USA320Pilot
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- May 18, 2003
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Creditor's Committee seek adviser on (US Airways') Delta takeover moves
- Thread starter USA320Pilot
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ClueByFour
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- Aug 20, 2002
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Bethune has no love for HP. Or US. Interesting choice.
Bethune runs airlines. He's not a "marble buyer and seller" like Parker and the Tempe crowd. Anyone that thinks LCC is profitable because of their operation is a fool. LCC is profitable because of massive employee givebacks on the East side.
I agree with BB. Bethune will fully explain why, from a labor and operational perspective, Parkers foolish reach will not work. IMHO the biggest factor is labor. One cannot run a service business with disgruntled employees where profit is made upon their backs rather than by a superbly run company that values and utilizes the most important asset it has.
Parker doesn't know how to do that. All he knows how to do is leverage a business utilizing low labor costs and other peoples money. Of course, he seems to be very good at that. Ergo, going after DAL while still in BK using the obvious advantages those laws allow. Just like he took advantage of U coming out of BK. Certainly nothing legally wrong with that. Imagine if he had the skill to utilize those advantages and combine them with a motivated and rewarded work force on his side. And then figured out how to run an ailine. Then he'd truly have something.
Parker will likely get something out of this grandstanding performance.
But it won't be DAL. Bethune will put the old Kabash on that in short order.
pilot
I agree with BB. Bethune will fully explain why, from a labor and operational perspective, Parkers foolish reach will not work. IMHO the biggest factor is labor. One cannot run a service business with disgruntled employees where profit is made upon their backs rather than by a superbly run company that values and utilizes the most important asset it has.
Parker doesn't know how to do that. All he knows how to do is leverage a business utilizing low labor costs and other peoples money. Of course, he seems to be very good at that. Ergo, going after DAL while still in BK using the obvious advantages those laws allow. Just like he took advantage of U coming out of BK. Certainly nothing legally wrong with that. Imagine if he had the skill to utilize those advantages and combine them with a motivated and rewarded work force on his side. And then figured out how to run an ailine. Then he'd truly have something.
Parker will likely get something out of this grandstanding performance.
But it won't be DAL. Bethune will put the old Kabash on that in short order.
pilot
CV580ETOPS
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- Nov 9, 2006
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Mr Eagle
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The unofficial committee of unsecured claim holders' comments come after a similar statement by Delta's court-approved official committee of unsecured creditors, and a day after US Airways dismissed the stand-alone plan as "unrealistic."
"(It) looks forward to analyzing carefully and discussing with Delta the proposed plan and the assumptions upon which it is based," the unofficial group's financial adviser, Jefferies & Co., said on its behalf. "It expects Delta to consider methodically, proactively and fairly strategic alternatives to its proposed stand-alone Chapter 11 plan."
Delta has repeatedly said it intends to emerge from bankruptcy as an independent carrier and hopes to get creditors to vote on its plan by February or March so that it can exit by spring of 2007.
Creditors holding at least two-thirds of the value of total impaired claims -- debt that will not be repaid in full -- must vote in the plan's favor for it to succeed. The bankruptcy court also needs to approve the plan. Delta assumes a total claim pool of about $15 billion.
The unofficial creditor group, which was formed after US Airways' November 15 bid, has grown to 17 members from nine and now represents more than $2.25 billion of unsecured claims against Delta, according to the statement.
The group is represented by the law firm Paul, Weiss, Rifkind, Wharton & Garrison LLP.
Copyright 2006 Reuters
"(It) looks forward to analyzing carefully and discussing with Delta the proposed plan and the assumptions upon which it is based," the unofficial group's financial adviser, Jefferies & Co., said on its behalf. "It expects Delta to consider methodically, proactively and fairly strategic alternatives to its proposed stand-alone Chapter 11 plan."
Delta has repeatedly said it intends to emerge from bankruptcy as an independent carrier and hopes to get creditors to vote on its plan by February or March so that it can exit by spring of 2007.
Creditors holding at least two-thirds of the value of total impaired claims -- debt that will not be repaid in full -- must vote in the plan's favor for it to succeed. The bankruptcy court also needs to approve the plan. Delta assumes a total claim pool of about $15 billion.
The unofficial creditor group, which was formed after US Airways' November 15 bid, has grown to 17 members from nine and now represents more than $2.25 billion of unsecured claims against Delta, according to the statement.
The group is represented by the law firm Paul, Weiss, Rifkind, Wharton & Garrison LLP.
Copyright 2006 Reuters
Man, this is some great reading. 
Look:
1. Bethune is being brought in by Boeing and the other major creditors to represent the interests of Boeing and the other major creditors, not Delta.
If they are taking the US Airways offer serious enough to have him look at it, then that means that they are taking a serious look at the proposal.
