USAirways to buy (merge) with Delta
- Thread starter javaboy
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WT, you act as if you have a team of lawyers, analysis, consultants, specialized law firms that you have used for a backing of your comments.
The evaluation was meticulously preformed before making the decision to go forward with the plans with all of those groups I mentioned. Anti-trust is not an issue in what the proposed "merger plan" is.
If you noticed in the letter 9-10% reduction in capacity will occur. Consolidation of routes will occur, things will move forward and on. U is not evil, Doug is not evil. Look at DAL, poor mgmt, poor poor poor...and if you notice only a small percentage of the masses are complaining, it is just that we choose to remember what is negative. I hear more comments daily about how HP/US saved their family and lives.
U/HP started with AC investing only $75 million and when it was over there was over $1 BILLION 5 months later when the deal was signed.
With respect.....
The evaluation was meticulously preformed before making the decision to go forward with the plans with all of those groups I mentioned. Anti-trust is not an issue in what the proposed "merger plan" is.
If you noticed in the letter 9-10% reduction in capacity will occur. Consolidation of routes will occur, things will move forward and on. U is not evil, Doug is not evil. Look at DAL, poor mgmt, poor poor poor...and if you notice only a small percentage of the masses are complaining, it is just that we choose to remember what is negative. I hear more comments daily about how HP/US saved their family and lives.
U/HP started with AC investing only $75 million and when it was over there was over $1 BILLION 5 months later when the deal was signed.
With respect.....
WNrforlife
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UScareways Sucks, big time
Gilding,
The key to US's offer is that the unsecured creditors will come out with something instead of nothing as is typical in bankruptcy exits. That's the key piece that will force DL mgmt's hand. They're going to have to develop a more robust plan than they initially anticipated. That could be a good thing for the long term health of the company. On the other hand, that also provides time for the pirahnas to put together other bids...
The key to US's offer is that the unsecured creditors will come out with something instead of nothing as is typical in bankruptcy exits. That's the key piece that will force DL mgmt's hand. They're going to have to develop a more robust plan than they initially anticipated. That could be a good thing for the long term health of the company. On the other hand, that also provides time for the pirahnas to put together other bids...
Gilding the Lily
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I totally agree with you. Likely, in order to approve the bankruptcy plan, US will recognize that they need to pay out more to the unsecured creditors than they would receive if there was not a merger in bankruptcy. But what about the financing received during bankruptcy???
Those banks will be harder to win over. Obviously, it is very difficult to convince a bank to provide financing to a bankrupt airline. They are unsecured creditors as well; but the bankruptcy code places these banks in a 'preference category' so that 'debtor in possession' financing is possible. So although they are unsecured, they would be one of the first creditors paid under the plan... meaning they will receive more than just pennies on the dollar.
So US will need to think of creative ways to encourage the 'preference debtor-in-possession' class to approve of the new merger bankruptcy plan. I suppose their first effort would be to include post-bankruptcy financing plans that are favorable to those banks. Of course, this point could be moot if those DIP financing banks, after doing risk-assessment, are able to determine that 2 mergers and a bankruptcy is less risky than 1 merger and a bankruptcy.
StewGuy86
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NewHampshire Black Bears
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World Traveler,
I hate to say it ol' boy, but
YOUR BALLS ARE IN A VISE, AND PARKERS TURNING THE HANDLE !!
OR,
Put it this way;
"MONEY TALKS,(US) AND BULL ####(DL) WALKS" !!!!!!!
This is a Ballsy way for Parker to rid himself of the cancerous PHL tumor !!
But $8B is a lot of "scratch" to pay for a "lone" ATL/NRT trip.
(Talk about Inflation)
OH, one last thing, AA thanks you Doug Parker, for ASSURING AA, that they Finally get a NY shuttle.
NH/BB's
Ps,
Parker would be a great "TEXAS HOLD EM" player.
I hate to say it ol' boy, but
YOUR BALLS ARE IN A VISE, AND PARKERS TURNING THE HANDLE !!
OR,
Put it this way;
"MONEY TALKS,(US) AND BULL ####(DL) WALKS" !!!!!!!
This is a Ballsy way for Parker to rid himself of the cancerous PHL tumor !!
But $8B is a lot of "scratch" to pay for a "lone" ATL/NRT trip.
(Talk about Inflation)
OH, one last thing, AA thanks you Doug Parker, for ASSURING AA, that they Finally get a NY shuttle.
NH/BB's
Ps,
Parker would be a great "TEXAS HOLD EM" player.
luv2fly
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Bankruptcy Court Can Be Tough
Venue for Hostile Takeovers
By MARIE BEAUDETTE and LAURA MCGANN
November 15, 2006 4:20 p.m.
US Airways Chief Executive Doug Parker faces a major handicap in his $8 billion bid to acquire unreceptive Delta Air Lines Inc.: Bankruptcy courts tend to be poor staging grounds for hostile takeovers.
Unless Delta's management can be persuaded to go along with the deal or its creditors stage a revolt in the bankruptcy court, US Airway's bid is a longshot, bankruptcy experts said Wednesday. Delta has exclusive control over its Chapter 11 case through at least early February, and bankruptcy courts seldom overrule management when things are going smoothly.
Mr. Parker "basically lobbed this Hail Mary pass up in the air to see who's going to catch it," said Fulbright & Jaworski partner William Rochelle. "To be able to have a prayer for success, he's got to be able to generate interest from creditors."
Mr. Rochelle, who represents secured creditors in airline bankruptcy cases, said Parker chose the "least offensive method" to persuade Delta to accept its proposal. Rebuffed by Delta's management, he decided to publicly court the carrier's unsecured creditors, who stand to gain a 45% stake in what would be one of the world's largest airlines.
But Mr. Parker, the America West chief who took the helm of US Airways when it merged with the Arizona-based carrier last fall, could be in for a bumpy ride as he attempts to take over a company protected by the bankruptcy court.
"If management is hostile to the US Airways proposal, US Airways may find it difficult to force its way into the room," said Reed Smith bankruptcy partner Eric Schaffer, who worked on US Airways' first Chapter 11 case. US Airways emerged from its second bankruptcy reorganization in 2005.
Ray Neidl, an airline analyst with Calyon Securities Inc., said convincing Delta's major creditors will be crucial if US Airways wants this deal to work.
"If the creditors see a better proposal, then the management would probably have to listen to them," he said.
Resisting Us Airways' Advances
For now, Delta is still resisting US Airways' advances. Chief Executive Gerald Grinstein responded Wednesday with a terse statement, making it clear that the company still plans to move forward with a stand-alone reorganization and that it intends to invoke its control over its Chapter 11 case to do so.
"The bankruptcy court has granted Delta the exclusive right to create a plan of reorganization until Feb. 15, 2007," he said. "We will continue to move aggressively toward that goal."
Delta, the nation's fourth largest airline, sought Chapter 11 protection on Sept. 14, 2005, about a month before changes to the Bankruptcy Code that sharply curbed debtor control in Chapter 11 cases took effect. Accordingly, the airline can expect to continue to drive its own reorganization process even beyond the current Feb. 15 plan filing deadline.
Companies in Chapter 11 protection are given an exclusive period of time to file a Chapter 11 reorganization plan, but can seek extensions if negotiations with creditors are moving forward. Although last year's bankruptcy law changes limit those to a maximum of 18 months, Delta could potentially enjoy unlimited extensions -- as did UAL Corp., the parent of United Airlines, which spent more than three years in bankruptcy.
Creditors can seek to end a company's exclusive control over its Chapter 11 case so they can file their own reorganization proposals. But bankruptcy experts say Delta's creditors would face an uphill battle wresting control from a team of competent executives managing a viable company.
Over the last year or so, Delta has negotiated deals to terminate its pilots' pension plan, obtained $280 million in annual wage-and-benefit concessions from its pilots, and said it's "on track" to exit Chapter 11 proceedings by the middle of 2007. The airline has also recalled 1,000 flight attendants in preparation for a major expansion of its international routes.
"Bankruptcy courts don't terminate exclusivity easily or quickly," Mr. Rochelle said. "It takes a lot of banging on the door before things happen."
In the absence of a deal with management, convincing a pivotal group of unsecured creditors -- the official committee that represents them in the airline's Chapter 11 case -- will be key.
The panel, formed early in every Chapter 11 case and usually made up of the largest unsecured creditors, has significant influence in a bankruptcy case and can be instrumental in swaying the court to second-guess a debtor company's business judgment.
The Delta committee, which includes aircraft financier Boeing Capital Corp., the federal Pension Benefit Guaranty Corp., Bank of New York Co. and the Air Line Pilots Association, hasn't yet shown its hand. Calls to committee members and the attorney who represents them weren't returned Wednesday.
US Airways could choose to buy Delta's unsecured claims in order to gain a foothold in the case and command the committee's attention, a move potential buyers often employ in smaller Chapter 11 cases.
For example, the hedge fund Harbinger Capital Partners forced an exclusivity battle in the bankruptcy of West Coast jewelry chain Crescent Jewelers and ultimately won control of the company post-bankruptcy. Harbinger later merged the company with another company it bought out of Chapter 11 -- East Coast chain Friedman's Inc.
Financier Ron Burkle's Yucaipa Cos. has bought up unsecured debt of rival auto-hauling companies Allied Holdings Inc. and Performance Transportation Services Inc., which are both operating under Chapter 11 protection, and is expected to attempt to merge them post-bankruptcy.
