HALF of their seniority.
Their crews think that their **** don't stink.

 

[whlinder]

Tremendous.

Too funny.

 

[proudf/a]

I know that they automatically upgrade non-revs to first for free.
Their planes are immaculate.
My friends at DL say that there is rampant favoritism and unfairness due to lack of unions.
Ground employees can transfer into INFLIGHT and maintain HALF of their seniority.
Their crews think that their **** don't stink.

I only agree half with this statement. I was on an international trip, my crew was in the train station we hooked up with a Delta crew on the train. Spent 10 hrs with them had the time of our lives. I think BK has humbled them.

 

[Tim Nelson]

I guess that's why Doug doesn't have any cash to cough up to the employees in the contract talks. I heard one person on CNBC say that Delta would be the surviving name of the merged carrier. I smell another way to oust the unions brewing. Same deal as it was by keeping the US Airways name, and the BK contracts. Now they will rid themselves of a few unions on the property altogether.
I hope there would be some kind of a vote, but one never knows around here. Even if there were, how many of those
DL diehards would vote in favor of a union anyway?

unfortunately for the IAM, they pushed many workers in small stations to the streets and those workers are still eligible voters and likely they can't wait to vote no. Delta has a couple thousand laid off workers who would be eligible also plus they have better benefits than union people anyways so a vote would mean grave and 'painful' consequences for the IAM. Especially since the IAM has not participated in justice during previous tentative agreements. The only way possible for the IAM to even think about staying on the property is to stop selling out the workers and actually stick to their guns [yes, they do have them when they want to use them] and obtain a solid transitional agreement that takes care of the flock.

regards,

 

[N924PS]

I only agree half with this statement. I was on an international trip, my crew was in the train station we hooked up with a Delta crew on the train. Spent 10 hrs with them had the time of our lives. I think BK has humbled them.

Or they could have been ex National/PanAm.

 

[NCFL]

Someone (DP) needs to have his head examined. We're still busy saying "pardon our dust" with the first merger. What will the Sand Castle say with this next one, "don't step in our cow patties?"

I'm picturing him in the locker room, dropping trou, saying "see, mine IS bigger." Or perhaps with his hand inside the front of his coat, a la Napoleon.

I agree CLT is vulnerable in this transaction, if it ever gets off the ground. I think DL will reject it outright, or certainly DOJ will put the kibosh on it.

 

[whatkindoffreshhell]

Where is the value created by such a deal?

Just a shell game.

Parker has revealed himself as a manipulator rather than an airline ops guy.

 

[Non Rev]

Wow!

This is not what I expected when I signed on this morning.
Unsolicited proposal to merge!?! My first thoughts about this are:

1. A real possibility this might not happen.
2. "If" the merger were to happen, it would be really bad news for CLT.
3. No need for more Intl gates in PHL with JFK practically next door.
4. Logistical nightmare in all aspects of the operation.
5. Too many fleet types.
6. Too many contract carriers.
7. Corporate culture. That would be huge barrier to success.
8. Did Dave bite off more than he can chew?
9. My guess is most DL employees do *not* want this.
10. This forum will be on Fire.......