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US Bankcorp Will Be Decider In US/DL Merger  
User currently offlineDLPMMM From United States of America, joined Apr 2005, 3580 posts, RR: 10
Posted (7 years 5 months 3 days ago) and read 8486 times:

After reading about how Boeing, GE, or Amex would influence any proposed merger as they are the largest creditors in the DL Chapter 11 reorganization, I decided to look at the Chapter 11 filing on the public court records to see which one was the larger creditor.

The results were much to my suprise (some numbers rounded):

Amex: $500 million
GE: $250 million
Bank of New York: $235 million
US Bankcorp N.A.: $5.4 Billion.

US Bankcorp out of Minneapolis Minn. is the 800 lb gorilla in the room.

They are apparently the trustees for all the equipment passthrough certificates that DL used in refinancing.

28 replies: All unread, showing first 25:
 
User currently offlineN328KF From United States of America, joined May 2004, 6482 posts, RR: 3
Reply 1, posted (7 years 5 months 3 days ago) and read 8492 times:

Quoting DLPMMM (Thread starter):
mex: $500 million
GE: $250 million
Bank of New York: $235 million
US Bankcorp N.A.: $5.4 Billion.

This doesn't tell the complete story. GECAS has debt-in-possession financing in place for much of Delta's wares, so their hold on Delta is far larger than it appears. They have a larger "stake" than US Bank.



When they call the roll in the Senate, the Senators do not know whether to answer 'Present' or 'Not guilty.' T.Roosevelt
User currently offlineBurnsie28 From United States of America, joined Aug 2004, 7502 posts, RR: 8
Reply 2, posted (7 years 5 months 3 days ago) and read 8495 times:

First off would be the employees of Delta.


"Some People Just Know How To Fly"- Best slogan ever, RIP NW 1926-2009
User currently offlineAirTran737 From United States of America, joined Apr 2004, 3689 posts, RR: 12
Reply 3, posted (7 years 5 months 2 days 23 hours ago) and read 8503 times:
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Quoting Burnsie28 (Reply 2):
First off would be the employees of Delta.

No they don't. The only union employees at Delta are the pilots, and perhaps dispatchers. The rest of them don't have a say in anything.



Nice Trip Report!!! Great Pics, thanks for posting!!!! B747Forever
User currently offlineDLPMMM From United States of America, joined Apr 2005, 3580 posts, RR: 10
Reply 4, posted (7 years 5 months 2 days 23 hours ago) and read 8509 times:

Quoting N328KF (Reply 1):
This doesn't tell the complete story. GECAS has debt-in-possession financing in place for much of Delta's wares, so their hold on Delta is far larger than it appears. They have a larger "stake" than US Bank.

I have looked through the filings and found another $230 million of GECAS secured claims bringing GE's exposure to $480 million, but that does not even come close to the $5.4 Billion that US Bankcorp represents.

If you have any links, it would be appreciated. From memory, I thought the DIP financing for DL was Amex and GE for about $500 million each, corresponding to the figures in the filings.

I could be wrong though.


User currently offlineSupa7E7 From , joined Dec 1969, posts, RR:
Reply 5, posted (7 years 5 months 2 days 23 hours ago) and read 8509 times:

Quoting Burnsie28 (Reply 2):
First off would be the employees of Delta.

The CEO doesn't seem to have much say, does he.

Yes, this is between creditors (mainly banks, including GE, which is a bank) and the backers of merger suiters which are ALSO banks.

So this is a classic Wall Street fight. It could be over bubble gum factories. Wall St doesn't give a rip as long as there is money.

Delta has to not only emerge healthy, they have to convince people they can be stronger ALONE than merged with US, where they get a magic CLT shrinkage which would be incredibly advantageous.

The synergies are on the table between DL and US. Trading fleets gives a good amount of gravy. Delta can dump MD-80s for one thing. US has Airbuses and E-190s coming in. DL's overhead costs disappear. That is substantial.

Either Delta can beat those synergies alone (one struggles to see how that is possible) or they admit the merger will increase shareholder value. In which case, it will happen.


User currently offlineGigneil From United States of America, joined Nov 2002, 16345 posts, RR: 86
Reply 6, posted (7 years 5 months 2 days 23 hours ago) and read 8509 times:

Its actually the UNsecured creditors that will be the deciding factor, not the secured ones.

US Airways' bid is mostly to the unsecured creditors.

NS


User currently offlineKSUpilot From United States of America, joined Jul 2006, 656 posts, RR: 0
Reply 7, posted (7 years 5 months 2 days 23 hours ago) and read 8508 times:

Quoting Supa7E7 (Reply 5):
The synergies are on the table between DL and US. Trading fleets gives a good amount of gravy. Delta can dump MD-80s for one thing. US has Airbuses and E-190s coming in. DL's overhead costs disappear. That is substantial.

Is it a given that the MD-80s will go if there is a merger? I know they are getting up there in age, however, DL has one of the larger MD-80 fleets.


User currently offlineSupa7E7 From , joined Dec 1969, posts, RR:
Reply 8, posted (7 years 5 months 2 days 23 hours ago) and read 8508 times:

Quoting KSUpilot (Reply 7):
Is it a given that the MD-80s will go if there is a merger? I know they are getting up there in age, however, DL has one of the larger MD-80 fleets.

Not a given at all. But it's an example of something US could help them accomplish faster. It would take 5 years or so, no question.

If the 2 would shrink (and despite Kirby denying it, they would), they would be dumping 733s and M80s.


User currently offlineB4real From United States of America, joined Aug 2003, 2611 posts, RR: 6
Reply 9, posted (7 years 5 months 2 days 22 hours ago) and read 8508 times:

Quoting AirTran737 (Reply 3):
No they don't. The only union employees at Delta are the pilots, and perhaps dispatchers. The rest of them don't have a say in anything.

 checkmark  Right now the BK court and the board are the real drivers. How well can DL present their reorg plan to the courts and execute it, so far so good actually. So DL has BK performance in their favor to present to the court to emerge standalone.

The precedent for a big airline was set with UA in BK. US in BK didn't work ultimately. They went in once, came out, went back, then Parker did his thing combing HP + US = US.



B4REAL, spelled like it sounds
User currently offlineMariner From New Zealand, joined Nov 2001, 24631 posts, RR: 86
Reply 10, posted (7 years 5 months 2 days 22 hours ago) and read 8508 times:
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Quoting DLPMMM (Thread starter):
US Bankcorp out of Minneapolis Minn. is the 800 lb gorilla in the room.

Curious numbers. There is no mention, for example, of Morgan Stanley:

http://www.flug-revue.rotor.com/FRNews1/FRNews05/FR050918.htm

"To help support its business during the Chapter 11 proceedings, Delta has obtained a commitment for $1.7 billion in debtor-in-possession (DIP) financing from GE Commercial Finance and Morgan Stanley as Co-Lead Arrangers. The commitment includes up to $1.4 billion of financing on an interim basis pending final approval of the full DIP financing at a later date. In addition to the commitment for the new $1.7 billion DIP financing, which replaces approximately $980 million in secured pre-petition financing from GE Commercial Finance and American Express, Delta has an agreement in principle with American Express to provide the airline with an additional $350 million of secured financing. Altogether, Delta's post-petition financing arrangements now total up to $2.05 billion, an increase of approximately $1.07 billion from the company's pre-petition secured credit facilities."

mariner



aeternum nauta
User currently offlineDLPMMM From United States of America, joined Apr 2005, 3580 posts, RR: 10
Reply 11, posted (7 years 5 months 2 days 22 hours ago) and read 8508 times:

Quoting Mariner (Reply 10):
"To help support its business during the Chapter 11 proceedings, Delta has obtained a commitment for $1.7 billion in debtor-in-possession (DIP) financing from GE Commercial Finance and Morgan Stanley as Co-Lead Arrangers. The commitment includes up to $1.4 billion of financing on an interim basis pending final approval of the full DIP financing at a later date. In addition to the commitment for the new $1.7 billion DIP financing, which replaces approximately $980 million in secured pre-petition financing from GE Commercial Finance and American Express, Delta has an agreement in principle with American Express to provide the airline with an additional $350 million of secured financing. Altogether, Delta's post-petition financing arrangements now total up to $2.05 billion, an increase of approximately $1.07 billion from the company's pre-petition secured credit facilities."

Thank you Mariner.

It looks like I was looking at the pre-petition debt as the $980 million mentioned is equal to the $500+$480 million AMEX and GECAS I cited.

According to what you posted, there is another ~$1.1 Billion in financing between GECAS, Morgan-Stanley, and AMEX.

That is still way less than the $5.4 Billion that US Bankcorp represents. I know there are plan approval thresholds for both dollar value and the number of creditors for an exit plan to be approved.


User currently offlineHPRamper From United States of America, joined May 2005, 3963 posts, RR: 8
Reply 12, posted (7 years 5 months 2 days 22 hours ago) and read 8507 times:

Quoting KSUpilot (Reply 7):
Is it a given that the MD-80s will go if there is a merger? I know they are getting up there in age, however, DL has one of the larger MD-80 fleets.

As they are calling for a 10-11% reduction in combined fleet size, I think it's safe to say the -88s and -90s will go, as well as the 737-200s. They will also be retiring the 733s as the new Airbuses and E-190s come online.


User currently offlinePHLBOS From United States of America, joined Mar 2004, 7482 posts, RR: 24
Reply 13, posted (7 years 5 months 2 days 22 hours ago) and read 8507 times:

Quoting HPRamper (Reply 12):
As they are calling for a 10-11% reduction in combined fleet size, I think it's safe to say the -88s and -90s will go, as well as the 737-200s.

IIRC, DL already retired its 732s earlier this year.



"TransEastern! You'll feel like you've never left the ground because we treat you like dirt!" SNL Parady ad circa 1981
User currently offlineMariner From New Zealand, joined Nov 2001, 24631 posts, RR: 86
Reply 14, posted (7 years 5 months 2 days 21 hours ago) and read 8507 times:
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Quoting DLPMMM (Reply 11):
That is still way less than the $5.4 Billion that US Bankcorp represents.

It can easily have changed. Or - US Bankcorp may be an "umbrella" for several other banks.

I am also surprised at the $4 billion figure. I thought Delta's DIP financing was limited to the $2 billion quoted. This may be other debt.

Again, one creditor could have "sold" their loan to another. It can get very complex, and sometimes goes beyond the simple statement on paper.

Example: I have no idea how many Delta aircraft leases that GECAS is holding, if any. This would be seperate from DIP but still a secured creditor, and could change the equation.

One reason that GECAS became the prime mover in the HP/US merger was because they didn't want US to default on all those leases and have the market flooded with aircraft.

I don't know if that applies here.

mariner



aeternum nauta
User currently offlineHPRamper From United States of America, joined May 2005, 3963 posts, RR: 8
Reply 15, posted (7 years 5 months 2 days 21 hours ago) and read 8507 times:

Quoting PHLBOS (Reply 13):
IIRC, DL already retired its 732s earlier this year.

Looking at the paperwork today, they are still listed. Maybe they just parked them and haven't gotten around to selling them off. Well, even better...means we can retire more of the old beat-up 733s.


User currently offlineWorldTraveler From , joined Dec 1969, posts, RR:
Reply 16, posted (7 years 5 months 2 days 21 hours ago) and read 8507 times:

Any combination between network carriers is predicated on removing capacity from the aviation system because any two network carriers have
at least some overlap if only on a regional basis. Customers are
seeing higher prices than they've seen in years, so they don't see a need for consolidation which will result in less capacity and higher fares. Governments and municipalities are seeing less service to medium and small cities so they aren't interested in losing any more.
Employees have already taken hits with reduced fleets so they aren't interested in reduced schedules and fleets that will result in more layoffs. The airline industry is marginally profitable which is as good as it has ever been. The airline industry is not broken.

There is no need for any combinations of any airlines, especially among airlines that don't want to combine such as Delta.

Unwanted and unnecessary combinations in the airline industry will only result in reduced service and higher fares.

Let's stop the talk among those who say there is a NEED for airlines to merge right now. Airline mergers only benefit a handful of dealmakers
at the expense of the rest of the public.


User currently offlineMariner From New Zealand, joined Nov 2001, 24631 posts, RR: 86
Reply 17, posted (7 years 5 months 2 days 21 hours ago) and read 8508 times:
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Quoting WorldTraveler (Reply 16):
Let's stop the talk among those who say there is a NEED for airlines to merge right now. Airline mergers only benefit a handful of dealmakers
at the expense of the rest of the public.

I didn't think that had been a feature of this particular thread? I think Supa7E7 got it spot on right:

Quoting Supa7E7 (Reply 5):
So this is a classic Wall Street fight. It could be over bubble gum factories. Wall St doesn't give a rip as long as there is money.

.
It is the function of Wall Street to make money.

mariner



aeternum nauta
User currently offlineFloridaflyboy From United States of America, joined Jun 2006, 1999 posts, RR: 0
Reply 18, posted (7 years 5 months 2 days 2 hours ago) and read 5852 times:

Actually, the United States Department of Justice is going to be the real decider in this merger deal just like they were in the UA/US merger proposal.


Good goes around!
User currently offlineAirRyan From United States of America, joined Mar 2005, 2532 posts, RR: 5
Reply 19, posted (7 years 5 months 2 days 2 hours ago) and read 5822 times:

Quoting Mariner (Reply 14):
Again, one creditor could have "sold" their loan to another. It can get very complex, and sometimes goes beyond the simple statement on paper.

No crap, my students loans have been sold so many times they have to feel like two dollar whores by now the way they have been passed around.

Quoting WorldTraveler (Reply 16):
Customers are
seeing higher prices than they've seen in years,

You obviously have not studied airline pricing very much have you - airline prices are some of the very few prices in our society that have not gone up in price despite the rampant increase in expenses (fuel and airplane costs) and inflation.

Quoting WorldTraveler (Reply 16):
which will result in less capacity and higher fares. Governments and municipalities are seeing less service to medium and small cities so they aren't interested in losing any more.

Since when did private business become a public mode of transportation? A small city cannot simply be guaranteed of air service just because we want to be nice.

Quoting WorldTraveler (Reply 16):
Employees have already taken hits with reduced fleets so they aren't interested in reduced schedules and fleets that will result in more layoffs. The airline industry is marginally profitable which is as good as it has ever been. The airline industry is not broken.

The only thing employees care about is their paycheck and the stability of being able to come back tommorow for work and be able to retire when they get done. Marginally profitable is not the goal of business, that sounds more like the defination of a charity, and if you don't think the airline industry is broken than I must really wonder if you are reading any of these posts on this forum!

Quoting WorldTraveler (Reply 16):
Unwanted and unnecessary combinations in the airline industry will only result in reduced service and higher fares.

DOJ propoganda...

Quoting WorldTraveler (Reply 16):
Let's stop the talk among those who say there is a NEED for airlines to merge right now. Airline mergers only benefit a handful of dealmakers
at the expense of the rest of the public.

Bankrupt carriers only benefit the CEO's and lawyers, not the consumers so do us a favor and go out and buy a copy of every businessman's favorite board game "Monopoly" and move to France if you don't like capitalism!


User currently offlineDLPMMM From United States of America, joined Apr 2005, 3580 posts, RR: 10
Reply 20, posted (7 years 5 months 2 days 2 hours ago) and read 5723 times:

Quoting Gigneil (Reply 6):
Its actually the UNsecured creditors that will be the deciding factor, not the secured ones.

You are correct. I guess that puts the pilots and the PBGC in the driver's seat. I don't know if the DIP's (AMEX and GECAS) are considered as unsecured, as they have first dibs after the secured creditors.

Are there any other very large unsecured creditors that anyone else is aware of?


User currently offlineSLCUT2777 From United States of America, joined Dec 2005, 3993 posts, RR: 11
Reply 21, posted (7 years 5 months 2 days 1 hour ago) and read 5410 times:

Quoting Floridaflyboy (Reply 18):
Actually, the United States Department of Justice is going to be the real decider in this merger deal just like they were in the UA/US merger proposal.

And the proposed US/DL deal would have to divest themselves of much more than just one or the others east coast shuttle to get by them. I think this whole thing will be so watered down that it won't be worth the $8 billion in cash and stock options Doug Parker has proposed in the end.
Even all of the above creditors no matter how big they are or where they fall in the pecking order being secured or unsecured are scrutinizing this deal of an airline that has just been through a significant merger last year, and still has technically not finished the integration of the two groups. Any credible investment banker will look at this with a high degree of skepticism in the advice they give bond holders. Bankrupt or not, DL being acquired by US will not be a done deal before the FTC as some posters in these threads think or spout off about.  scratchchin 



DELTA Air Lines; The Only Way To Fly from Salt Lake City; Let the Western Heritage always be with Delta!
User currently offlineATWZW170 From United States of America, joined Oct 2004, 904 posts, RR: 3
Reply 22, posted (7 years 5 months 2 days 1 hour ago) and read 5365 times:

I have to agree with AirRyan. Air fares are NOT high. They have been kept low due in part to WN, FL, F9 - For airlines to make anything they need to reduce capacity so that there aren't as many low seats for sale. The airline industry needs this chance to rebound. Not saying this is the sure all, fix all - but in todays market it would be helpful.


Success is getting what you want...happiness is liking what you get
User currently offlinePHLBOS From United States of America, joined Mar 2004, 7482 posts, RR: 24
Reply 23, posted (7 years 5 months 2 days ago) and read 5089 times:

Quoting AirRyan (Reply 19):
airline prices are some of the very few prices in our society that have not gone up in price despite the rampant increase in expenses (fuel and airplane costs) and inflation.

In markets/routes where true LCC (namely WN/TZ, FL, F9, and/or B6) competition exists; your statement is correct. However, in markets where there's no LCC competition (have you priced PHL-PWM or PHL-BUF lately?); many of the fares are high enough to literally scream, "SUDDENLY, IT'S 1995!"



"TransEastern! You'll feel like you've never left the ground because we treat you like dirt!" SNL Parady ad circa 1981
User currently offlineMah584jr From United States of America, joined Mar 2006, 500 posts, RR: 0
Reply 24, posted (7 years 5 months 1 day 23 hours ago) and read 5068 times:

Quoting PHLBOS (Reply 13):
IIRC, DL already retired its 732s earlier this year.

You are correct.

Quoting WorldTraveler (Reply 16):
Let's stop the talk among those who say there is a NEED for airlines to merge right now. Airline mergers only benefit a handful of dealmakers
at the expense of the rest of the public.

The number of airlines in America are just too many. I think by combining airlines, we can actually make air travel BETTER for the public in the long run. The airlines of other countries have vastly superior service, cleaner aircraft and route structures that make business sense. I think it's time that we as customers demand a better product, even if prices may go up a little and I think consolidation of our airlines can really help us find better quality travel.

In regards to the US/DL merger, is there really a need for a hub in CLT CVG or SLC? Look how much more profitable PIT is since the US/HP merger. It's now the right size for the market. So I could see where merger these two companies could make a lot of sense for both the customer and the airlines involved.


25 Post contains images LAXdude1023 : They dont need propoganda since they have to approve the merger anyway. This is true. With this merger lots of people are going to lose their jobs. T
26 Picarus : I think the one variable here that no one has mentioned yet is the Democrat's recent re-assertion of power in Congress. Democrats are more likely to g
27 Hiflyer : First off the employee's...aside from the pilots...have no say...and since no union the DL emps will have no say on intergration into USAir...stapling
28 Post contains links Diamond : Please continue all DL/US merger conversations in one of these 5 official threads: Official DL/US Merger Thread: Fleet Speculation   http://www1.air
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