US Airways – Delta Merger Update

[USA320Pilot]

US Airways – Delta Merger Update: December 15, 2006

Who’s saying what about the US Airways - Delta merger

“In our view, one of the reasons US Airways’ offer to Delta is interesting (aside from potential synergy and less capacity) is that the deal provides investors in listed equities access to where the real money is made in airlines – the restructuring process.†-- Bear Stearns Analyst Report, Dec. 1

We like the news because Delta is in some ways the weakest of the carriers right now, and US Air has considerably strengthened.†- Ronald Fiedling, SVP, Rochester Investment Team at OppenheimerFunds, Reuters, Nov. 15

If mergers "remove the overcapacity of seats from the sky and make the airlines a more competitive business, it would be good for our membership." - Stephen Gordon, president of the ground workers union at Northwest Airlines, Minneapolis Star Tribune, Nov. 16

“This is a pretty lucrative offer for unsecured debtors.†- William Warlick, industry expert, Fitch Ratings, Ltd., The Philadelphia Inquirer, Nov. 16

“As far as US Airways is concerned, I think that obviously Doug Parker and Scott Kirby have shown that they can do this with America West. They have done a great job for the shareholders of US Airways already, and I think that this deal would be greatly accretive, and would be good for not only US Airways and Delta, but for the entire industry in terms of capacity reduction.†- Jim Corridore, airline analyst, Standard & Poor’s, CNBC’s Morning Call, Nov. 15

“When the industry gets into trouble, capacity never comes out, so losses become worse and worse. The thing I like about this deal is [that] Doug Parker says, 'this industry has a lot of capacity [and] a lot of us are fighting a bit too hard.'†- Kwame Webb, an airlines analyst at T. Rowe Price, Knowledge@Wharton, Nov. 29

“A US Airways-Delta merger is the start of a needed consolidation. The low-cost carriers are now big enough to offer real alternatives to large network airlines. It will be good for consumers in the long run, making fewer, healthier carriers.†- Patrick Murphy, aviation consultant, Time

“In the end, most industry experts predict that the industry will restructure itself into three or four major U.S. carriers serving not just the entire country, but the world.†- Washington Post editorial, Nov. 19

“The prospect for everybody would be better because you’d have these companies combining and forming a much stronger entity which would eliminate redundancies…The prospect for recovery for bondholders would be improved.†- Margaret Patel, portfolio manager, Pioneer High Yield Fund, Dow Jones, Nov. 15

“Absolutely fares would fall. US Airways has done an amazing job of absolutely lowering fares in the markets that they serve. They have said they’re going to cut them, and they have done it.†- Terry Trippler, airline industry expert, CNBC’s Squawk on the Street, Nov. 15

"We consider this [bid for Delta] a serious offer and a very substantial one, and one that we're assuming has a decent chance of actually happening." - Gary Kelly, Southwest Airlines Chief Executive, Wall Street Journal, Nov. 21

What’s in a Name?

TEMPE (About US – US Airways’ Weekly Newsletter – December 14, 2006) – Since last month’s announcement of a possible deal with Delta, many (US Airways) employees have spoken up regarding the name of a combined airline.

- “Why Delta? We’ve worked hard to maintain the US Airways name.â€
- “Doesn’t ‘US Airways’ seen like a better name for a U.S.-based carrier?â€
- “It won’t take long before US Airways has the notoriety of Delta.â€

And, while those are all great points, the fact remains that Delta Air Lines would be the name of the combined carrier.

Why Delta Air Lines?

The choice was made with the same logic that was used to determine US Airways over America West. Back when the US/AWA merger was in the works, the company enlisted the help of a well-known poling firm to conduct a survey with travelers from around the nation.

Several strong themes emerged from this study, including the fact that Southwest Airlines has the strongest airline name brand, followed by American, Delta, United, and that everyone else lags behind. The US Airways brand was chosen over America West largely because many more consumers recognized it.

Coming in among the top three, the Delta Air Lines brand is clearly a very powerful one on a global basis. That translates to brand equity, meaning Delta is a well-known brand – more so than US Airways. To ignore that would be irresponsible to our employees and other stakeholders.

If the merger fails to materialize, US Airways will continue to operate proudly under its name, re-energizing it and earning back customers because – yes – it’s a fitting and well-known name for an airline that spans the nation and far beyond.

Standard & Poor's Sees 'Window of Opportunity' for Airline Industry Consolidation

See Story

Regional Airlines May Suffer in Mergers

See Story

High Hurdles Await Airlines

http://www.thestreet.com/_yahoo/newsanalys...E&cm_ite=NA

If More U.S. Airlines Merge, Who would Benefit?

