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The Real Hurdle To A DL-US Tie Up  
User currently offlineIncitatus From Brazil, joined Feb 2005, 4014 posts, RR: 13
Posted (7 years 7 months 4 weeks 1 day 6 hours ago) and read 3107 times:

On January 23 the Wall Street Journal reported that none of the currently claimed hurdles to an acquisition of Delta Airlines by USAirways is significant. The merger would likely sail through regulators with few conditions attached to it. The offer presented by USAirways is attractive to creditors.

The real concern of creditors is that they expect the current managers of Delta to be uncooperative after the merger, effectively poisoning the transaction. This highlights that the work group with the most exposure to an acquisition is made of Delta's managerial staff.


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19 replies: All unread, jump to last
 
User currently offlineAirFrnt From United States of America, joined Jul 2004, 2826 posts, RR: 42
Reply 1, posted (7 years 7 months 4 weeks 1 day 6 hours ago) and read 3102 times:

Quoting Incitatus (Thread starter):
On January 23 the Wall Street Journal reported that none of the currently claimed hurdles to an acquisition of Delta Airlines by USAirways is significant. The merger would likely sail through regulators with few conditions attached to it. The offer presented by USAirways is attractive to creditors.

The real concern of creditors is that they expect the current managers of Delta to be uncooperative after the merger, effectively poisoning the transaction. This highlights that the work group with the most exposure to an acquisition is made of Delta's managerial staff.

Which makes a lot of sense. DL management has not proven that it is competent enough to remain in charge after this merger.


User currently offlineSLCUT2777 From United States of America, joined Dec 2005, 4060 posts, RR: 11
Reply 2, posted (7 years 7 months 4 weeks 1 day 6 hours ago) and read 3062 times:

Quoting Incitatus (Thread starter):
This highlights that the work group with the most exposure to an acquisition is made of Delta's managerial staff.

Can you blame them? If I worked for DL I certainly wouldn't want to risk my career in working for Doug Parker. The pilots from DALPA leadership on down throughout the rank-n-file are opposed to this, and have been so since day one. The opposition to this most idiotic merger idea (just to eliminate competition that will be a road block to Parker and HP/US), has largely come from the grass roots as demonstrated by the signatures generated on the petition campaign: http://www.sltrib.com/business/ci_5073307

Quoting Paul Beebe, Salt Lake Tribune:
Petitions with more than 100,000 signatures opposing US Airways' hostile bid for Delta Air Lines were delivered to the U.S. Senate on Tuesday, ahead of a Senate hearing today on airline mergers.
The signatures included names of 5,353 Utahns who said the merger will hurt travelers, small communities, businesses and Delta employees, according to Keep Delta My Delta, an employee-led campaign supporting the airline's exit from bankruptcy as an independent company.
People signing their names were pilots and other employees, retirees and elected officials, the group said.
The 104,851 signatures were handed to the senators by Delta employees after a rally outside the Capitol.
"Obviously I haven't seen the [US Airways] proposal. But it seems fairly obvious that [a merger] could have a harmful effect on Delta's Salt Lake City hub," Sen. Orrin Hatch said.
In addition to the signatures, more than 155,000 letters have been sent to members of Congress and the Bush administration.
A US Airways spokesman acknowledged widespread opposition among Delta employees to the merger, but said many workers have based their opposition on faulty information.
"We know that there is misinformation out there. We are not going to communicate directly with (Delta) employees at this time. So the information they get is primarily one-sided," Philip Gee said.

What faulty information or misinformation? That Doug Parker will kick all the DL employees to the curb due to not having a union to protect them? That Parker's business plan for this merger are synergies from "Fantasyland?" That Parker's business plan for this merger is seriously flawed financially speaking? All VERY believable information.



DELTA Air Lines; The Only Way To Fly from Salt Lake City; Let the Western Heritage always be with Delta!
User currently offlineJetlanta From United States of America, joined Jul 2001, 3297 posts, RR: 35
Reply 3, posted (7 years 7 months 4 weeks 1 day 6 hours ago) and read 3044 times:

Quoting AirFrnt (Reply 1):
Which makes a lot of sense. DL management has not proven that it is competent enough to remain in charge after this merger.

