I do not know what was said at this event but this is from the floor of the House.
Comments from Georgia's congressional delegation, December 7, 2006
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December 8, 2006
Mr. LEWIS of Georgia. Madam Speaker, joining me tonight are Mr. Scott and Mr. Bishop from Georgia.
Madam Speaker, I rise tonight to tell you about a bad deal, a very bad deal. You may have read about the recent unwanted, unsolicited and unnecessary bid from U.S. Airways to take over a strong, proud, Georgia company named Delta Airlines .
But Americans have learned the hard way that bigger is not always better, and in this case, Delta's takeover by U.S. Airways will have a devastating impact on the people of Atlanta, on the east coast of this country, and it will rob the American travelers of the economic advantages that competition creates.
Mr. Speaker, today I represent thousands of Delta employees all over Georgia, hundreds of Delta pilots, and the executive leadership of that organization. Delta employees and its executive are working through some difficult problems right now as they reshape the company, but when it comes to this merger, they speak with one strong and mighty voice.
Management and employees agree on this. None of them are for this deal. I think that speaks volumes, Madam Speaker. It demonstrates how deeply they believe this takeover will impair the quality of airline transportation in our country.
You may have heard that Delta had run into some problems and was going through bankruptcy proceedings, but it is about to emerge from this bankruptcy a stronger, better airline, with a renewed commitment to serve the American people, American travelers and world travelers.
Delta had problems but it was not a failing company. They have used the hardship of bankruptcy to make tremendous progress. In spite of its challenges, it has created 70 new international destinations. It offers service to all 50 States. Employee morale has improved. Pensions for 90,000 employees and retirees were saved, and 2,500 pilots, machinists and other employees have been called back to work.
It is because of the sacrifice of Delta employees and executives to make good on its commitments to its creditors that it became a prime target for this hostile merger. It is because Delta was able to win the uphill battle of bankruptcy and is poised to emerge transformed that U.S. Airways want to take it over against its will. That is not right, that is not fair, and that is not just.
This is not a case of the survival of the fittest. U.S. Airways is in trouble. It has already gone through two bankruptcies and cannot seem to bring its merger with America West to a close.
In 2004, U.S. Airways was on death's doorstep. It had no choice but to merge with America West. It would have had to liquidate all its assets if it had not merged with another company, but 2 years later, the integration of U.S. Airways and America West is still not complete. The majority of its labor groups are still working under separate contracts. It still has two IT systems. U.S. Airways has not even repainted all of its aircraft.
Madam Speaker, even though U.S. Airways cannot seem to manage its own merger, it is hoping and praying that it can take advantage of the hard work and tough sacrifices the good people of Delta have already made so that it can survive. This is not a win-win situation. It is a win for U.S. Airways and an incredible risk for Delta Airlines and for all of its customers.
It is a risk for the people of Atlanta, a risk for
Hartsfeld-Jackson Airport, the largest commercial airport in the world. It is a risk for the State of Georgia and thousands of American citizens.
At this time, Madam Speaker, I want to yield to my colleague and friend from the State of Georgia (Mr. Scott).
Mr. SCOTT of Georgia. Madam Speaker, I thank very much my colleague Mr. Lewis.
This is indeed an extraordinary moment in the history of this country and history of American business. Let us see if we cannot set the stage properly so we understand exactly what is going on.
As my colleague Mr. Lewis has stated and given history of Delta Airlines' brilliant and hard fought effort to come out of bankruptcy, this is a great American story. It is perhaps one of the greatest business recovery stories in American history.
Delta Airlines was at the bottom, but that company came together. It made the sacrifices. Its pilots' union gave and gave. Its employees gave back raises. They combined their efforts. That company, under brilliant management and leadership, brought itself together.
We owe it to Delta to have their bankruptcy plan now go into effect, and they have a plan to come out of bankruptcy, which they will have and they will come out of bankruptcy within the next 6 months. Do we not owe it to Delta to give them that opportunity to make it work?
Meanwhile, lurching on the sidelines, almost like a vulture, is U.S. Airways. Let me take a moment to describe U.S. Airways at this point. Here is a company that is just coming out of bankruptcy itself, a company that has just gone through a merger, that is now problematic, a company that has a merger in which it is now dealing with two sets of pilots' unions, two sets of flight attendants' unions, two reservation systems and two scheduling systems. How in the world can we, in effect, for a creditor who has an indebtedness with Delta feel that that investment can best be met by investing in a company, an airline company that is beset with a ton of labor problems?
