Hedge Fund Seeks Delta Merger With United
By JEFF BAILEY
Published: November 14, 2007
Pardus Capital Management, a New York hedge fund, has sent a letter to management of Delta Air Lines asking it to seek a stock-for-stock merger with UAL, the parent of United Airlines, in a deal that would create the world’s largest airline and could prompt sweeping consolidation in the airline industry.
Gordon M. Bethune, former chief executive officer of Continental Airlines, is working with Pardus, the hedge fund said in the letter. And consultants have identified $585 million in savings the two big airlines — currently Nos. 2 and 3 in the country — could realize by combining operations.
Pardus said in its letter, sent Tuesday night, that it owns seven million Delta shares, about a 2.6 percent stake.
The proposal comes one year after a bid for Delta by US Airways that ultimately failed. That offer raised hopes among investors that airlines, long reluctant to merge because of expected labor problems and other factors, would finally consolidate and make the industry more efficient.
The US Airways bid also, however, attracted opposition from Delta workers, who feared widespread job losses, and from some who expected that the deal would reduce air service in some cities both carriers served
Story
By JEFF BAILEY
Published: November 14, 2007
Pardus Capital Management, a New York hedge fund, has sent a letter to management of Delta Air Lines asking it to seek a stock-for-stock merger with UAL, the parent of United Airlines, in a deal that would create the world’s largest airline and could prompt sweeping consolidation in the airline industry.
Gordon M. Bethune, former chief executive officer of Continental Airlines, is working with Pardus, the hedge fund said in the letter. And consultants have identified $585 million in savings the two big airlines — currently Nos. 2 and 3 in the country — could realize by combining operations.
Pardus said in its letter, sent Tuesday night, that it owns seven million Delta shares, about a 2.6 percent stake.
The proposal comes one year after a bid for Delta by US Airways that ultimately failed. That offer raised hopes among investors that airlines, long reluctant to merge because of expected labor problems and other factors, would finally consolidate and make the industry more efficient.
The US Airways bid also, however, attracted opposition from Delta workers, who feared widespread job losses, and from some who expected that the deal would reduce air service in some cities both carriers served
Story
AL - News) CEO Richard Anderson today issued the following statement in response to correspondence from Pardus Capital Management LP advocating that Delta lead industry consolidation:
