No benefits of merger with Oil high

[North by Northwest]

Finally, somebody "gets it". Mergers do not offer any advantage in this turbulent period of high oil.

http://www.marketwatch.com/News/Story/Stor...o&dist=yhoo

 

[LukeAisleWalker]

Finally, somebody "gets it". Mergers do not offer any advantage in this turbulent period of high oil.

http://www.marketwatch.com/News/Story/Stor...o&dist=yhoo

Tell this guy:
"UBS Analyst: Delta, Northwest Merger Still Coming Soon"

http://www.btnonline.com/businesstravelnew...t_id=1003722611

 

[North by Northwest]

Tell this guy:
"UBS Analyst: Delta, Northwest Merger Still Coming Soon"

http://www.btnonline.com/businesstravelnew...t_id=1003722611

UBS Warburg.. I'm most certainly NOT surprised at their perspective "Crissey said investors—who have salivated at whiffs of a deal—are growing frustrated at perceptions of a lack of progress toward consolidation, as detailed in media reports."

This is the part that will kill the deal:

""Upon the announcement (not closing) of a merger, Northwest would effectively sacrifice its Golden Share over Continental, which currently prevents Continental from merging without Northwest's consent (under most reasonable circumstances). Therefore, Northwest needs to be certain that whatever deal it announces will close."

Crissey said that even if labor groups (I am assuming they are referring ONLY to pilots and NOT the other 26,000 NWA employees) throw their support behind Delta and Northwest, other forces could undo an agreement, including DOJ or political pressure. Still, Crissey said, "We believe the window for these deals to be announced is closing and that, given the upward move in fuel prices, labor may want to view the current proposal in a more favorable light."

Every other Union on the property stands AGAINST this. We have sacrifice far too much (for this balance sheet) to position this company then hand it to RAnderson for any number of reasons. We simply have a great deal to lose vs. gain.

We will lose the "Golden Share" (if the merger attempt fails, which I believe it will because of the enormous opposition at NW)
We will lose Continental to another alliance
We will lose the safe harbor of our balance sheet (earned on the backs of NW employees) by assuming tens of Billions in additional Delta debt.
We will lose one of the oldest names/history in World Aviation, simply because we have a far smaller debt ($3.6 Billion NOL-non operating loss from BK) carry over than Delta $9.1 Billion NOL WHICH MUST BE USED WITH IN TWO YEARS OF EXITING BK (which they will lose if Northwest is the surviving name) THAT is the REAL reason the "Delta" name has been chosen. That is why there is not a "Delta/Northwest" name. It HAS to be under "Delta" because of the money.
We will have sacrificed our future for what?
If Steenland / and that thing they call a NW BOD knows whats good for them, they will let this die quietly before it gets nasty. It will NOT pass the DOJ when you have an ENTIRE company (outside of 1/2 the pilots, and of course Steenland inc. ) 100% against it.

p.s. did I mention years of internal legal battles between a heavily unionized workforce and a company notorious for being vehemently ANTI-UNION?
A poisonous combination indeed.

 

[chucky]

Steenland doesn't seem to "get it" either:


Northwest's Steenland: Oil Prices May Force Airline Consolidation

 

[North by Northwest]

Chucky, his "various" reasons "change' by the week. He is of the type "if you tell it to them enough times, they will eventually BELIEVE it", although, he forgets that any and everything that comes out of his mouth NO ONE at NWA pays ANY ATTENTION to unless it is an announcement that he is LEAVING. (don't let the door knob hitcha!)

Notice how he, nor any of the others comment on "how" a large company (the size of the former two) will be any less affected by high oil.

It's the old "Fear monger" card.

We all know how bad oil is. We also know that NW can with stand these prices better alone than combined with tens of billions of additional debt.

Steenland's mouth is a mute point. The DOJ/Oberstar will have the last say.

 

[NewHampshire Black Bears]

What EVER is going to HAPPEN,..will Happen.

With that said, when Oil hits $200+, I only know of 3 carriers that will STILL be operating..NW/AA/WN !

 

[boxer]

What EVER is going to HAPPEN,..will Happen.

With that said, when Oil hits $200+, I only know of 3 carriers that will STILL be operating..NW/AA/WN !

Your reasoning for reaching this conclusion?

 

[FWAAA]

Your reasoning for reaching this conclusion?

With respect to AA, wonder if NH/BBs is thinking that AA still has the bankruptcy card to play? File Ch 11, whack employee pay some more, ditch the unsecured debt, ditch leases on the most inefficient aircraft, walk away from secured debt on inefficient aircraft (simply turn over the collateral to the lenders) and emerge with even lower expenses, enabling AA to survive on expensive oil.

 

[RobertD]

With respect to AA, wonder if NH/BBs is thinking that AA still has the bankruptcy card to play? File Ch 11, whack employee pay some more, ditch the unsecured debt, ditch leases on the most inefficient aircraft, walk away from secured debt on inefficient aircraft (simply turn over the collateral to the lenders) and emerge with even lower expenses, enabling AA to survive on expensive oil.

I'm not too sure about AA playing the chapter 11 card. Remember Delta and NW declared Chapter 11 JUST before the bankruptcy laws changed.

 

[chucky]

Your reasoning for reaching this conclusion?

<_< -------------he has none, just happens to be his 3 favorite airlines.

 

[North by Northwest]

<_< -------------he has none, just happens to be his 3 favorite airlines.

Well...I for one like Delta, United, AA, Cont., just not for the reasons used for this merger attempt (which NW does NOT need). They all have great strengths.

 

[FWAAA]

I'm not too sure about AA playing the chapter 11 card. Remember Delta and NW declared Chapter 11 JUST before the bankruptcy laws changed.

True, but the major changes to the law don't prevent airlines (or others) from ever filing Ch 11 again; they merely addressed some of the typical complaints about UAL's three year odyssey. Since it was inevitable that both DL and NW would have to restructure, they would have been beyond stupid to wait until after the effective date of the changes. So of course they filed while they could avail themselves of the more permissive old law. But that has no bearing on whether an airline could navigate Ch 11 under the new rules. An airline could certainly prepare a pre-packaged plan and avoid most of the law's changes.

That said, I'm not convinced that AA would file now that it's paid down billions of dollars of debt and its pension plans are now 96% funded (as of 12/31/07). All AA would gain would be the disposal of inefficient leased and encumbered aircraft, some unsecured debt (there's not a lot of it) and the ability to whack employee pay some more.

 

[chucky]

NHBB, here's my prediction:



DL + NW = Merge
CO + UA = Merge
AA = MERGE WITH LCC or FILES BANKRUPTCY

But like you said, what will be will be.

JMO

 

[RobertD]

That said, I'm not convinced that AA would file now that it's paid down billions of dollars of debt and its pension plans are now 96% funded (as of 12/31/07). All AA would gain would be the disposal of inefficient leased and encumbered aircraft, some unsecured debt (there's not a lot of it) and the ability to whack employee pay some more.

Um, you basically said AA has paid down their debt, funded their pension plans etc....
So they would enter into Chapter 11 why?
I don't think an Airline as healthy as this would qualify.
Of course stranger things have happened.

 

[brokenwrench]

What EVER is going to HAPPEN,..will Happen.

With that said, when Oil hits $200+, I only know of 3 carriers that will STILL be operating..NW/AA/WN !

For what it is worth Mike Linenberg of Merrill Lynch put together a chart with regard to airline profits and oil cost.

With oil for 2008 at an average of $90 bucks a barrel AMR is the only one of the top 6 to show a loss (204), DL is projected to make a profit of $60M, NW $154, CO $102 and US $79. At $105 a barrel average for 2008 AMR will lose $1.2 Billion, CO will lose $240, DL $419, NW $180, UAL $444 and US will be in the red $100 million.