I want to deal with the other issue. Not only is it bad for the creditors, it is bad in terms of our own antitrust practices. In a previous case in which there was a United Airlines merger, the Justice Department's antitrust division ruled that that could not merge, and they did not nearly have the overlapping that this does.
So now we have a case here that with Delta in bankruptcy, even if this merger does proceed to a point, then it goes into bankruptcy, then the antitrust division of the Justice Department must rule.
That is why it is important for us in Congress to make this bold statement and urge the Justice Department and urge that we have hearings and do everything we can to stop this merger from going through on the grounds that it is anti-competitiveness, it is anti-consumer and it is anti-American for this important reason.
Another thing about U.S. Airways, they buy their airplanes from foreign governments, whereas Delta buys theirs from American governments.
Mr. LEWIS of Georgia. Mr. Scott should know we have two more BISHOPs waiting to speak. We have BISHOP of Georgia and BISHOP of Utah, and they both live in cities that are served by Delta . BISHOP of Georgia from Albany, Georgia, and BISHOP of Utah in Salt Lake City.
Madam Speaker, I now yield to Mr. BISHOP, my colleague from Georgia.
Mr. BISHOP of Georgia. Madam Speaker, I thank my colleague for yielding.
I rise tonight to discuss Delta Airline's tremendous progress since it entered bankruptcy in September 2005 toward its long-planned goal toward emerging in the first part of next year as a financially strong, stand-alone, independent airline.
This is a very positive story that has involved difficult decisions by Delta's management, sacrifices from its employees and strong support from its creditors, from the home State of Georgia and other communities it serves.
This is also an important story to tell tonight because U.S. Airways' unsolicited merger proposal would jeopardize the progress and saddle Delta with a huge debt that would put it at a competitive disadvantage.
On November 15, when U.S. Airways went public with this unsolicited merger proposal, Delta's CEO Gerald Grinstein wrote to Delta's 45,000 employees and said, Delta people have participated in the hard work and tough choices driving our company's already remarkable restructuring progress. I know you care deeply about what this means for our airline.
Less than a week later, Mr. Grinstein wrote again to Delta's employees to share how the outpouring of support for Delta's future as a profitable, strong, stand-alone airline and for you, the people who have been fighting hard to reach that goal, has been overwhelming.
So what is the story behind this remarkable restructuring progress since Delta entered bankruptcy in September 2005? In short, Delta has reduced costs, increased revenue, improved customer service, launched new domestic and international air services and achieved tangible progress on other major fronts.
As Business Week recently put it, Delta's senior management has worked around-the-clock renegotiating thousands of contracts, bucking up demoralized employees, imploring bankers to provide financing and wrangling with creditors to keep them from picking all the meat off Delta's bones.
To give just a few examples of Delta's tremendous progress over the last year, Delta has overhauled its vast domestic and international network, shifting as much as 20 percent of its domestic capacity and its largest aircraft to international service, all while expanding to all 50 States and serving 70 new international cities.
[Time: 23:15]
Delta recently announced the recall in the coming months of hundreds of furloughed employees, pilots, flight attendants, mechanics, and others. Most recently, Delta announced that it will recall another 200 pilots beyond the 130 pilots already recalled this year. Similarly, Delta recently brought back 1,250 flight attendants and 900 mechanics and maintenance workers. This brings to nearly 2,500 the number of employees recalled in just the recent months.
This week, in a move critical to its ability to emerge from bankruptcy, Delta agreed with the Pension Benefit Guaranty Corporation to terminate Delta's pension plan for its pilots. Retired Delta pilots will receive more than $800 million in allowed claims. A group representing most of Delta's retired pilots agreed not to fight this agreement. Further, and perhaps of greatest significance, at the time of this announcement Delta also reconfirmed that it will preserve its non-pilot retirement plan for 90,000 active and retired ground employees and flight attendants.
Based on this tremendous progress, Delta plans to file a plan of reorganization with the bankruptcy court in the coming weeks, and expects to emerge as a strong, competitive, stand-alone airline during the first part of next year. Such a result will be good for competition, good for the flying public in Georgia and throughout the U.S., and good for Delta employees, for their customers, and for their creditors.
In contrast, Mr. Speaker, US Airways' proposal would be bad for competition because of the monopoly it would create, bad for the flying public in Georgia and throughout the U.S. because of its potential rate increases, and terrible for Delta's employees, customers, and creditors because of the jobs that would be lost.