See Story

About US (US Airways' Weekly Newsletter) - December 14, 2006

See Story

Regards,

USA320Pilot

 

[Dog Wonder]

Do you ever get tired of yourself?

 

[ClueByFour]

Nothing like "fair and balanced."

 

[delta777]

From the New York Times:
"Airline mergers are already on the political radar screen. Concerned about rising fares and the potential for reduced air service to small communities, Representative James L. Oberstar, Democrat of Minnesota, the next chairman of the House Committee on Commerce and Transportation, said yesterday that the Justice Department should block any major airline merger.
If it does not, Mr. Oberstar said, he would call hearings before his committee to consider action to block such mergers (three steps are necessary to approve an airline deal: the Transportation Department must determine that a merger is financially viable, the Federal Aviation Administration must approve a certificate of safety, and the Justice Department must determine that there are no antitrust issues).
Mr. Oberstar said the public could be harmed only by the sort of large mergers contemplated by US Airways and by United and Continental, and that those in turn would lead to other mergers.

“I don’t think there’s any benefit from mergers except for the benefit of stockholders and airline officials,â€￾ Mr. Oberstar said. “There is no benefit to the traveling public.â€￾

THE DEAL IS OFFICIALLY DEAD!!!

Keep spouting your dribble. This deal is all but dead. Checked your stock price lately USAIR320Pilot??? Lost nearly $7 in a week. Stick a fork in it already, your simply a mouth piece for Dougie.

Hell, your airline is so pathetic, they'd rather drop the US Airways name altogeher if the merger had happened!!! Way do support the home team.

And why on God's green earth do you support Dougie so much, he's made US Airways either at or very near the bottom in pay in virtually all categories??? He must laugh at how spineless you are.

 

[USA320Pilot]

Delta777:

It is my understanding you will hear some interesting news about the proposed merger proceeding in the not-to-distant future.

In regard to US Airways' contracts, they were negotiated prior to the US Airways - America West merger and not by Doug Parker.

Best regards,

USA320Pilot

 

[dariencc]

THE DEAL IS OFFICIALLY DEAD!!!

Keep spouting your dribble. This deal is all but dead. Checked your stock price lately USAIR320Pilot??? Lost nearly $7 in a week. Stick a fork in it already, your simply a mouth piece for Dougie.

The deal is OFFICIALLY :unsure: DEAD :blink: ???

Quick, you better notify Gerry, Dougie, and especially Ralph Cramden.

 

[EyeInTheSky]

Delta 777,
Oberstar is a politician who has to run for office every two years -- aka meaning he is ALWAYS campaigning. Not to mention that other bankrupt airline is in his district. This is about him keeping face.
He'll go to his constituents in two years and say "Gee, I really tried to keep that merger stuff from happening." The reality is the creditors will dictate what plan is appropriate. I guess 777 ain't so lucky.

Later,
Eye

 

[delta777]

"In regard to US Airways' contracts, they were negotiated prior to the US Airways - America West merger and not by Doug Parker."-USA320Pilot

You're right, he was at America West at the time, which had an even LOWER payscale.


Delta 777,
Oberstar is a politician who has to run for office every two years -- aka meaning he is ALWAYS campaigning. Not to mention that other bankrupt airline is in his district. This is about him keeping face.
He'll go to his constituents in two years and say "Gee, I really tried to keep that merger stuff from happening." The reality is the creditors will dictate what plan is appropriate. I guess 777 ain't so lucky.

Later,
Eye


He JUST became Chairman of the House Committee on Commerce and Transportation, so he's not going anywhere for a while. US Airways was the one that said this deal had to be consumated while Delta was still in Bankruptcy in order to ensure the "synergies" could be achieved. Looks like that won't be happening on Mr. Oberstar's watch, judging from these statements,


From the New York Times:
"Airline mergers are already on the political radar screen. Concerned about rising fares and the potential for reduced air service to small communities, Representative James L. Oberstar, Democrat of Minnesota, the next chairman of the House Committee on Commerce and Transportation, said yesterday that the Justice Department should block any major airline merger.
If it does not, Mr. Oberstar said, he would call hearings before his committee to consider action to block such mergers (three steps are necessary to approve an airline deal: the Transportation Department must determine that a merger is financially viable, the Federal Aviation Administration must approve a certificate of safety, and the Justice Department must determine that there are no antitrust issues).
Mr. Oberstar said the public could be harmed only by the sort of large mergers contemplated by US Airways and by United and Continental, and that those in turn would lead to other mergers.

Doesn't get much more clearer than that, now does it? I guess at this point, EVEN IF the Debtors/Creditors chose US Airways plan, they'd have a hard time getting it through the DOJ/DOT. Do you think the creditors are taking any of Mr. Oberstar's comments lightly?

