Hedge Fund Pardus Pushes
For Delta-United Merger
By SUSAN CAREY
November 14, 2007 11:29 a.m.
A hedge fund with stakes in Delta Air Lines Inc. and United Airlines parent UAL Corp. sent a letter to Delta management Tuesday renewing its calls for airline consolidation and specifically advocating a merger of Delta and United.
In the letter, Pardus Capital Management LP, which holds 7 million Delta shares and 5.6 million UAL shares, said it believes "it is imperative" that Delta "enter into a merger transaction with another carrier given the rapid rise in fuel prices and the increased risk to the business as a stand alone entity." Pardus, which noted that the letter was a followup to a Sept. 7 missive to Delta, said it has consulted industry experts including airline consulting firm SH&E and Gordon Bethune, former chief of Continental Airlines Inc.
With their input, Pardus studied potential combinations of Delta with United, Northwest Airlines Corp. and Continental, according to the letter, signed by Karim Samii, Pardus president, and Shane Larson, principal. "Pardus believes the most attractive and practical combination would be a Delta and United Airlines combination," the letter said, because that pairing would produce $585 million in synergies achieve more network breadth than the other combinations.
Story
For Delta-United Merger
By SUSAN CAREY
November 14, 2007 11:29 a.m.
A hedge fund with stakes in Delta Air Lines Inc. and United Airlines parent UAL Corp. sent a letter to Delta management Tuesday renewing its calls for airline consolidation and specifically advocating a merger of Delta and United.
In the letter, Pardus Capital Management LP, which holds 7 million Delta shares and 5.6 million UAL shares, said it believes "it is imperative" that Delta "enter into a merger transaction with another carrier given the rapid rise in fuel prices and the increased risk to the business as a stand alone entity." Pardus, which noted that the letter was a followup to a Sept. 7 missive to Delta, said it has consulted industry experts including airline consulting firm SH&E and Gordon Bethune, former chief of Continental Airlines Inc.
With their input, Pardus studied potential combinations of Delta with United, Northwest Airlines Corp. and Continental, according to the letter, signed by Karim Samii, Pardus president, and Shane Larson, principal. "Pardus believes the most attractive and practical combination would be a Delta and United Airlines combination," the letter said, because that pairing would produce $585 million in synergies achieve more network breadth than the other combinations.
Story