In short, US Airways' proposal would jeopardize all that Delta , with strong support from its employees, creditors, and local communities and others, has worked towards for more than a year now. We sincerely hope that it will be soundly rejected.
Mr. SCOTT of Georgia. If the gentleman would yield for a moment, you hit on a very good point. But not only in Georgia is this significant, but this is a national issue. And we have our distinguished gentleman, Mr. Bishop from Utah, who will tell how this impacts the Nation as a whole.
Mr. BISHOP of Utah. I appreciate yielding from the three distinguished gentlemen from Georgia, including my namesake who has preceded me here as well as on the voting list every time we look up there on the board.
Indeed, Delta has an impact in the State of Utah as well. Delta and its feeder services have about 7,000 employees; they fly 350 flights out of Salt Lake City every day; they have added 30 nonstop flights since their recovery process is going through. It is significant not just to the consumers of Utah but the entire Intermountain West and indeed the West, as we now have a situation of competition that exists.
US Air had a hub in Las Vegas. It merged with America West with a hub in Phoenix. Delta has a hub in Salt Lake. That has a competitive overlap which gives the consumers of the West a choice in where their air travel goes and the kinds of air fare in a free market environment.
The southeast of this Nation has basically the same situation, with a hub already for US Air in Charlotte as well as Delta in Atlanta. Those are very close hubs geographically. It makes no sense, especially in the West, of a company, even though they have said they would, to maintain a hub in Las Vegas and Phoenix and Salt Lake at the same time. Business sense would say something would have to close. And if that happens, the net result is that there are fewer air travel opportunities and less competition for consumers in our area of the Nation. In fact, and the concern I also have is the merger between America West and US Air I am told resulted in four times as many fare increases in cities as it did in fare decreases. Now, I am also told that if this merger would go through, there would be near monopolistic competition, as some of you have already mentioned. Twenty-three States would be in a near monopoly situation; 71 cities, including those in the East, would have almost monopolistic situations, with 57 percent of the slots and 44 percent of the gates controlled by simply one company. That does not lead to better economic situations and better choices for our customers and our citizens.
If this was a willing merger, I would not be so upset, but it is not. Delta does not wish to enter into this arrangement. They wish to stay a stand-alone strong company, and I would suggest that is significantly and fundamentally a different situation than US Air was in when they merged with America West. It is a company that is in economic recovery and very close to being in full economic recovery. And as the gentleman has already said, this is a company where the morale of their employees is on the upswing.
As the gentleman from Georgia said, the employees are now coming back to this company as they have now turned the economic corner and can enter the market a strong, viable, stand-alone company, giving extra service, giving extra opportunity, giving consumer choice, which is for the betterment of all our constituents. Were this merger to go through, the service would be less in the Intermountain West, the choices would be less in the Intermountain West, and there would be significant harm done to my constituents.
So I agree with my good friends over here that this is not in the best interest of any of our areas; it is not in the best interests of the flying public of America. And I also oppose this forced hostile takeover.
Mr. LEWIS of Georgia. Let me thank our colleague from Utah for participating in this Special Order. As we said earlier, Madam Speaker, this is a bad deal, this is not a good deal, and that is why we are speaking out tonight and we will continue to speak out in opposition against this proposed takeover bid until this proposal is off the table. As it has been said, we want to secure Delta's future as a strong stand-alone company. That is in the best interests of the American people, not just to people in the Southeast, but to people in the West and all over this country.
It has used the hardship of bankruptcy to make tremendous progress. In spite of its challenges, it has created 70 new international destinations. It offers service to all 50 states. Employee morale has improved. Pensions for 90 thousand employees and retirees were saved. And 2,500 pilots, machinists and other employees have been called back to work. And it is because of the sacrifice of Delta employees and executives to make good on its commitments to its creditors that it became a prime target for this hostile merger. It's because Delta was able to win the uphill battle of bankruptcy and is poised to emerge transformed, that US Airways wants to take it over against its will.
This merger puts the very successful efforts of an independent corporation in jeopardy, ..... and it would leave this important transportation resource in the hands of an institution that cannot seem to get its own house in order.
This is not a case of the survival of the fittest. US Airways is in trouble. It has already gone through two bankruptcies, and cannot seem to bring its merger with America West to a close.
