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Will Wall Street Allow Delta To Go It Alone?  
User currently offlineSLCUT2777 From United States of America, joined Dec 2005, 4068 posts, RR: 11
Posted (6 years 7 months 3 weeks 1 day 2 hours ago) and read 4837 times:

http://www.ajc.com/business/content/...stories/2008/02/01/delta_0202.html
It seams that the #2 executive at DL is now rattling the "We'll go it alone" sabre. Does DL have the ability to stand alone and make it?
Does Ed Bastian have a leg to stand on in saying this?
Will the creditors who control the majority of the DAL listed shares, and the hedge fund managers such as Pardus to continue to push the merger button?
Do any of them (the creditors) regret not taking Doug Parker's offer a year ago?


DELTA Air Lines; The Only Way To Fly from Salt Lake City; Let the Western Heritage always be with Delta!
44 replies: All unread, showing first 25:
 
User currently offlineFlyASAGuy2005 From United States of America, joined Sep 2007, 7004 posts, RR: 11
Reply 1, posted (6 years 7 months 3 weeks 1 day 2 hours ago) and read 4813 times:



Quoting SLCUT2777 (Thread starter):
It seams that the #2 executive at DL is now rattling the "We'll go it alone" sabre. Does DL have the ability to stand alone and make it?

This is what they have been "rattling" since they emerged from bankrupcy so it shouldn't be any surprise.

Quoting SLCUT2777 (Thread starter):
Does Ed Bastian have a leg to stand on in saying this?

Their books and cost cutting measures would speak for themselves, so yes.

Quoting SLCUT2777 (Thread starter):
Will the creditors who control the majority of the DAL listed shares, and the hedge fund managers such as Pardus to continue to push the merger button?

So long as they get their money back, of course!  Smile

Quoting SLCUT2777 (Thread starter):
Do any of them (the creditors) regret not taking Doug Parker's offer a year ago?

I doubt it. Judging the price of US stock, they wouldn't have gotten a great return.



What gets measured gets done.
User currently offlineFlyASAGuy2005 From United States of America, joined Sep 2007, 7004 posts, RR: 11
Reply 2, posted (6 years 7 months 3 weeks 1 day 2 hours ago) and read 4798 times:

BTW, anyone noticed how Delta's market cap has rocketed by almost $2B? Wacky stuff. They are a little over a billion away from LUV...


What gets measured gets done.
User currently offlineSTT757 From United States of America, joined Mar 2000, 16872 posts, RR: 51
Reply 3, posted (6 years 7 months 3 weeks 1 day 2 hours ago) and read 4798 times:



Quoting SLCUT2777 (Thread starter):
It seams that the #2 executive at DL is now rattling the "We'll go it alone" sabre. Does DL have the ability to stand alone and make it

Absolutely not, DL's investors when considering the $10-11 Billion dollar offer from US Airways were told by DL management that if they passed on the US offer that DL would increase share holder value in DL through M&A. Fast forward to the present and now those investors who were offered $11 Billion are now stuck with DL which is currently worth only $5 Billion.

Folks like Pardus etc are pissed about not taking that US Airways offer, turns out they turned down the best value they were going to get with DL.



Eastern Air lines flt # 701, EWR-MCO Boeing 757
User currently offlineSLCUT2777 From United States of America, joined Dec 2005, 4068 posts, RR: 11
Reply 4, posted (6 years 7 months 3 weeks 1 day 2 hours ago) and read 4736 times:



Quoting STT757 (Reply 3):
Folks like Pardus etc are pissed about not taking that US Airways offer, turns out they turned down the best value they were going to get with DL.

I think Pardus invested in mostly UA stock after they emerged and that was likewise the case with DL. But you're correct that Pardus is a "short term" Hedge Fund operation that looks at quick short term investments.
The biggest "what if" on the failed DL+HP+US merger a year ago is how it would of affected the LCC stock price right now given the market conditions, most notably fuel costs, given the current Tempe based US managements ability to integrate etc...



DELTA Air Lines; The Only Way To Fly from Salt Lake City; Let the Western Heritage always be with Delta!
User currently offlineEvilForce From , joined Dec 1969, posts, RR:
Reply 5, posted (6 years 7 months 3 weeks 1 day 1 hour ago) and read 4699 times:



Quoting FlyASAGuy2005 (Reply 1):
I doubt it. Judging the price of US stock, they wouldn't have gotten a great return.