US Airways, whose smooth merger last fall with America West had management backing, has the experience of two past Chapter 11 cases as it moves forward with its proposal.
The airline could ally itself with other major creditors to force Delta -- or the Manhattan bankruptcy court -- to move toward a merger.
"Management will have to consider what the creditors want," Mr. Neidl said. "It's the most important element of the company now, and they'll at least have to listen to their opinion."
But Mr. Rochelle of Fulbright & Jaworski said he'd be surprised if Delta and its major creditors "ran off in different directions."
He also questioned whether US Airways' Mr. Parker, widely regarded as a savvy executive who saved his airline from extinction, would want to be the architect of a deal built on a bitter battle between Delta and its creditors.
"I don't know whether Doug Parker would want to do it on a highly adversarial basis," Mr. Rochelle said. "That would really not create the kind of an effective working environment you need to integrate three airlines.
Venue for Hostile Takeovers
By MARIE BEAUDETTE and LAURA MCGANN
November 15, 2006 4:20 p.m.
US Airways Chief Executive Doug Parker faces a major handicap in his $8 billion bid to acquire unreceptive Delta Air Lines Inc.: Bankruptcy courts tend to be poor staging grounds for hostile takeovers.
Unless Delta's management can be persuaded to go along with the deal or its creditors stage a revolt in the bankruptcy court, US Airway's bid is a longshot, bankruptcy experts said Wednesday. Delta has exclusive control over its Chapter 11 case through at least early February, and bankruptcy courts seldom overrule management when things are going smoothly.
Mr. Parker "basically lobbed this Hail Mary pass up in the air to see who's going to catch it," said Fulbright & Jaworski partner William Rochelle. "To be able to have a prayer for success, he's got to be able to generate interest from creditors."
Mr. Rochelle, who represents secured creditors in airline bankruptcy cases, said Parker chose the "least offensive method" to persuade Delta to accept its proposal. Rebuffed by Delta's management, he decided to publicly court the carrier's unsecured creditors, who stand to gain a 45% stake in what would be one of the world's largest airlines.
But Mr. Parker, the America West chief who took the helm of US Airways when it merged with the Arizona-based carrier last fall, could be in for a bumpy ride as he attempts to take over a company protected by the bankruptcy court.
"If management is hostile to the US Airways proposal, US Airways may find it difficult to force its way into the room," said Reed Smith bankruptcy partner Eric Schaffer, who worked on US Airways' first Chapter 11 case. US Airways emerged from its second bankruptcy reorganization in 2005.
Ray Neidl, an airline analyst with Calyon Securities Inc., said convincing Delta's major creditors will be crucial if US Airways wants this deal to work.
"If the creditors see a better proposal, then the management would probably have to listen to them," he said.
Resisting Us Airways' Advances
For now, Delta is still resisting US Airways' advances. Chief Executive Gerald Grinstein responded Wednesday with a terse statement, making it clear that the company still plans to move forward with a stand-alone reorganization and that it intends to invoke its control over its Chapter 11 case to do so.
"The bankruptcy court has granted Delta the exclusive right to create a plan of reorganization until Feb. 15, 2007," he said. "We will continue to move aggressively toward that goal."
Delta, the nation's fourth largest airline, sought Chapter 11 protection on Sept. 14, 2005, about a month before changes to the Bankruptcy Code that sharply curbed debtor control in Chapter 11 cases took effect. Accordingly, the airline can expect to continue to drive its own reorganization process even beyond the current Feb. 15 plan filing deadline.
Companies in Chapter 11 protection are given an exclusive period of time to file a Chapter 11 reorganization plan, but can seek extensions if negotiations with creditors are moving forward. Although last year's bankruptcy law changes limit those to a maximum of 18 months, Delta could potentially enjoy unlimited extensions -- as did UAL Corp., the parent of United Airlines, which spent more than three years in bankruptcy.
Creditors can seek to end a company's exclusive control over its Chapter 11 case so they can file their own reorganization proposals. But bankruptcy experts say Delta's creditors would face an uphill battle wresting control from a team of competent executives managing a viable company.
Over the last year or so, Delta has negotiated deals to terminate its pilots' pension plan, obtained $280 million in annual wage-and-benefit concessions from its pilots, and said it's "on track" to exit Chapter 11 proceedings by the middle of 2007. The airline has also recalled 1,000 flight attendants in preparation for a major expansion of its international routes.
"Bankruptcy courts don't terminate exclusivity easily or quickly," Mr. Rochelle said. "It takes a lot of banging on the door before things happen."
In the absence of a deal with management, convincing a pivotal group of unsecured creditors -- the official committee that represents them in the airline's Chapter 11 case -- will be key.
The panel, formed early in every Chapter 11 case and usually made up of the largest unsecured creditors, has significant influence in a bankruptcy case and can be instrumental in swaying the court to second-guess a debtor company's business judgment.