On the contrary, the creditors are extremely impressed with current DL management. This is half the reason the US bid is dying. The creditors are sticking with management because management has delivered everything it promised to them so far. They've met every internal goal agreed to with the creditors at the beginning of this process.

US management, on the other hand, really hasn't executed anything but a transaction to merge US and HP. Since then, there has been very little to indicate they can manage the process of a merger. I'm not saying they won't, but they are hardly a proven commodity at this point.

Before anyone mentions it, the financial peformance of the combined US and HP was strong in 2006. However much of that is due to having finished the restructuring process BEFORE the industry-wide jump in yields and the drop in oil prices. It wasn't something brilliant that Doug & Co. pulled off all of the sudden. It was a fundamental change in the economic dynamics of the industry that provided most of the improvement. Most carriers benefited proportionally during this period.


User currently offlineAirFrnt From United States of America, joined Jul 2004, 2826 posts, RR: 42
Reply 4, posted (7 years 7 months 4 weeks 1 day 6 hours ago) and read 3036 times:

Quoting SLCUT2777 (Reply 2):
If I worked for DL I certainly wouldn't want to risk my career in working for Doug Parker.

As opposed to working for DL management, which seems rather more inept right now then US?

Quoting SLCUT2777 (Reply 2):
The pilots from DALPA leadership on down throughout the rank-n-file are opposed to this

Which makes me like it. Let's face it, the unions and the airline management have been competing for who has their head furthest lodged up the APU exhaust since deregulation.

Quoting SLCUT2777 (Reply 2):
That Doug Parker will kick all the DL employees to the curb due to not having a union to protect them? That Parker's business plan for this merger are synergies from "Fantasyland?" That Parker's business plan for this merger is seriously flawed financially speaking?

All emotional arguments. Face the music people. The Airline industry is still struggling to play be deregulation rules. They buy excess capacity, award insane contracts to pilots, buy fuel high, and oppose reasonable consolidation to protect their jobs.

I find it amusing just how quickly the DL contingent who prior to US's merger would as soon as spit on DL management as look at them have been terrorized by a group of old men who have their interest, not that of the carrier or the consumer at heart.


User currently offlineEXAAUADL From , joined Dec 1969, posts, RR:
Reply 5, posted (7 years 7 months 4 weeks 1 day 5 hours ago) and read 3010 times:

Quoting AirFrnt (Reply 1):
Which makes a lot of sense. SA)">DL management has not proven that it is competent enough to remain in charge after this merger.

Shows how much you know about Delta. SA)">DL's new addition of Glen Hauenstein and Bob Cortelyou from SA)">CO have increased SA)">DL's' unit revenues and set the company to a sustainable path to profitability. Their gamble of moving widebodies out of the US to International and cutting flying on TU/SA) and Rheintalflug (Austria)">WE and SA/SU has paid off.

The reason SA)">DL is a target is because of the improvements SA)">DL has made since late 2005. On the other hand, NWA is not a target, route wise it would be a huge asset to US, and easier for DOJ to approve. But no one wants NWA as they have not made the improvements required to succeed as a stand alone company


User currently offlineEXAAUADL From , joined Dec 1969, posts, RR:
Reply 6, posted (7 years 7 months 4 weeks 1 day 5 hours ago) and read 3010 times:

What happened to the spelling in my post????

User currently offlineWorldTraveler From , joined Dec 1969, posts, RR:
Reply 7, posted (7 years 7 months 4 weeks 1 day 5 hours ago) and read 2978 times:

Woe. Time out.

