USAir and Delta....no go!

[BoeingBoy]

Question...given that nobody has really come out of bankruptcy ordering scores of new aircraft, what is the chance DL will?

Actually, not correct. None other than US ordered "scores of aircraft" shortly after emerging from BK1 - 170 Bombardiers and Embraiers, to be precise, not counting options. Valued at roughly the same as DL's outstanding orders. And, of course, didn't take all those airplanes thanks to BK2.

Additionally, US did not reject the Airbus orders that were on the books. Rescheduled - yes, rejected - no.

What will DL do about the outstanding Boeing orders? Don't know, but seems they'd be foolish to cancel them at this point.

If they do [see above - Jim], but US were to guarantee a larger portion of that order book DL has (since it's likely DL won't fulfill the entire $3.7 billion in orders) wouldn't Boeing be compelled to vote in favor of US's plan.

Given those conditions, probably so. I'm not sure exactly how US could "guarantee" orders - they've cancelled Boeing orders in the past. Maybe if Parker went so far as to cancel all the Airbus orders and place a big Boeing order before any voting, Boeing might be swayed.

Additionally, a bigger creditor than Coca-Cola is Bank of New York. The list of the Top 20 unsecurred creditors on the ch 11 filing listed Boeing's $3.7b then 19 separate claims by BoNY totaling more than Boeing's claim. Given that, there's little DL can do to satisfy them like they can Boeing & Coke (agree to fulfill those contracts...which is unlikely to begin with). It would seem BoNY would be more compelled to go with US.

Interesting that you should mention BofNY. They were an unsecured creditor in the US bankruptcies (as trustee for the bonds issues for construction at LGA) and were still fighting with US over their BK2 claims until June of this year. An agreement was reached whereby they got something like 35-40 cents on the dollar, after taking something of a beating in BK1. Any chance they'll remember that when they consider US' offer?

I guess overall, I'm asking why these creditors couldn't be compelled to go with US as easily as DL when DL is unlikely to fulfill or make whole the amount owed these creditors. It seems that it would be more likely that US (as the new Delta) could fulfill a greater portion of these claims...

I certainly have no idea what any of the creditors will do. However, the aviation community is a pretty small one. Many of DL's creditors were also US' creditors and had to fight with US over their claims during two bankrupcies. I'm not saying that that experience will color their thinking, but wouldn't count on them forgetting either.

Jim

 

[abe]

A lot of great responses. I do agree to some extent that previous relationships and partnerships can't be quantified like cold hard cash can (money talks, bull@#$& walks, right?)

Don't think that these relationships won't mean something, though. Some of these creditors are looking for a quick payday....others might be more inclined to look at future paydays. This deal is already coming under scrutiny from several analysts with regards to the mystical synergies that Parker has outlined. Not only with the route overlap, but with the 900+ aircraft and 20+ different aircraft/engine types. Not to mentioned the extra 60,000 employees...and also the potential for gov't scrutiny.

While most applaud the early success of the USAir/AWA merger, they also acknowledge that there is a lot of work to be done. If the big money creditors see better long term value in an alternative deal (or the stand alone plan), they may be inclined to nix this deal.

Right now Parker's offer is the best deal...but only because it's the only deal. It has no competition. There will be others (at least one...JG's). There may also be counter offers from Parker.

It will be interesting...


Abe

 

[wings396]

We can all go back and forth on this topic as much as we like, and in the end it will mean nothing. Big business does what it best for it, and the employees or what they think means nothing period. As I said before, I have had ties to both airlines involved in this discussion. I feel that the combination of US and DL if done properly would be a complete powerhouse of an Airline. The sad thing is even if this merger takes place the combined carrier will be about the same size as DL was prior to all of it's cutbacks. The combination of US and HP is still a smaller carrier than US was back in 1989 following the PI merger.
At that time the fleet consisted of 454 A/C, while todays fleet is below 400. One would have hoped that 17 years and a merger later that the Airline would have grown instead of going backwards.
There is no reason to rally for "Your Delta", as they could care less about you. I never got too upset while going thru any of the past mergers at US. All that counts is if you will continue to get a paycheck. Where it comes from, or what name is on it means very little to the bank when you go to cash it.

 

[luv2fly]

All that counts is if you will continue to get a paycheck. Where it comes from, or what name is on it means very little to the bank when you go to cash it.

Well then there is reason for concern. If this merge proceeds as planned, there will be numerous layoffs, career stagnation, and extended furloughs for both US and DL, regardless of what Mr. Parker claims. Once again, he will say what he has to in order to garner support for his proposal.

 

[wings396]

Well then there is reason for concern. If this merge proceeds as planned, there will be numerous layoffs, career stagnation, and extended furloughs for both US and DL, regardless of what Mr. Parker claims. Once again, he will say what he has to in order to garner support for his proposal.

So far this has not been the case at US, and hopefully it will stay that way. Career stagnation will be around with or without any merger. While there have been recalls taking place at US, it isn't enough for anyone to move up the ladder at the pace they could before. To be honest, I don't think it will ever be that way again at most carriers. I can't see Parker doing this deal just to downsize the Airline. Granted, he will have to rearrange quite a bit due to the overlap issue, but will most likely use those assests elsewhere. Only time will tell, and as I said none of us have any say in the matter.

 

[PhxMama]

I remember the US thread COKE vs PEPSI and how east and west(HP) flights served either Coke or Pepsi. If Im correct US now serves only Coke products(DP is a Dr Pepper guy.) Is it a coincidence? What do you think?

 

[flyingcat]

I remember the US thread COKE vs PEPSI and how east and west(HP) flights served either Coke or Pepsi. If Im correct US now serves only Coke products(DP is a Dr Pepper guy.) Is it a coincidence? What do you think?

There is one problem in your logic. Diet Dr Pepper was not in the contract. He now needs to go buy it for his flights.

 

[PhxMama]

I did not know that but still where is the Coca Cola HQ's located? It would be hard to have the public opinion of CC when you have a huge Pepsi contract. Also harder to sway public opinion in Atl , many are employed by CC. Just a thought. Appreciate the info on diet DR Pepper.( I dont touch the stuff.)

 

[GSEMAN]

I remember the US thread COKE vs PEPSI and how east and west(HP) flights served either Coke or Pepsi. If Im correct US now serves only Coke products(DP is a Dr Pepper guy.) Is it a coincidence? What do you think?

Actually you have hit on a subject which would make a great different thread. It would probably be coincidence if your idea were true, however it would be interesting to find out if cocacola holds a major financial interest in U. There was another airline in the past which only served coke products.
It was Delta Airlines and Coke was a major stock holder and if I'm not mistaken someone frome Coke sat on the board. B)

 

[flymore3071]

knowledge or facts? well they do help