Lucky 777's wins!!!

 

[N903AW]

"Airline mergers are already on the political radar screen. Concerned about rising fares and the potential for reduced air service to small communities, Representative James L. Oberstar, Democrat of Minnesota, the next chairman of the House Committee on Commerce and Transportation, said yesterday that the Justice Department should block any major airline merger.

With all this Government regulation and tight-fistedness why don't we just repeal the Airline Deregulation Act of 1979 and re-regulate the industry!

 

[whlinder]

We like the news because Delta is in some ways the weakest of the carriers right now, and US Air has considerably strengthened.â€￾ - Ronald Fiedling, SVP, Rochester Investment Team at OppenheimerFunds, Reuters, Nov. 15

Someone send this to WorldTraveler

“Absolutely fares would fall. US Airways has done an amazing job of absolutely lowering fares in the markets that they serve. They have said they’re going to cut them, and they have done it.â€￾ - Terry Trippler, airline industry expert, CNBC’s Squawk on the Street, Nov. 15

Expert?

Yes, the fares will fall. Sure. But the average fare paid will rise. What a tool.

He JUST became Chairman of the House Committee on Commerce and Transportation, so he's not going anywhere for a while. US Airways was the one that said this deal had to be consumated while Delta was still in Bankruptcy in order to ensure the "synergies" could be achieved. Looks like that won't be happening on Mr. Oberstar's watch, judging from these statements,
From the New York Times:
"Airline mergers are already on the political radar screen. Concerned about rising fares and the potential for reduced air service to small communities, Representative James L. Oberstar, Democrat of Minnesota, the next chairman of the House Committee on Commerce and Transportation, said yesterday that the Justice Department should block any major airline merger.
If it does not, Mr. Oberstar said, he would call hearings before his committee to consider action to block such mergers (three steps are necessary to approve an airline deal: the Transportation Department must determine that a merger is financially viable, the Federal Aviation Administration must approve a certificate of safety, and the Justice Department must determine that there are no antitrust issues).
Mr. Oberstar said the public could be harmed only by the sort of large mergers contemplated by US Airways and by United and Continental, and that those in turn would lead to other mergers.

Doesn't get much more clearer than that, now does it? I guess at this point, EVEN IF the Debtors/Creditors chose US Airways plan, they'd have a hard time getting it through the DOJ/DOT. Do you think the creditors are taking any of Mr. Oberstar's comments lightly?

:down: :down:

If Oberstar really thinks that no carriers should be allowed to merge in order to keep fares low and keep lots of service to small communities, then he needs to move to subsidize the industry. He's a bigger tool than Trippler.

 

[etops1]

delta777 ,
although i know you really really want this deal to be dead. the fact reamains that it is far from dead. you know that and i know that. just roll with it. what ever happens will happen.

 

[Dog Wonder]

For DL employees it is better to have a merger with US Airways than to have the assets sold off piecemeal.

 

[BoeingBoy]

For DL employees it is better to have a merger with US Airways than to have the assets sold off piecemeal.

Undoubtedly true, but so far there has been no expression of interest in DL's assets by any other carrier. Every expression of interest (Southwest, Airtran, Jetblue) has been in any US/DL assets divested as a result of the merger. So it appears (so far) that any "fragmentation" could happen because of the merger, not instead of it.....

Jim

 

[bigbusboy]

I agree with Jim. But I don't think anyone will see a fragmentation like: shuttle to AA, JFK to NW, ATL/CVG to US and B6 and LUV picking up the scraps. Ralphy boy suggested something to this effect and the good capt. from LGA also suggested this might happen if DL doesn't agree to the merger. Personally, given the chance, I think DL really doesn't need a merger partner. With some refinancing and new management, they'll do just fine.

 

[BoeingBoy]

But I don't think anyone will see a fragmentation like: shuttle to AA, JFK to NW, ATL/CVG to US and B6 and LUV picking up the scraps.

<snip>

Personally, given the chance, I think DL really doesn't need a merger partner. With some refinancing and new management, they'll do just fine.

I agree, unless some industry shaking event like 911 were to happen again. How much "fragmentation" would come with the merger is up to the regulators (and anyone else's guess at this point). Without the merger, and at this point in time, there doesn't appear to be any need or impetus for DL's "fragmentation".

While I'm sure that these shadowy "money people" are talking about the possibilities, they're the one's that stand to make a bundle by putting these deals together or loaning the money to make them happen. By and large, they could care less if it's the best long-term interests of the company(s), the employees, the shareholders, communities across the country, or anyone else.

Jim