First, just because the WSJ says it has people who believe there are no significant obstacles to consolidation doesn't mean there aren't. In the age of communication we live in, everyone has an opinion and can make it. The issues that have been continually brought forward follow along with the people who make the decisions regarding the validity of the claim:

1. Anticompetitive - DOJ, influenced by the DOT and Congress who are most in touch with the American people.
2. Too much debt - ultimately the industry creditors (which includes labor) who are not interested in seeing a combined US/DL end up in BK again - which it most certainly will do with the kinds of debt levels it will carry relative to the size of the airline.
3. Labor turmoil - that is ultimately DL employees to decide. and there is no indication they are giving up.

we could go on but it is patently wrong to say there are no issues which will exist. And management opposition exists BECAUSE they recognize every one of the three things above and more.

Quoting AirFrnt (Reply 4):
As opposed to working for DL management, which seems rather more inept right now then US?

Your comment is patently wrong since HP/US have 3 BK to their credit and still have not truly merged anything while DL has managed to bring about the fastest and most dramatic turnaround in the history of US aviation. There's nothing wrong with Delta that US didn't do three times worse.

US' proposal is wrong for everyone except for US - and in an industry that STILL exists to serve the public (every US airline has a certificate of public convenience), there is no room for screwing every other stakeholder so that a handful of industry financial interests and executives can benefit.

The reality is that US made the bid because its plan is failing. US' traffic over the winter is the lowest among the network carriers and is especially weak when compared with its east coast heavy peers. US still has way too much capacity in the wrong places and continues to face growing incursion of true low fare and low cost carriers in its markets.

Senate testimony today will convincingly put the US deal out to pasture. The US people and Congress have no interest in seeing consolidation in an industry that is as stable and profitalbe as it usually gets. The fact that US is not positioned to compete long-term is not relevant to the discussion about consolidation in the airline industry. It just means that US will probably file for BK again and will likely fail - after Parker walks away with millions of dollars.

Congratulations to the Delta people (employees, mgmt, government supporters, and customers) that have stood tall in opposing US Airways' proposal to unilaterally improve its own failing fortunes.


User currently offlinePanamair From United States of America, joined Oct 2001, 4910 posts, RR: 25
Reply 8, posted (7 years 7 months 4 weeks 1 day 5 hours ago) and read 2943 times:
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Quoting AirFrnt (Reply 1):
DL management has not proven that it is competent enough to remain in charge after this merger.

Oh, I'm sorry, did you mean the management team that will report a full year Operating Profit for 2006 after a $1.1 billion Operating Loss in 2005 (net of special items)? The same management team that recently reported a $52 million Operating Profit for the month of November 2006 alone, compared to say, $20 million for CO during the entire Q4 or $23 million for UA during the entire Q4?


User currently offlineSLCUT2777 From United States of America, joined Dec 2005, 4060 posts, RR: 11
Reply 9, posted (7 years 7 months 4 weeks 1 day 4 hours ago) and read 2877 times:

Quoting AirFrnt (Reply 4):
As opposed to working for DL management, which seems rather more inept right now then US?

I'd work for Jerry Grinstein any day of the week before I'd pack up and work for Doug Parker. All Parker has managed to do since the HP/US "financial" merger is get work groups of the two certificates pissed at each other (baggage handler fights in Phoenix!), not to mention further alienate his rank-n-file employees with his further manipulations in pursuing this wild goose chase trying to coral DL into a deal their creditors will refuse and tell him to hit the taxiway! Some manager! His last name might as well be Steenland!

Quoting Panamair (Reply 8):
Oh, I'm sorry, did you mean the management team that will report a full year Operating Profit for 2006 after a $1.1 billion Operating Loss in 2005 (net of special items)? The same management team that recently reported a $52 million Operating Profit for the month of November 2006 alone, compared to say, $20 million for CO during the entire Q4 or $23 million for UA during the entire Q4?

 checkmark  An HP/US cheerleader will never admit that their management team just doesn't stack up to rival carriers.

Quoting AirFrnt (Reply 4):
and oppose reasonable consolidation to protect their jobs.

Oppose ridiculous consolidation that will never work, only in the eyes of DL haters and HP/US (aka Doug Parker) cheerleaders.

Quoting AirFrnt (Reply 4):
The Airline industry is still struggling to play be deregulation rules.