In 2004, US Airways was on death's door--it had no choice but to merge with America West. It would have had to liquidate all its assets if it had not merged with another company.
But two years later, the integration of US Airways and America West is still not complete. The majority of its labor groups are still working under separate contracts. It still has two I-T systems. US Airways hasn't even repainted all its aircraft!
Madam Speaker, even though US Airways can't seem to manage its own merger, it is hoping and praying that it can take advantage of the hard work and tough sacrifices the good people of Delta have already made so that it can survive. This is not a win-win situation. It is a win for US Airways and an incredible risk for Delta Airlines .
It is a risk for the people of Atlanta, a risk for Hartsfield-Jackson Airport, the largest commercial airport in the world. It is a risk for the State of Georgia and thousands of American citizens.
I think freedom in the marketplace is important, but when a bad business deal like this one threatens the economies of so many communities and the lives of so many citizens, I think Members of Congress must take notice. I think we must step in and take a long hard look at the economic impact of this kind of hostile takeover.
Why must the American people pay, why must the employees pay, why must travelers pay when American businesses can't get their house in order? This takeover attempt will hurt people in my district, it will damage the economy of the State of Georgia, and it will isolate communities in the Southeast that have come to depend upon air travel.
I think the Members who stand with us tonight would encourage the Justice Department and the House Judiciary Committee to review this takeover with a fine-toothed comb so we can make sure it serves the best interests of the American people.
Madam Speaker, US Airways keeps using the word ``synergy'' to describe this takeover. They want to make us feel comfortable about this deal. But, synergy is just a codeword for cutting flights and eliminating competition. And that means higher prices for American consumers.
``Synergy'' means two companies working together to accomplish what one couldn't, but that's not what will happen in this merger. Delta could emerge as an independent company from this bankruptcy in a few months.
That's something US Airways could not do when it was in trouble. An independent Delta will continue to serve hundreds of markets that US Airways will cut off or cut back. This is not synergy; it is exploitation. It is suffocation.
US Airways wants to take over the strength of a new Delta Airlines for its own benefit and raise fares so it can service the huge new debt it has to take on to pay for this merger. Meanwhile American travelers will have to pay more money for less service.
If this merger is not stopped, travelers in many American cities will only have one air carrier to choose from. If they want to fly, they will have to accept monopoly prices or stay home. And if the past is any indication, the ``New Delta ,'' as US Airways likes to call the results of this merger, will take full advantage of their monopoly.
Using the name, ``New Delta ,'' tells us something about which airline has real strength and a better reputation. Madam Speaker, it would seem that US Airways has more confidence in Delta , than they do in themselves.
If the proposed merger goes as planned, there may be some reduction in fares between some big cities, but service to hundreds of small cities throughout the northeast region of this country--cities that are just beginning to build a new economic life, cities like Asheville, Augusta, Birmingham, and Jacksonville. That's what US Airways did when it merged with America West. There's no reason to think they won't do it again.
Some analysts say that a merger with Delta would be good for the airline industry. But, US Airways will weigh Delta down with $23 billion in debt. $23 Billion Dollars!
Delta went into bankruptcy because it had $21 billion in debt. This plan will probably send the two airlines right back into bankruptcy!
The whole purpose of Delta's bankruptcy negotiations was to reconfigure its debt load. It was a tough struggle, but Delta did it. And now US Airways wants to pile up staggering amounts of new debt in hopes that Delta can bear some of the load, hoping that a more efficient organization can solve its problems. That's like asking an expert swimmer to save one that's drowning. It might work, but there's just as much chance that they will both die.
There is no economic model, except maybe voodoo economics, that resolves debt by adding debt. This extra burden would drain the competitiveness of the merged airline and threaten the survival of both companies.
This is not a promising plan for Delta's creditors who are taking a risk that a company which cannot complete its own merger, could somehow juggle a brand new merger at the same time. Practically and economically, it doesn't make sense. This is a win for US Airways and much too risky for Delta .
US Airways executives have said they will find so-called ``synergies'' if the merger occurs when Delta is still in bankruptcy. Don't be fooled--that just means that the Delta executives and employees who have already sacrificed a lot, will be asked to sacrifice even more. And it means that all the agreements they worked so hard to gain are up for grabs.
It means US Airways wants to make new agreements that benefit its stock price without regard to the harm it would cause Delta's employees, Delta's passengers, or Delta's creditors. That's right--Delta's creditors!