The Delta committee, which includes aircraft financier Boeing Capital Corp., the federal Pension Benefit Guaranty Corp., Bank of New York Co. and the Air Line Pilots Association, hasn't yet shown its hand. Calls to committee members and the attorney who represents them weren't returned Wednesday.
US Airways could choose to buy Delta's unsecured claims in order to gain a foothold in the case and command the committee's attention, a move potential buyers often employ in smaller Chapter 11 cases.
For example, the hedge fund Harbinger Capital Partners forced an exclusivity battle in the bankruptcy of West Coast jewelry chain Crescent Jewelers and ultimately won control of the company post-bankruptcy. Harbinger later merged the company with another company it bought out of Chapter 11 -- East Coast chain Friedman's Inc.
Financier Ron Burkle's Yucaipa Cos. has bought up unsecured debt of rival auto-hauling companies Allied Holdings Inc. and Performance Transportation Services Inc., which are both operating under Chapter 11 protection, and is expected to attempt to merge them post-bankruptcy.
US Airways, whose smooth merger last fall with America West had management backing, has the experience of two past Chapter 11 cases as it moves forward with its proposal.
The airline could ally itself with other major creditors to force Delta -- or the Manhattan bankruptcy court -- to move toward a merger.
"Management will have to consider what the creditors want," Mr. Neidl said. "It's the most important element of the company now, and they'll at least have to listen to their opinion."
But Mr. Rochelle of Fulbright & Jaworski said he'd be surprised if Delta and its major creditors "ran off in different directions."
He also questioned whether US Airways' Mr. Parker, widely regarded as a savvy executive who saved his airline from extinction, would want to be the architect of a deal built on a bitter battle between Delta and its creditors.
"I don't know whether Doug Parker would want to do it on a highly adversarial basis," Mr. Rochelle said. "That would really not create the kind of an effective working environment you need to integrate three airlines.
LCC_#1
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Oh that's real mature. What an idiot!
UnitedChicago
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Any way you slice it, this is going to impact DL's BK exit plans. It's now become a big distraction and Grinstein will have to line up a package that's equal to or better than what U has offered.
I wonder if United's calling about now to propose a friendly merger - one not rammed down Grinstein's throat.
Either way, Grinstein was wrong to dismiss Parker in the way he did.
DL is officially in play.
I wonder if United's calling about now to propose a friendly merger - one not rammed down Grinstein's throat.
Either way, Grinstein was wrong to dismiss Parker in the way he did.
DL is officially in play.
CLTBWIDAYSYR
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And look for just how much praise there will be for our illustrious management team when Charlotte is drastically reduced (both in flights and in employment...no training center for pilots, flight attendants, or customer service, no trans-Atlantic flights, etc), PIT employment further dwindles to nothing with OCC moving to ATL, PHL employees are scattered when that station is reduced and int'l service is cut in favor of JFK, PHX loses HQ status and 75 year old DL flight attendants move in to Sky Harbor bumping the most senior HPers out of their lines of flying.
No, this is going to be ugly--both for DL and US/HP. Doogie has lost his mind. If you think there is a big culture difference between US & HP, just wait till all of Georgia gets added into the mix. When its over, NONE involved will love to fly and it will definitely show.
NewHampshire Black Bears
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Jesus,
You make "this" sound like the Shiites/Sunni's and Kurds, in Iraq . :blink:
(I'm NOT saying your wrong however)
NH/BB's
You make "this" sound like the Shiites/Sunni's and Kurds, in Iraq . :blink:
(I'm NOT saying your wrong however)
NH/BB's
jimntx
Veteran
It is not so much a anti-trust issue (which still might be used for a legal argument in blocking the merger) as a restraint of trade issue. True, the LCCs have grown and the legacies have not really shrunk. However, all this growth is in major markets--everybody flies to LAS, Florida, West Coast. However, if you look at service to a number of smaller cities--particularly in the East Coast corridor--a merger between US Airways and Delta would then mean those cities are served by only one airline for all practical purposes. Having DL mainline, US Airways mainline, and American Eagle (or United/Continental Express) does not solve the problem if DL and US merge.
High Iron
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Pithy as all get-out. Too true for comfort really. You're psychic. The pollyanna PR is laughable.
Actually, US has lined up over $7B in financing to refinance all the DIP loans, so there will be no issue at all with the DIP banks.
Given that at risk Delta debt soared about 20% yesterday, it seems that the market is saying that the US offer is quite a bit better than "go it alone." While DL management has a lot of ways to be difficult in the BK process, I don't see how they prevail on a stand alone strategy when the market (and therefore the creditors) clearly think they will do better with the merger. Not to mention that US stock soared as well, making the equity portion of the deal worth more.
I suspect that DL management is flying to Chicago or Dallas to look for a White Knight right now.