Really? The standing offer was $5 billion in cash, with $5 billion in stock. DL didn't even make a counter offer. They quite likely could have gotten $ 6 billion in cash + stock. You can't compare LCC's stock right now since a merged company would have had more revenue, size, assets, etc. Even in a very conservative estimate, the creditors of DL would have gotten $ 8 billion or more for the sell out.

Plus, we haven't even touched on what the cost of $ 6 to $ 8 billion in lost opportunity capital is worth within those own creditor's business models. Let's say a 20% return would be at the bottom end of acceptable. It was a gamble, and they double downed instead of cashing in. Time will tell if it was a smart choice.


User currently offlineBobnwa From United States of America, joined Dec 2000, 6475 posts, RR: 9
Reply 6, posted (6 years 7 months 3 weeks 1 day 1 hour ago) and read 4700 times:



Quoting STT757 (Reply 3):
Fast forward to the present and now those investors who were offered $11 Billion are now stuck with DL which is currently worth only $5 Billion.

They were offered stock in the new US Airways worth 11B at the time. It is worth nowhere near that now so the DL value of 5 billion doesn't look bad.


User currently offlineEvilForce From , joined Dec 1969, posts, RR:
Reply 7, posted (6 years 7 months 3 weeks 1 day 1 hour ago) and read 4682 times:



Quoting Bobnwa (Reply 6):
They were offered stock in the new US Airways worth 11B at the time. It is worth nowhere near that now so the DL value of 5 billion doesn't look bad.

Cash and stock worth $10 - $11 billion.

1/2 cash - 1/2 stock roughly


User currently offlineBreaker1011 From United States of America, joined Nov 2007, 938 posts, RR: 2
Reply 8, posted (6 years 7 months 3 weeks 1 day 1 hour ago) and read 4682 times:



Quoting SLCUT2777 (Reply 4):
I think Pardus invested in mostly UA stock after they emerged and that was likewise the case with DL. But you're correct that Pardus is a "short term" Hedge Fund operation that looks at quick short term investments.
The biggest "what if" on the failed DL+HP+US merger a year ago is how it would of affected the LCC stock price right now given the market conditions, most notably fuel costs, given the current Tempe based US managements ability to integrate etc...

Well stated. I personally feed that to keep carrying a "failed $10B bid" flag is simply not valid any longer. No one will ever know what the mostly LCC stock-based offer, combined with BORROWED cash, would have held today as far as net present value of the failed US bid should a marriage have been consumated. It would probably be a company slightly more valuable than DL alone is today - however many variables - the heavier debt load (would have been the heaviest in the industry by a mile), the likely bungled intergration of the "3" carriers, and the over-valuation of LCC stock at the time in the first place - would make the resulting NPV very hard to predict.

It's easier for funds like Pardus to avoid considering all of those variables and just keep trying to leverage DL's management against the "failed $10B bid."



Life's tough. It's even tougher if you're stupid. J. Wayne
User currently offlineBreaker1011 From United States of America, joined Nov 2007, 938 posts, RR: 2
Reply 9, posted (6 years 7 months 3 weeks 1 day 1 hour ago) and read 4653 times:

After seeing Evil's post, he makes an excellent point. There are two discussions to be had here:

1) What could creditors have walked-away with at the time
2) What would an LCC+DAL entity be valued at today

Evil's most likely VERY right in item #1 in that creditors would have walked away with more had they accepted, if short term value was the name of the game (and it was - always is in most BK's). The fact that the entire cash offer would have been borrowed by LCC is of no consequence to the creditors - it's in their pocket and LCC pays off the loan(s). Plus add some LCC stock of questionable NPV, sell it off, and yes you'd have walked away with more in the short term FOR SURE.

The combined entity's NPV itself though, per my previous post, would be the big question, assuming that creditors are indeed hanging on to DAL.



Life's tough. It's even tougher if you're stupid. J. Wayne
User currently offlineSTT757 From United States of America, joined Mar 2000, 16872 posts, RR: 51
Reply 10, posted (6 years 7 months 3 weeks 1 day 1 hour ago) and read 4632 times:



Quoting Bobnwa (Reply 6):
They were offered stock in the new US Airways worth 11B at the time.

As mentioned half of that $11 Billion was cash.