Gaining ``synergies'' while Delta is still in bankruptcy means rejecting contracts and leases Delta has already negotiated. That is a win for US Airways and a risk for Delta's creditors.
There are some who claim that airline mergers are unavoidable and good for the industry. In some instances, like the US Airways and America West case, end-to-end mergers of that sort can be good and competitive if they are executed well. Both of those airlines had very little overlapping service.
But Delta is in a very different position than US Airways was in when it received the America West offer. Delta is returning to profitability. It will emerge from bankruptcy in a few months. Delta's network is strong.
The morale of Delta's people is good. Delta's revenue picture is impressive. In no way does Delta need US Airways to survive. But US Airways needs Delta to survive. That's why this is a hostile takeover. It knows Delta would have no good reason to participate in this deal, except by force.
Madam Speaker, I am here today to raise the question: Will this merger really serve the best interests of the American people?
Will it benefit travelers and business people in small communities to fly at the will of a monopoly? Will the service cuts and hub closures benefit business and individual citizens in those cities? Most small communities that lose service will never again see a low-cost carrier come to town to save the day.
Just look at Georgia--there are no low cost carriers today in any cities other than Atlanta and Savannah.
Airlines won't take on those routes for the very reason that they haven't up to now. They don't believe in that kind of service. There are not enough passengers for them.
Delta is proposing to maintain those routes, and US Airways now has to compete with Delta to win in those markets. That competition helps keep fares down and provides choices a monopoly carrier will not offer.
And Madam Speaker, what about justice for Delta's employees? Delta's employees have sacrificed a lot to turn the company around.
They have been through lay offs, pay cuts, and uncertainty about the company's future and even their retirement benefits. They deserve to reap what they've sown. They have hung in there. They didn't give up in hard times. And this is the kind of nation that rewards hard work and sacrifice.
Delta employees should reap the benefits of their sacrifice. They don't deserve the risks of a US Airways takeover. They have been through the worry of losing their jobs and benefits. They have fought hard to win back their security. They don't deserve to lose the seniority they've worked so long to achieve.
And that's why--they don't want US Airways! They don't want to go back. They want to move forward with a free and independent Delta airlines .
Madam Speaker, I submit to you that the U.S. Government must look at this takeover bid and measure it against our nation's antitrust laws. We must begin a rigorous antitrust investigation by the Department of Justice. House and Senate Committees must also investigate this merger proposal thoroughly.
It is our duty, it is our obligation, it is our responsibility as Members of Congress to represent the best interests of our constituents and our nation, and to hold the feet of the responsible agencies of the Federal Government to the fire to make sure that their review is thorough, careful, and fair.
I am convinced that, if they look at this deal, they will find that it is more anti-competitive than the 2000 United-US Airways merger, which the Justice Department opposed. I am convinced that this deal is more anti-competitive than almost any other airline combination possible.
Over the years, Delta has been a significant economic engine, fueling the region's growth. It has helped to make Atlanta one of the world's most important international transportation centers. The potential loss of Atlanta as Delta's home would be a tragedy--a real blow to Atlanta, to the State of Georgia, and the people of the United States.
Madam Speaker, this is a bad deal. That is why we are speaking here tonight, and we will continue to speak in opposition to this takeover bid until it is off the table. We want to secure Delta's future as a strong, stand-alone company in the heart of Atlanta.
Madam Speaker, I yield to Mr. Scott.
Mr. SCOTT of Georgia. Madam Speaker, I think it is very important for us to make sure that we sum up these major points that we have made here this evening, and that is this: one, this planned hostile takeover, which hopefully we will arrest and stop in the next few days, is anti-consumer, it is anti-competitive; it is not in the best interests of the American traveling public, it is not in the best interests of the creditors to Delta , and it certainly violates, as the gentleman from Utah so eloquently stated point by point, it clearly violates the antitrust statutes of the Justice Department of this country.
So it is within the spirit of what is good and what is right about America, and let me say this to my colleagues and to you, Madam Speaker, that this country is grounded on justice. The American people are expecting justice. This is not just a case for Delta Airlines ; it is not just a case for the airline industry. This is a case for the American people, and they are looking at this Congress to provide leadership, keep the feet to the fire, and make sure that this hostile takeover does not take place in the form of any kind of merger, and that Delta Airlines is allowed to stand alone and earn the right that they deserve to come back full flushed and be the outstanding airline that we know that they are.
h34r: I-T done in March. Next topic.