I'm not sure if "master-manipulator" CEO's like Parker are the answer. He might have proven his ability to play hardball with the HP unions (much the way Doug Steenland runs NW), but he has failed to integrate HP work groups with the US work groups. Not very high marks in my estimation. But he can sure toy with Wall Street for short term gains! Grinstein on the other hand isn't in this for the money, he has already made his fortune as a Seattle based corporate attorney in the transportation sector, CEO of Western Airlines and BNSF Railroad. He is working right now as a minimum wage CEO for DL and has been doing so since taking over just over three years ago.

Quoting WorldTraveler (Reply 7):
The fact that US is not positioned to compete long-term is not relevant to the discussion about consolidation in the airline industry. It just means that US will probably file for BK again and will likely fail - after Parker walks away with millions of dollars.

 checkmark  BINGO! Over the next couple of years, DL will make HP/US taxiway/runway kill all over again!



DELTA Air Lines; The Only Way To Fly from Salt Lake City; Let the Western Heritage always be with Delta!
User currently offlineCOFanNYC From United States of America, joined Jan 2007, 215 posts, RR: 0
Reply 10, posted (7 years 7 months 4 weeks 1 day 4 hours ago) and read 2856 times:

Quoting WorldTraveler (Reply 7):
1. Anticompetitive - DOJ, influenced by the DOT and Congress who are most in touch with the American people.

Certainly the DoJ would have to take a good look into a merger of US/DL. The always mentioned shuttle operations and other bits and pieces would have to be shed before this deal would pass muster.

However, let's not try and claim that Congress is in touch with the American people. That might be pushing the envelope a little bit.  Silly


User currently offlineDoug_Or From United States of America, joined Mar 2000, 3407 posts, RR: 3
Reply 11, posted (7 years 7 months 4 weeks 1 day 4 hours ago) and read 2856 times:

What do the US employees think? I left a few months ago, but at the time most seemed to think it was a joke. I know DL employees have voiced their opposition, but whats the mood in the trenches @ US?


When in doubt, one B pump off
User currently offlineFlyusairways From United States of America, joined Dec 2005, 178 posts, RR: 3
Reply 12, posted (7 years 7 months 4 weeks 1 day 4 hours ago) and read 2849 times:

Quoting SLCUT2777 (Reply 9):
An HP/US cheerleader will never admit that their management team just doesn't stack up to rival carriers.

Hmmm, to dispute this statement, I must say that I'm not overly proud of US Airways management at this point--and look at my username!

Also, please read what I had to say in reply 37 to the following topic:

News Report : DL Takover Bid Faltering (by Litz Jan 23 2007 in Civil Aviation)

[Edited 2007-01-24 18:12:41]


All nonstop flights are direct, but not all direct flights are nonstop!
User currently offlineB727 From United States of America, joined Oct 1999, 521 posts, RR: 1
Reply 13, posted (7 years 7 months 4 weeks 1 day 4 hours ago) and read 2849 times:

Let me tell you, I'd rather give Doug's theroy and plan a try rather that not have a job at all in a few years if not sooner.

B727
Glenn


User currently offlineJetlanta From United States of America, joined Jul 2001, 3297 posts, RR: 35
Reply 14, posted (7 years 7 months 4 weeks 1 day 4 hours ago) and read 2809 times:

Quoting B727 (Reply 13):
Let me tell you, I'd rather give Doug's theroy and plan a try rather that not have a job at all in a few years if not sooner.

If that were the choice, then we'd all agree. But it really isn't...is it?


User currently offlineSHUPirate1 From United States of America, joined Sep 2003, 3670 posts, RR: 16
Reply 15, posted (7 years 7 months 4 weeks 1 day 3 hours ago) and read 2767 times:

Quoting WorldTraveler (Reply 7):
Your comment is patently wrong since HP/US have 3 BK to their credit and still have not truly merged anything while DL has managed to bring about the fastest and most dramatic turnaround in the history of US aviation. There's nothing wrong with Delta that US didn't do three times worse.

And US Airways, who was hours away from a Chapter Seven filing back in January of 2005, hasn't had a more dramatic turnaround?