Eastern Air lines flt # 701, EWR-MCO Boeing 757
User currently offlineEvilForce From , joined Dec 1969, posts, RR:
Reply 11, posted (6 years 7 months 3 weeks 1 day 1 hour ago) and read 4624 times:



Quoting Breaker1011 (Reply 9):
The combined entity's NPV itself though, per my previous post, would be the big question, assuming that creditors are indeed hanging on to DAL.

Yup, we agree. Time will tell all. It may be the biggest boneheaded thing they did by holding onto DL. Or, it could be a stroke of genius that will land them on the front cover of Business Week as savvy investors. Or, somewhere in-between. I posted this on the other thread as well: http://www.airlineforecasts.com/weal...ature_of_the_airline_industry.html

It's an interesting read nonetheless. An asset spin might be just the best play in the current market.


User currently offlineSTT757 From United States of America, joined Mar 2000, 16872 posts, RR: 51
Reply 12, posted (6 years 7 months 3 weeks 1 day 1 hour ago) and read 4622 times:

Doug Parkers take;

http://www.cnbc.com/id/15840232?play...oo|headline|quote|video|&par=yahoo



Eastern Air lines flt # 701, EWR-MCO Boeing 757
User currently offlineBobnwa From United States of America, joined Dec 2000, 6475 posts, RR: 9
Reply 13, posted (6 years 7 months 3 weeks 1 day 1 hour ago) and read 4607 times:



Quoting STT757 (Reply 10):
As mentioned half of that $11 Billion was cash.

Borrowed cash, so that the debt of the newer company would have gone way up and the stock value down.


User currently offlineSTT757 From United States of America, joined Mar 2000, 16872 posts, RR: 51
Reply 14, posted (6 years 7 months 3 weeks 1 day 1 hour ago) and read 4594 times:



Quoting Bobnwa (Reply 13):
Borrowed cash, so that the debt of the newer company would have gone way up and the stock value down.

The investors/creditors don't care where the cash came from, many of whom would have walked after the transaction.



Eastern Air lines flt # 701, EWR-MCO Boeing 757
User currently offlineBreaker1011 From United States of America, joined Nov 2007, 938 posts, RR: 2
Reply 15, posted (6 years 7 months 3 weeks 1 day 1 hour ago) and read 4566 times:

No matter what you think of Parker, he's trying to get back into the public eye right now in a BIG way and for good reason. He's the only industry executive right now with any recent, considerable experience with a merger, yet all the attention to that experience is rather negative (it was bungled, still is). If he's going to survive as a leader in the industry he has some repair work to do on image (some bad press) and performance of his company. I see all of his recent interviews and commentaries consistently talking to the failed DL bid in effort to try to portray himself as a "father" of today's airline M&A, thus making himself more attractive to investors that might one day be faced with a "leadership decision" should US be swallowed-up. So, some "personal marketing" if you will. Can't blame him really, right or wrong in whomever's eyes! He's a very smart guy and employees used to love him, he just got in a bit over his head.


Life's tough. It's even tougher if you're stupid. J. Wayne
User currently offlineMariner From New Zealand, joined Nov 2001, 25269 posts, RR: 85
Reply 16, posted (6 years 7 months 3 weeks 1 day 1 hour ago) and read 4536 times:
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Quoting Bobnwa (Reply 13):
so that the debt of the newer company would have gone way up and the stock value down.

Delta stock value has gone down anyway.

Delta stock only just reached, for a very short time, the lowest end of the valuation that Delta had put on it to deflect the US offer.

mariner



aeternum nauta
User currently offlineFlyASAGuy2005 From United States of America, joined Sep 2007, 7004 posts, RR: 11
Reply 17, posted (6 years 7 months 3 weeks 1 day 1 hour ago) and read 4522 times:



Quoting STT757 (Reply 3):
DL which is currently worth only $5 Billion.

As I stated, Delta's going rate is currently $7.32B and seeing as how everyone likes to compare everything in the aviation industry to Southwest, here's mine. They are at $8.94B. Not to bad in my eyes.

Again, seems like creditors like Paradus couldn't have given a rat's ass about what happened to Delta and US. Although I don't like them, I whole heartedly DO care about what happens to US, NW, LUV, or any other airline for that matter. Would the combined company have been a better company? I don't see how. Yeah the rich would have gotten richer and the little guys get kicked in the ass. Then, the BOD would have looked like a bunch of ass holes once the botched deal finally took it's tole on the combined company.

Anyone care to elaborate on what the combined debt load would have been again?



What gets measured gets done.
User currently offlineMoMan From United States of America, joined Aug 2004, 1054 posts, RR: 4
Reply 18, posted (6 years 7 months 3 weeks 1 day 1 hour ago) and read 4514 times:



Quoting Breaker1011 (Reply 15):
No matter what you think of Parker, he's trying to get back into the public eye right now in a BIG way and for good reason. He's the only industry executive right now with any recent, considerable experience with a merger, yet all the attention to that experience is rather negative (it was bungled, still is). If he's going to survive as a leader in the industry he has some repair work to do on image (some bad press) and performance of his company. I see all of his recent interviews and commentaries consistently talking to the failed DL bid in effort to try to portray himself as a "father" of today's airline M&A, thus making himself more attractive to investors that might one day be faced with a "leadership decision" should US be swallowed-up. So, some "personal marketing" if you will. Can't blame him really, right or wrong in whomever's eyes! He's a very smart guy and employees used to love him, he just got in a bit over his head.

Parker took two companies both on the brink of disaster and combined them, if only in name. He has a poor track record at mergers and customer service since then. AW was once a small, nimble carrier. Parker would have had much more respect throughout the industry if he had went after NW - with DL there was very little gains to be made outside of cutting costs and overlapping operations. DL + US was too overlapping, where US + NW would have been a much better combination and allowed him to keep his respect. Until Parker cleans up the mess of US Airways (which is arguably moving in the right direction), his opinions will be diminished.



AA Platinum Member - American Airlines Forever
User currently offlineBreaker1011 From United States of America, joined Nov 2007, 938 posts, RR: 2
Reply 19, posted (6 years 7 months 3 weeks 1 day 1 hour ago) and read 4512 times:



Quoting FlyASAGuy2005 (Reply 17):
As I stated, Delta's going rate is currently $7.32B and seeing as how everyone likes to compare everything in the aviation industry to Southwest, here's mine. They are at $8.94B. Not to bad in my eyes

ASAGuy - can you tell me where the $7.32B figure comes from? As of Friday, I'm seeing $4.46B for DAL and $9.1B for LUV. Is there something you're adding to DL's market cap that's not being added to LUV's?



Life's tough. It's even tougher if you're stupid. J. Wayne
User currently offlineFlyASAGuy2005 From United States of America, joined Sep 2007, 7004 posts, RR: 11
Reply 20, posted (6 years 7 months 3 weeks 1 day 1 hour ago) and read 4485 times:

This is from yahoo. I can see what you are saying but go yahoo finance and that's the numbers they are producing. Not sure where they get it but it's there...


What gets measured gets done.
User currently offlineMasseyBrown From United States of America, joined Dec 2002, 5438 posts, RR: 7
Reply 21, posted (6 years 7 months 3 weeks 1 day 1 hour ago) and read 4478 times:



Quoting SLCUT2777 (Thread starter):
Does DL have the ability to stand alone and make it?

Probably; but there are negatives, which don't get discussed much. First is a substantial debt load - way more than tangible assets. Second is a forecast of low growth in international flying in 2008 in the face of a large increment of new int'l flying by DL.

http://www.iata.org/pressroom/pr/2007-12-12-01.htm

Next, despite airlines saying we're ok through March, the US market looks soft. DL is losing money this winter and their better-than-ok performance last summer will turn to loses with the slightest decline in traffic. Even when they made profits in Q3, their cash flow was negative.

None of this will be a problem if the period of weak traffic is brief; they can easily stand a bad year. Anything more than that would require them to take another look at what they're doing.



I love long German words like 'Freundschaftsbezeigungen'.
User currently offlineEvilForce From , joined Dec 1969, posts, RR:
Reply 22, posted (6 years 7 months 3 weeks 1 day 1 hour ago) and read 4470 times:



Quoting Breaker1011 (Reply 15):
No matter what you think of Parker, he's trying to get back into the public eye right now in a BIG way and for good reason. He's the only industry executive right now with any recent, considerable experience with a merger, yet all the attention to that experience is rather negative (it was bungled, still is). If he's going to survive as a leader in the industry he has some repair work to do on image (some bad press) and performance of his company. I see all of his recent interviews and commentaries consistently talking to the failed DL bid in effort to try to portray himself as a "father" of today's airline M&A, thus making himself more attractive to investors that might one day be faced with a "leadership decision" should US be swallowed-up. So, some "personal marketing" if you will. Can't blame him really, right or wrong in whomever's eyes! He's a very smart guy and employees used to love him, he just got in a bit over his head.

Here's the thing.... he's done as good of a job as can be expected. Airliner mergers are notoriously hard. If you don't think a DL/NW or DL/Anyone merger isn't going to be just as problematic, you are sorely mistaken. You can armchair quarter back what Mr. Parker did incorrectly ad infinitum, but virtually every merger combination mentally imagined...will be just as hard for any other company/executive to pull off.

I've said a dozen times before, be careful what you wish for. If Delta is "successful" in buying another carrier, it statistically is more apt to end in failure than success. Not good odds.


User currently offlineBreaker1011 From United States of America, joined Nov 2007, 938 posts, RR: 2
Reply 23, posted (6 years 7 months 3 weeks 1 day ago) and read 4441 times:

How interesting is that! Here's what I found for DAL's market cap from various sources. Perhaps someone smarter than me knows how to explain the differences reported? Looks to me that the $4.98B's have it (or may just be all reporting from the same source).

Excite: $4.46B
Yahoo: $7.32B
WSJ: $4.98B
AJC: $4.98B
CNN: $4.98B
Fortune: $4.98B
Reuters: $5.01B



Life's tough. It's even tougher if you're stupid. J. Wayne
User currently offlineFlyASAGuy2005 From United States of America, joined Sep 2007, 7004 posts, RR: 11
Reply 24, posted (6 years 7 months 3 weeks 1 day ago) and read 4435 times:

Well from the looks of it, I would have to say yahoo! is full of it as everyone else's numbers are right around the same. Where do they pull this information from anyway? As stated, I thought it strange it jumped $2B in a few days.


What gets measured gets done.
25 Breaker1011 : Laughing - Maybe Yahoo has already predicted the outcome of merger talks and is just trying to make it easy for us to see the value of the new Deluniw
26 MasseyBrown : I suspect the high Yahoo number is calculated by adding in DL's stock dilution of 100 million shares (coming this year?) without reducing the share p
27 Breaker1011 : AH - good thought there Massey. So to restate - the "assumption" on their part in this case is that 100 million shares, once offered to the market, wi
28 Alphascan : Parker has always been a "deal" guy. He has never run an airline very well. HP had a terrible culture, one where nobody trusted anyone else between f
29 Breaker1011 : I've read alot in the past that HP and even some post-merger employees felt Doug was out with the troops, respected, available to talk, and had built
30 Post contains images FlyASAGuy2005 : Great way to look at it. Every day that goes by, the more I look at Ed Bastian as a puppet and am now glad he is not at the helm, although that is no
31 WorldTraveler : And while you may be absolutely right that they wished they could have cashed out then, it's all academic now because the government wouldn't have al
32 MoMan : That's a good point. Retail World 101. There's a reason it's called Black Friday and airlines are not immune from any other business which is selling
33 Breaker1011 : Good way to position this - finally I agree with you WT as a fellow DL fan.
34 MasseyBrown : We are not discussing relative performance. We are discussing DL's ability to survive on its own. What is this obsession? Why do you need to inject C
35 STT757 : Why do you continue to make false statements about CO to divert attention away from DL? I checked all of CO's Quarterly reports for 2007 and every si
36 MrLurker : The $7 Billion and change number is the most accurate. All of the institutional investors (the only people that matter when determining stock price)
37 Continental180 : this is retarded!! they just said yesterday that they were going to merger with continental, now the president says we can stand a this alone? this is
38 SLCUT2777 : The U.S.A is effectively already in a recession, despite any of the B.S. we'll continue to hear from the final year of the administration at 1600 Pen
39 Post contains images FlyASAGuy2005 : Everyone say it with me! RANT! LOL Ok, please quote where Delta said "we are going to merge with Continental". Also for that matter, please quote whe
40 Continental180 : im aware it wasnt said, but with all this merger talk, it seems like delta is always in the middle of it, and/or started it. its just annoying...becu
41 Lowecur : Lots of posturing right now, as everyone is happy with future bookings. DL and creditors want to choose a dance partner in the next 60 days. Steenland
42 Bobnwa : Did we all except you, miss Delta saying this?
43 Alphascan : Effectively? Either we are or we aren't. A recession is a measurable phenomenon. It is two consecutive quarters of negative y/y growth in the GDP. No
44 ATLAaron : If you click on the linked article in the OP, did anyone else notice how much weight Bastain has gained? Irrelevant I know but still.
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