2. Airlines run just fine with disgruntled employees (as was pointed outbefore), US Airways has, so has NWA, UAL, and yes even Delta Airlines in recent times. To be honest, the service level of most US carriers sucks so bad, that it would be difficult for the average traveller to spot a "disgruntled" airline employee.
3. How exactly do you think DAL plans to make a profit after exiting bankruptcy, other than also utilizing low labor costs...? The only real difference between Parker's and Delta's plan, is that Parker wants to add more debt to a combinded operation, in return for controlling market share. That's it.
Why is Bethune being brought in...?
Because the creditors want to hear from an expert if the gamble of owning more market share would give the "New Delta" pricing power.
If after a huge wave of consolidation, the remaining players are not able to raise average ticket prices, then all that will have been accomplished is the addition of new debt. (Debt-laden airlines without pricing power make poor customers for Boeing and the rest of the Creditors).
THAT is the real question behind this whole idea. Will Parker's plan produce pricing power...? And the uncertaintity behind the answer is why I give this whole merger 50/50% chance of succeeding.
Any Yahoo can figure that adding (say NWA's routes) to your system will incur a certain cost vs. return. And most people can see the logic behind that kind of M + A activity.
But the reason the Creditors need Bethune's advice is that they need his expertise in market dynamics and pricing to decide if THIS kind of meger would be worth their investment.
It doesn't have a thing to do with how Bethune "feels" about HP or U or DAL, nor does it really center on the employees that work for these carriers. Like I said before, it all comes down to the money issue...
So please stop trying to kid yourself otherwise.
Look:
1. Bethune is being brought in by Boeing and the other major creditors to represent the interests of Boeing and the other major creditors, not Delta.
If they are taking the US Airways offer serious enough to have him look at it, then that means that they are taking a serious look at the proposal.
2. Airlines run just fine with disgruntled employees (as was pointed outbefore), US Airways has, so has NWA, UAL, and yes even Delta Airlines in recent times. To be honest, the service level of most US carriers sucks so bad, that it would be difficult for the average traveller to spot a "disgruntled" airline employee.
3. How exactly do you think DAL plans to make a profit after exiting bankruptcy, other than also utilizing low labor costs...? The only real difference between Parker's and Delta's plan, is that Parker wants to add more debt to a combinded operation, in return for controlling market share. That's it.
Why is Bethune being brought in...?
Because the creditors want to hear from an expert if the gamble of owning more market share would give the "New Delta" pricing power.
If after a huge wave of consolidation, the remaining players are not able to raise average ticket prices, then all that will have been accomplished is the addition of new debt. (Debt-laden airlines without pricing power make poor customers for Boeing and the rest of the Creditors).
THAT is the real question behind this whole idea. Will Parker's plan produce pricing power...? And the uncertaintity behind the answer is why I give this whole merger 50/50% chance of succeeding.
Any Yahoo can figure that adding (say NWA's routes) to your system will incur a certain cost vs. return. And most people can see the logic behind that kind of M + A activity.
But the reason the Creditors need Bethune's advice is that they need his expertise in market dynamics and pricing to decide if THIS kind of meger would be worth their investment.
It doesn't have a thing to do with how Bethune "feels" about HP or U or DAL, nor does it really center on the employees that work for these carriers. Like I said before, it all comes down to the money issue...
So please stop trying to kid yourself otherwise.
longing4piedmont
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- May 19, 2003
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So? They have no more say than I do in what happens. What is you point?
deltawatch
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- Aug 20, 2002
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Rico once again you've got it all right ..... Curious, how long have you been hanging around this industry?
Depends upon the day of the week...
Either way too long, or not long enough.
But then again, accounting would probably have been a lot more boring. I doubt the USACCOUNTING.COM forums would be nearly as entertaining.
deltawatch
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- Aug 20, 2002
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Rico this backs up what you said ...... NewsWeek.com Dec 22 2006
Bethune Quote
""You really want to be the guy who sold Delta?" says Gordon Bethune, the retired chairman and CEO of Continental Airlines (CAL). Still, he gives the deal "60-40" odds of happening because Delta's creditor committees will determine what's likely to return the most financial value. "They do math real well. And the judge is likely to go along with the mathematics," Bethune says.""
Bethune Quote
""You really want to be the guy who sold Delta?" says Gordon Bethune, the retired chairman and CEO of Continental Airlines (CAL). Still, he gives the deal "60-40" odds of happening because Delta's creditor committees will determine what's likely to return the most financial value. "They do math real well. And the judge is likely to go along with the mathematics," Bethune says.""
Hmm, he gives better odds than I do even...
I missed that he was the adviser for the unsecured creditors, not the secured ones like Boeing. But if he weighs in, I am damn sure that the main creditors will listen to what he has to say.
Flufdriver
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- Aug 20, 2002
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IMHO, Gordon is a shoe in to be invited over to Gerry's house over the holidays for a little Christmas cheer!! (wink)
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