Merger

[totobird]

When the merger was first discussed oil was at $40 a barrel and Parker said that we could turn a profit at even $50 a barrel.
Now that oil has jumped to $70 and possibly hitting $80 could the investors in the merger pull back their money causing a domino affect and thus stopping the merger ?
Just a thought but it wouldn't surprise me if the investors are giving this a second look considering a return on their investment may take longer or not happen at all.

 

[Walmartgreeter]

When the merger was first discussed oil was at $40 a barrel and Parker said that we could turn a profit at even $50 a barrel.
Now that oil has jumped to $70 and possibly hitting $80 could the investors in the merger pull back their money causing a domino affect and thus stopping the merger ?
Just a thought but it wouldn't surprise me if the investors are giving this a second look considering a return on their investment may take longer or not happen at all.

[post="295402"][/post]​

My opinion is this terrible event might actually bring about reasonable pricing for airline travel. No more Walmart fares, no more $99 coast to coast. Not that my investing is any proof of future events. But don't be all gloom and doom, this could actually go either way. Best. Greeter.

 

[totobird]

Not to be all doom and gloom but I don't think higher fares are going to solve anything. Heck, people can't afford gas for their cars. Do you think they are going to be spending what little money is left out of their paychecks for vacations and airfare ?

 

[autofixer]

It may be cheaper to fly to a closer destination now (than driving) and certainly a distant destination.

 

[PBI2FLL]

<_< The only way I see airfares increasing substantially is if B6, WN or FL all announce significant increases to their fares. To be honest, I don't think that'll happen, but you can probably count on higher fuel surcharges being passed on to the public, that's a given.

 

[totobird]

Do you really think more people are going to be flying even if it is cheaper than driving ?
They still need a rental car plus gas, a hotel, spending money, food.
Most of their money will now be going into the gas tank and to pay for the high heating bills headed this way.
Just being a realist.
Vacations are one of the first things people cut out when they feel the pinch.

 

[BoeingBoy]

Back to the original question.....

There's this in the investment agreements:

"Absence of Changes. From the date of this Agreement through the Closing Date, there shall not have occurred any change, event, occurrence, condition or development that has or could reasonably be expected to have a material adverse effect on the financial condition, assets, liabilities, business or results of operations of the Company or West or that would prevent, materially delay or materially impair the ability of the Company, West or Investor to consummate the transactions contemplated by this Agreement. The Company’s financial and operational performance from the period from March 31, 2005 to the Closing Date shall not have deviated materially and adversely from the performance indicated in the Financial Plan."

Jim

 

[EricLv2Fish]

Southwest has hedges in place till after the new year. They are still buying a good portion of their fuel at levels when oil was 35 dollars a barrel. Unfortunately there are weak carriers on life support that don't have any fuel hedging in place. It's only a matter of time before the breath is completely taken out of them, and oil at or near 70 bucks a barrel will certainely speed their demise. Another reason this merger is good for both AWA and US Airways; the merger will buy time..2.5 billion dollars worth of time.... time enough for the weak to pass so the wounded can heal and get stronger. Any one still grumbling about this merger needs to wake up.

 

[EyeInTheSky]

Back to the original question.....

There's this in the investment agreements:

"Absence of Changes. From the date of this Agreement through the Closing Date, there shall not have occurred any change, event, occurrence, condition or development that has or could reasonably be expected to have a material adverse effect on the financial condition, assets, liabilities, business or results of operations of the Company or West or that would prevent, materially delay or materially impair the ability of the Company, West or Investor to consummate the transactions contemplated by this Agreement. The Company’s financial and operational performance from the period from March 31, 2005 to the Closing Date shall not have deviated materially and adversely from the performance indicated in the Financial Plan."

Jim

[post="295733"][/post]​

I didn't see a "Katrina Clause" in there BoeingBoy...did you? BTW, how the hey are you?

 

[BoeingBoy]

No, not anything specifically about Katrina or even hurricanes. But that "material adverse effect" can cover a lot of things.....

And I'm doing great, thanks. Flying the minimum possible, enjoying life, and moved up 4 or 5 spots in the last bid.

Hope you are too...

Jim

 

[hp_fa]

Back to the original question.....

There's this in the investment agreements:

"Absence of Changes. From the date of this Agreement through the Closing Date, there shall not have occurred any change, event, occurrence, condition or development that has or could reasonably be expected to have a material adverse effect on the financial condition, assets, liabilities, business or results of operations of the Company or West or that would prevent, materially delay or materially impair the ability of the Company, West or Investor to consummate the transactions contemplated by this Agreement. The Company’s financial and operational performance from the period from March 31, 2005 to the Closing Date shall not have deviated materially and adversely from the performance indicated in the Financial Plan."

Jim

[post="295733"][/post]​

That "out" clause is currently wider and deeper then the Grand Canyon. So, the question really is do the combined investors really want to gamble $1.5 billion on:

1) the price of oil dropping significantly and quickly;

2) airlines not filing for BK and staying afloat in BK longer then HP/US under the new BK laws that will be in effect after the merger is to close;

3) that people will still fly with the fares needing to go up to just pay for the fuel, let alone profits; and,

4) that labor integration issues aren not worse then anticipated.

If I was an investor I seriously would be looking for an exit and perhaps come back another day for another deal.

 

[EyeInTheSky]

That "out" clause is currently wider and deeper then the Grand Canyon. So, the question really is do the combined investors really want to gamble $1.5 billion on:

1) the price of oil dropping significantly and quickly;

2) airlines not filing for BK and staying afloat in BK longer then HP/US under the new BK laws that will be in effect after the merger is to close;

3) that people will still fly with the fares needing to go up to just pay for the fuel, let alone profits; and,

4) that labor integration issues aren not worse then anticipated.

If I was an investor I seriously would be looking for an exit and perhaps come back another day for another deal.

[post="295745"][/post]​

hp_fa, Doug Parker has put his balls on the dotted line on this one. I don't think he wants to walk away. I think he "gets" the bottom line of both companies combined synergies. If everyone keeps their wits about them then this has a big chance of being a good thing for all employees. Hey, he's YOUR CEO and he thinks this will work. If it doesn't work, I hate to say it but very few CEO's survive a failed merger attempt. The list of executive roadkill is long and distinguished in these matters.

 

[coolflyingfool]

Some times it is better to retreat and give up the battle that so later on you may come back and win the war. If oil hangs in the $65/barrel range, that is $15/barrel higher than DP said they could make money at. That would scare me from approving this merger right now, but maybe later. I don't think that now is a time to throw caution to the wind.

 

[SoftLanding]

Some times it is better to retreat and give up the battle that so later on you may come back and win the war.  If oil hangs in the $65/barrel range, that is $15/barrel higher than DP said they could make money at.  That would scare me from approving this merger right now, but maybe later.  I don't think that now is a time to throw caution to the wind.

[post="295807"][/post]​

Me thinks that this is the time to actually throw caution to the wind.

Plenty of oil out there, refined products are the problem, but give it some time...

Sell euphoria, buy blood in the streets...(Don't mean any disrespect to the residents of NO.)

 

[mwereplanes]

The combined entity will be able to handle the challenges of high oil much better than if each company were to try individually. Oil prices will not stop the merger from occuring.

IMO the merger will go through. The challenge is to see if Parker can quickly rid himself of the operational hurricane known as Crellin. I'm still trying to figure out the logic behind that astute move. Good luck to you all.

mr