Delta Rejects US Offer

[ngneer]

Press Release Source: Delta Air Lines, Inc.


Delta Says US Airways Proposal Inferior in Value, Structurally Flawed and Cannot be Executed as Claimed
Tuesday December 19, 7:13 am ET


ATLANTA, Dec. 19, 2006 (PRIME NEWSWIRE) -- Delta Air Lines (``Delta'') (Other OTCALRQ.PK - News) today outlined key reasons why its Board of Directors rejected the unsolicited merger proposal made by US Airways on November 15, 2006 (the ``US Airways proposal'') and concluded that the Company's standalone Plan of Reorganization (the ``Plan'') will provide creditors with superior value as well as a faster recovery and much greater certainty of execution.
After a thorough analysis, the Board concluded that the US Airways proposal of $8.4 billion will result in substantially inferior value for creditors compared with Delta's standalone Plan, which is estimated by Delta's financial adviser, The Blackstone Group, to have a consolidated equity value for the Company of approximately $9.4 billion to $12.0 billion. The Plan is discussed in a separate announcement issued today.

Further, the Board determined that the US Airways proposal is structurally flawed, because it:



* Has an unacceptably high risk of not achieving antitrust clearance
because the US Airways proposal would harm consumers and
communities;

* Has overwhelming labor issues precluding attainment of claimed
synergies;

* Depends on achieving "synergies" that are premised on faulty
economic assumptions;

* Saddles the company with a precariously high debt load;

* Would reverse Delta's progress and erode the value of the Delta
brand; and

* Would expose Delta to merger-related risks. US Airways continues to
experience significant integration problems and has not completed
its prior, much smaller merger with America West; it is not equipped
to simultaneously integrate a substantially larger company.

Link to full press release

 

[luv2fly]

Mr. Ralphcramden's words.

In his last communicade, Mr. ralphcramden revealed exclusively that a rift has developed within the DALRQ board. Tonight, Mr. ralphcramden can state that several members of the board have taken a firm position with Mr. Gerald Grinstein that the LCC proposal deserves full consideration, up to and including an agreement allowing LCC to conduct due dilgence in the matter.

What happened to your "rift" Ralphy? It appears that your conspiracy theory holds no water once again.

 

[Baja4U]

Mr. Ralphcramden's words.
What happened to your "rift" Ralphy? It appears that your conspiracy theory holds no water once again.

Way to go DELTA!!!!!Don't let the LCC cancer get ya!!

 

[WorldTraveler]

Here are my favorite words:

STRUCTURALLY FLAWED

“dis-synergiesâ€￾

extremely high percentage of overlapping routes and hubs

faulty economic assumptions

precariously high debt load

significant integration problems - 8 out of 9 labor agreements being negotiated to cover the work groups of US Airways and America West remain unsettled

service has suffered across the merged US Airways

Read 'em and weep, Tempe

 

[N924PS]

Just because those words have been spoken doesn't mean the USAirways plan is dead. Also, it doesn't mean that Delta's stand alone plan will be successful.

You know, most USAirways employees I have talked to could care less if they merge with Delta Air Lines. And especially don't want to take the "Delta" name if the merger would somehow come to fruition. After all the sacrifices the good employees have made over the years, there is some pride in keeping the name "USAirways" in the air.

After all is said and done it's still amazing that the airline that Delta management counted on to fail as part of it's own business plan came back to haunt them, and will continue to be a strong competitor even if a merger doesn't happen.

 

[Walmartgreeter]

"significant integration problems - 8 out of 9 labor agreements being negotiated to cover the work groups of US Airways and America West remain unsettled"

Parker and company seem to think they can continue to push labor issues aside as they clean up on money deals. Dealing with labor is a big part of actually "running an airline." If they cannot do it at US Airways, what makes anyone think they can run the New Delta!?

 

[NYCDelta]

Just because those words have been spoken doesn't mean the USAirways plan is dead. Also, it doesn't mean that Delta's stand alone plan will be successful.

You know, most USAirways employees I have talked to could care less if they merge with Delta Air Lines. And especially don't want to take the "Delta" name if the merger would somehow come to fruition. After all the sacrifices the good employees have made over the years, there is some pride in keeping the name "USAirways" in the air.
After all is said and done it's still amazing that the airline that Delta management counted on to fail as part of it's own business plan came back to haunt them, and will continue to be a strong competitor even if a merger doesn't happen.

We feel the exact same way at Delta.

 

[crusher]

I don't think that DL's rejection of the offer was unexpected , however it is untimately not their (BOD) decision when it all comes down to it. The final decision will come from the creditors and the BK judge. It is what they want that will drive this up or down. The BOD will present their case to the judge and creditors for their consideration but they will be the ones making the final decision. I still believe that DP will ultimately turn his sights to NWA whose routes structure and fleet are a better match for US.

 

[tokerboy]

"significant integration problems - 8 out of 9 labor agreements being negotiated to cover the work groups of US Airways and America West remain unsettled"

Parker and company seem to think they can continue to push labor issues aside as they clean up on money deals. Dealing with labor is a big part of actually "running an airline." If they cannot do it at US Airways, what makes anyone think they can run the New Delta!?

Most of the mechs here in the west want the merger for the simple reason of we are impressed with the pride of the non-union Delta techs. We have always believed that the whole IAM thing is a big smelly turd. We definately would stand with any Delta vote to rid ouselves of the IAM albatross that was forcefully hung around our necks!

 

[757inthebarrel]

You know, most USAirways employees I have talked to could care less if they merge with Delta Air Lines. And especially don't want to take the "Delta" name if the merger would somehow come to fruition. After all the sacrifices the good employees have made over the years, there is some pride in keeping the name "USAirways" in the air.

After all is said and done it's still amazing that the airline that Delta management counted on to fail as part of it's own business plan came back to haunt them, and will continue to be a strong competitor even if a merger doesn't happen.

Most US employees that I've talked with don't want it either, for many of the same reasons we at DL don't. It's been years of uncertainty and it's finally starting to stabilize. This plan would doom us both to many more years of stress and uncertainty. For DL employees it would extend the BK and load the company with debt.

Your right, DL management spent too long thinking US was going away and delaying the steps they needed to take to save the company. I bet they would admit that over beers.

I think the driving factor in this deal being rejected will be the delayed payout for the creditors. The takeover will greatly complicate and extend the BK. More creditors will be added to the pool as leases are rejected and synergies created. The US offer will have more cash but the payout may not come for a year or more later. Who knows what LCC's stock price will be then.