Burma's constitutional referendum options: A. Yes, B. Go to Insein Prison!
User currently offlineSLCUT2777 From United States of America, joined Dec 2005, 4060 posts, RR: 11
Reply 16, posted (7 years 7 months 4 weeks 1 day 3 hours ago) and read 2752 times:

Quoting SHUPirate1 (Reply 15):
And US Airways, who was hours away from a Chapter Seven filing back in January of 2005, hasn't had a more dramatic turnaround?

And yet you think DL is hours away from turning to Chapter 7?

Quoting Flyusairways (Reply 12):
Hmmm, to dispute this statement, I must say that I'm not overly proud of US Airways management at this point--and look at my username!
Also, please read what I had to say in reply 37 to the following topic:

 checkmark  I read it, and I must now admit that due to it you've found you're way onto my respected users list. Others on this thread however are far from it!



DELTA Air Lines; The Only Way To Fly from Salt Lake City; Let the Western Heritage always be with Delta!
User currently offlineFlyusairways From United States of America, joined Dec 2005, 178 posts, RR: 3
Reply 17, posted (7 years 7 months 4 weeks 1 day 3 hours ago) and read 2721 times:

Quoting SLCUT2777 (Reply 16):
you've found you're way onto my respected users list

Thanks so much! I appreciate it.
Glad you understand my point!  Smile



All nonstop flights are direct, but not all direct flights are nonstop!
User currently offlineSEPilot From United States of America, joined Dec 2006, 6907 posts, RR: 46
Reply 18, posted (7 years 7 months 4 weeks 1 day 3 hours ago) and read 2683 times:

The fact that the DL employees seem to be almost universally against it bodes very ill for all concerned if it goes through. Doug should quietly fold his tent and go elsewhere; if he does get the merger he'll doubtless regret it very soon. Nothing good can happen if most of the employees are against you.


The problem with making things foolproof is that fools are so doggone ingenious...Dan Keebler
User currently offlineWorldTraveler From , joined Dec 1969, posts, RR:
Reply 19, posted (7 years 7 months 4 weeks 1 day 2 hours ago) and read 2650 times:

Quoting SHUPirate1 (Reply 15):
And US Airways, who was hours away from a Chapter Seven filing back in January of 2005, hasn't had a more dramatic turnaround?

First, the old US is not the new US. It was acquired by HP. So no, US didn't accomplish a turnaround. Second, US and HP both had bankruptcies and federal loan guarantees to get where they are today. DL has had no ATSB loans. So, based on resources available to it, DL has accomplished its turnaround more on its own than either US or HP did. And third, DL has accomplished its turnaround faster than either US or HP did - and DL is a much larger airline.

Quoting COFanNYC (Reply 10):
Certainly the DoJ would have to take a good look into a merger of US/DL. The always mentioned shuttle operations and other bits and pieces would have to be shed before this deal would pass muster.

And everyone still thinks you can rip the heart out of US or DL and expect the remainder to work. Where do you think DL and US are most profitable but in its key routes in NYC or WAS? The only reason Parker is willing to talk about selling off key assets is to gain control of the rest of DL which is much more valuable than what he would have to give up. All the while ignoring the reality that WN and every other true LFC will come in and drop fares so low that no network carrier can make money at high cost stations like LGA.

Quoting Doug_Or (Reply 11):
What do the US employees think? I left a few months ago, but at the time most seemed to think it was a joke. I know DL employees have voiced their opposition, but whats the mood in the trenches @ US?

I missed the introductions at the Senate hearings but I believe it was an ex-TW, now US or HP labor representative that was telling Doug Parker that completing the integration of US/HP was absolutely necessry if US had any chance of making a DL/US integration work.

Quoting B727 (Reply 13):
Let me tell you, I'd rather give Doug's theroy and plan a try rather that not have a job at all in a few years if not sooner.

There are alot of people in Washington that aren't willing to let someone "try" a plan at the expense of the American people - esp. since there were no shortage of experts and Senators that testified that Parker's promises can't be counted on to actually happen.


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