positiverate
Posts: 1543
Joined: Thu May 05, 2005 10:35 pm

Delta Seeks Creditor Help To Fend Off US Air Bid

Sat Nov 18, 2006 5:37 am

Delta Seeks Creditor Help to Fend Off US Air Bid: Report

NEW YORK ( Reuters) - Bankrupt Delta Air Lines Inc. (DALRQ.PK) is trying to rally support from creditors to help fend off a takeover bid by US Airways Group Inc. (LCC.N), the Wall Street Journal reported on its Web site on Friday.

Delta Chief Executive Gerald Grinstein and other executives have held a series of conference calls with creditors to sift through terms of US Airways' offer, pressing creditors to back Delta's restructuring plan, the paper said.

More here: http://www.nytimes.com/reuters/business/business-aero-delta.html
 
User avatar
TVNWZ
Posts: 1717
Joined: Fri Feb 17, 2006 9:28 am

RE: Delta Seeks Creditor Help To Fend Off US Air Bid

Sat Nov 18, 2006 6:05 am

Here is what I predict:

The creditors will act like the deal is "insufficient" to force the price up a little more. and they will have "concerns" over some other aspects, for the same reason.

DL will attempt to come up with better numbers than US if the creditors go along with DL's plan. Ultimately, they will accept the plan that puts more net dollars in their pockets.
 
flydl2atl
Posts: 115
Joined: Sat Aug 20, 2005 9:47 am

RE: Delta Seeks Creditor Help To Fend Off US Air Bid

Sat Nov 18, 2006 6:27 am

Does anybody have a list of Delta's largest creditors? If I recall correctly, Boeing is up there on the list. Wouldn't it make a lot more sense for Boeing to back DL Mgmt. After all, future DL orders under the current mgmt are almost a lock and we're talking billions of dollars worth. However, if DL is aquired by US or UA wouldn't those same orders be in jeopardy of being lost to Airbus? I would think Boeing and Amex would definitely line up with DL MGMT. It seems they have a lot to lose with DL under USAirways.
 
jcavinato
Posts: 392
Joined: Sun Jan 02, 2005 9:14 am

RE: Delta Seeks Creditor Help To Fend Off US Air Bid

Sat Nov 18, 2006 6:51 am

TVNWZ, your're right on the money with this scenario/prediction. Having been on a few company boards (a few of them through merger and acquisition), this is to be expected.
 
SESGDL
Posts: 2621
Joined: Sat Jan 13, 2001 6:25 am

RE: Delta Seeks Creditor Help To Fend Off US Air Bid

Sat Nov 18, 2006 7:43 am

Quoting TVNWZ (Reply 1):
DL will attempt to come up with better numbers than US if the creditors go along with DL's plan. Ultimately, they will accept the plan that puts more net dollars in their pockets.

Are you saying they will accept DL's plan or US's plan? Good God I hope this doesn't go through!

Jeremy
 
ScottB
Posts: 5507
Joined: Fri Jul 28, 2000 1:25 am

RE: Delta Seeks Creditor Help To Fend Off US Air Bid

Sat Nov 18, 2006 8:07 am

Quoting Flydl2atl (Reply 2):
Does anybody have a list of Delta's largest creditors? If I recall correctly, Boeing is up there on the list.

The Delta pilots are up there on the list of unsecured creditors, since they were granted a large (around $2 billion if memory serves) unsecured claim in exchange for giving up additional wage concessions and agreeing to the pension plan termination. I believe the Pension Benefits Guarantee Corporation is also a large unsecured creditor.
 
deltaguy767
Posts: 644
Joined: Tue Jun 14, 2005 8:32 am

RE: Delta Seeks Creditor Help To Fend Off US Air Bid

Sat Nov 18, 2006 8:20 am

Quoting ScottB (Reply 5):

The Delta pilots are up there on the list of unsecured creditors, since they were granted a large (around $2 billion if memory serves) unsecured claim in exchange for giving up additional wage concessions and agreeing to the pension plan termination. I believe the Pension Benefits Guarantee Corporation is also a large unsecured creditor.

Well I can tell you for sure that AMEX and GE Capital are numbers 1 and 2 on the unsecured creditors list because I had to do some accounts regarding the DL BK, however other than that I'm not allowed to divulge anything. Personally as a private citizen, I believe that the creditors will probably not accept the offer because they will be getting at most .25 on the dollar as they are owed 16 billion and are only guaranteed (cash) 4 billion from US with an additional $4 in stock options. A company such as AMEX or GE Capital or Boeing is not going to give up 75% of their cash investments into DL just to let it be taken off their hands. Unless we see 8-12 billion in cash being offered, the creditors will not let DL merge.

Cheers from BDL,  wave 
DeltaGuy767
A Good Landing is one you walk away from!
 
planemaker
Posts: 5411
Joined: Mon Aug 25, 2003 12:53 pm

RE: Delta Seeks Creditor Help To Fend Off US Air Bid

Sat Nov 18, 2006 8:21 am

Quoting TVNWZ (Reply 1):
The creditors will act like the deal is "insufficient" to force the price up a little more. and they will have "concerns" over some other aspects, for the same reason.

FYI, the Financial Times reported that Delta's unsecured debt was recently trading at around 40 cents on the dollar. For creditors money is all that matters... and US is beating the current 40 cents with their cash and stock offer.
Nationalism is an infantile disease. It is the measles of mankind. - A. Einstein
 
DAL767400ER
Posts: 5084
Joined: Wed Feb 09, 2005 2:47 am

RE: Delta Seeks Creditor Help To Fend Off US Air Bid

Sat Nov 18, 2006 8:25 am

Quoting Flydl2atl (Reply 2):
? If I recall correctly, Boeing is up there on the list. Wouldn't it make a lot more sense for Boeing to back DL Mgmt. After all, future DL orders under the current mgmt are almost a lock and we're talking billions of dollars worth.

No doubt about that. Now, I don't know how much $$$ Boeing has actually given to Delta, but they definitely see the order potential they have with Delta, namely:
-At least 5 77Ls in addition to DL's current 5 777s on order
-At least 100 787s, if not even 150-200, depening on what DL would replace their 757s with
-Either around 100 additional orders, or (longterm) 200+ 737RS/Y1 orders.
In short, DL would be too valuable of a customer for Boeing to lose, and I'm sure Grinstein&Co will mention that to Boeing on a regular basis  Wink .
 
haggis79
Posts: 535
Joined: Tue Jun 27, 2006 8:05 pm

RE: Delta Seeks Creditor Help To Fend Off US Air Bid

Sat Nov 18, 2006 8:27 am

Quoting Planemaker (Reply 7):
FYI, the Financial Times reported that Delta's unsecured debt was recently trading at around 40 cents on the dollar. For creditors money is all that matters... and US is beating the current 40 cents with their cash and stock offer.

yeah, but it's cash AND STOCK.... and the stock might become worthless pretty quick, if the merger fails and the entire combined entity US/DL goes bankrupt...
300 310 319/20/21 332/3 343 AT4/7 143 B19 732/3/4/5/G/8/9 742/4 752/3 763/4 77E/W CR2/7/9 D95 E45/70 F50 F70 100 M11 M90
 
dank
Posts: 928
Joined: Thu Jul 20, 2006 11:35 am

RE: Delta Seeks Creditor Help To Fend Off US Air Bid

Sat Nov 18, 2006 8:43 am

Quoting TVNWZ (Reply 1):
DL will attempt to come up with better numbers than US if the creditors go along with DL's plan. Ultimately, they will accept the plan that puts more net dollars in their pockets.

And this is potentially why the creditors may go along with US on this. I'm not saying they will. But in the end, they want to know which way will yield the biggest profit in the short and long term.

cheers.
 
planemaker
Posts: 5411
Joined: Mon Aug 25, 2003 12:53 pm

RE: Delta Seeks Creditor Help To Fend Off US Air Bid

Sat Nov 18, 2006 8:44 am

Quoting DeltaGuy767 (Reply 6):
Well I can tell you for sure that AMEX and GE Capital are numbers 1 and 2 on the unsecured creditors list because I had to do some accounts regarding the DL BK, however other than that I'm not allowed to divulge anything.

