Delta group pans bid by US Airways
By Thomas Olson
TRIBUNE-REVIEW
Thursday, November 23, 2006
Now comes the Delta team on defense.
A group representing Delta Air Lines workers Wednesday forcefully defended their employer's resistance to US Airways' hostile $8.7 billion bid for Delta. With a rallying cry of "Keep Delta My Delta!" they are backing management's aim for the company to exit bankruptcy by itself.
The so-called Delta Board Council is the latest of several parties to take a stance on US Airways' surprise bid for the Atlanta-based carrier.
Other groups include a group of Delta creditors and the head of the Delta pilot's union.
Delta declared Chapter 11 bankruptcy in September 2005, just as US Airways was about to exit bankruptcy and merge with America West Airlines. Delta owes creditors about $16 billion.
"This campaign is indicative of the feelings of all 51,000 Delta employees," said Beth Graham, a Delta council representative in Atlanta. "We do not wish to be associated with US Airways."
The grass-roots group has already given away 25,000 big red buttons reading, "Keep Delta My Delta!" and have ordered 50,000 more, she said.
"When you have someone coming at you, you do all kinds of things," said Graham, who has been a Delta flight attendant for 21 years. She also said workers' $900 million in concessions since mid-2005 led to Delta's second-quarter profit, its first black ink in five years.
Coming at Delta is Doug Parker, the CEO of US Airways who announced the unwanted bid to acquire the nation's third-largest carrier on Nov. 15. The half-cash, half-stock offer presumes US Airways could find about $1.65 billion a year in synergies, or expense reductions plus new revenue. Bankruptcy law allows filers to terminate labor and other contracts, as well as aircraft and other leases.
Parker acknowledged the Delta buttons but insisted his bid is meant to build "the country's largest and most financially sound airline," he said in a letter to US Airways workers yesterday. Parker said too many airline business plans are geared for survival over just the next three years.
"This team is interested in building an airline that builds 20- and 30-year careers, and that desire extends to the employees of both US Airways and Delta," Parker said.
Some Delta creditors, who will be the ones to vote on management's reorganization plan, are lining up on US Airways' side. An ad hoc committee of bondholders voiced support of the offer during conference calls on Tuesday, the Wall Street Journal reported. The lawyer representing the committee could not be reached yesterday.
Led by CEO Gerald Grinstein, Delta management is finalizing a reorganization plan to exit bankruptcy as a stronger carrier that remains independent. Management hopes to submit the plan to the bankruptcy court and to Delta creditors before year-end.
But US Airways' gambit won't fly, Delta pilot Lee Moak said. He is chairman of the Delta unit of the Air Line Pilots Association, which has been analyzing the offer.
"I am skeptical that many of these synergies are anywhere near as attractive as US Airways management would like Wall Street and our creditors to believe," Moak wrote in a letter late Tuesday to fellow Delta pilots.
US Airways' merger proposal "faces many obstacles," Moak wrote, and seems to "lack any substantial benefit for Delta, its employees, our communities or our customers." He also cited "substantial antitrust scrutiny" likely to come from the two carrier's overlapping routes in the eastern U.S. and the fact that US Airways needs to finish integrating its systems and contracts with America West's.
"Should this merger be as misguided and as poor an idea as I currently believe it to be, then I will deploy very available resource to stop it," Moak said.
By Thomas Olson
TRIBUNE-REVIEW
Thursday, November 23, 2006
Now comes the Delta team on defense.
A group representing Delta Air Lines workers Wednesday forcefully defended their employer's resistance to US Airways' hostile $8.7 billion bid for Delta. With a rallying cry of "Keep Delta My Delta!" they are backing management's aim for the company to exit bankruptcy by itself.
The so-called Delta Board Council is the latest of several parties to take a stance on US Airways' surprise bid for the Atlanta-based carrier.
Other groups include a group of Delta creditors and the head of the Delta pilot's union.
Delta declared Chapter 11 bankruptcy in September 2005, just as US Airways was about to exit bankruptcy and merge with America West Airlines. Delta owes creditors about $16 billion.
"This campaign is indicative of the feelings of all 51,000 Delta employees," said Beth Graham, a Delta council representative in Atlanta. "We do not wish to be associated with US Airways."
The grass-roots group has already given away 25,000 big red buttons reading, "Keep Delta My Delta!" and have ordered 50,000 more, she said.
"When you have someone coming at you, you do all kinds of things," said Graham, who has been a Delta flight attendant for 21 years. She also said workers' $900 million in concessions since mid-2005 led to Delta's second-quarter profit, its first black ink in five years.
Coming at Delta is Doug Parker, the CEO of US Airways who announced the unwanted bid to acquire the nation's third-largest carrier on Nov. 15. The half-cash, half-stock offer presumes US Airways could find about $1.65 billion a year in synergies, or expense reductions plus new revenue. Bankruptcy law allows filers to terminate labor and other contracts, as well as aircraft and other leases.
Parker acknowledged the Delta buttons but insisted his bid is meant to build "the country's largest and most financially sound airline," he said in a letter to US Airways workers yesterday. Parker said too many airline business plans are geared for survival over just the next three years.
"This team is interested in building an airline that builds 20- and 30-year careers, and that desire extends to the employees of both US Airways and Delta," Parker said.
Some Delta creditors, who will be the ones to vote on management's reorganization plan, are lining up on US Airways' side. An ad hoc committee of bondholders voiced support of the offer during conference calls on Tuesday, the Wall Street Journal reported. The lawyer representing the committee could not be reached yesterday.
Led by CEO Gerald Grinstein, Delta management is finalizing a reorganization plan to exit bankruptcy as a stronger carrier that remains independent. Management hopes to submit the plan to the bankruptcy court and to Delta creditors before year-end.
But US Airways' gambit won't fly, Delta pilot Lee Moak said. He is chairman of the Delta unit of the Air Line Pilots Association, which has been analyzing the offer.
"I am skeptical that many of these synergies are anywhere near as attractive as US Airways management would like Wall Street and our creditors to believe," Moak wrote in a letter late Tuesday to fellow Delta pilots.
US Airways' merger proposal "faces many obstacles," Moak wrote, and seems to "lack any substantial benefit for Delta, its employees, our communities or our customers." He also cited "substantial antitrust scrutiny" likely to come from the two carrier's overlapping routes in the eastern U.S. and the fact that US Airways needs to finish integrating its systems and contracts with America West's.
"Should this merger be as misguided and as poor an idea as I currently believe it to be, then I will deploy very available resource to stop it," Moak said.
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