Here is the list of the top 20 unsecured creditors from their filing...


1 BOEING COMMERCIAL AIRPLANE GROUP $3,718,340,366 FUTURE AIRCRAFT COMMITMENTS

2 THE BANK OF NEW YORK $924,895,000 DELTA AIR LINES 8.30%

3 THE BANK OF NEW YORK $537,500,000 DELTA AIR LINES 8.125% DUE 2039

4 THE BANK OF NEW YORK $499,340,000 DELTA AIR LINES 7.90%

5 THE BANK OF NEW YORK $497,585,000 MASSPORT SERIES A, B & C

6 THE BANK OF NEW YORK $350,000,000 DELTA AIR LINES INC. 8% CONVERTBLE

7 THE BANK OF NEW YORK $325,000,000 DELTA AIRLINES 2.875% CONV. SR.

8 THE BANK OF NEW YORK $295,495,000 DEVELP AUTH OF CLAYTON CNTY-A,

9 THE BANK OF NEW YORK $247,772,000 DELTA AIR LINES 10.00% SENIOR

10 THE BANK OF NEW YORK $135,202,000 8.00% NOTES DUE 2007

11 SUNTRUST BANK $124,770,000 FULTON COUNTY - OCIII

12 THE BANK OF NEW YORK $121,975,000 DELTA AIR LINES 7.70%

13 THE BANK OF NEW YORK $105,766,000 DELTA AIR LINES 9.75%

14 THE BANK OF NEW YORK $102,455,000 DELTA AIR LINES 9.00%

15 THE BANK OF NEW YORK $84,665,000 DELTA AIR LINES 10.125%

16 THE BANK OF NEW YORK $68,725,000 DELTA AIR LINES 10.375% DUE 2011

17 THE BANK OF NEW YORK $63,548,000 DELTA AIR LINES INC. 9.25% DUE 2022

18 THE BANK OF NEW YORK $54,329,000 DELTA AIR LINES INC. 10.375%

19 SUNTRUST BANK $29,900,000 FULTON COUNTY - 1992

20 THE BANK OF NEW YORK $27,500,000 DELTA AIR LINES MTN SERIES B

Quoting Haggis79 (Reply 9):
yeah, but it's cash AND STOCK.... and the stock might become worthless pretty quick, if the merger fails and the entire combined entity US/DL goes bankrupt...

Well, you don't know how much is cash and how much is stock. And, judging from the market's reaction to the news and the result of the HP/US merger (AC made a killing), the market is looking at this proposed merger favourably.
Nationalism is an infantile disease. It is the measles of mankind. - A. Einstein
 
User avatar
TVNWZ
Posts: 1717
Joined: Fri Feb 17, 2006 9:28 am

RE: Delta Seeks Creditor Help To Fend Off US Air Bid

Sat Nov 18, 2006 8:47 am

Quoting SESGDL (Reply 4):
Are you saying they will accept DL's plan or US's plan? Good God I hope this doesn't go through!

The plan with the most net dollars.

Quoting Jcavinato (Reply 3):
TVNWZ, your're right on the money with this scenario/prediction. Having been on a few company boards (a few of them through merger and acquisition), this is to be expected.

Glad to find another board colleague!

Quoting Planemaker (Reply 7):
FYI, the Financial Times reported that Delta's unsecured debt was recently trading at around 40 cents on the dollar. For creditors money is all that matters... and US is beating the current 40 cents with their cash and stock offer

This is indeed a big indicator. And as noted by Haggis79, stock is important too. But, Haggis 79, Parker has a very, very good stock record. the faact that Citi is willing to pony up the $4B cash gets Wall Streets attention big time.

Quoting DeltaGuy767 (Reply 6):
A company such as AMEX or GE Capital or Boeing is not going to give up 75% of their cash investments into DL just to let it be taken off their hands. Unless we see 8-12 billion in cash being offered, the creditors will not let DL merge.

Sure they will. The creditors will go with the offer that they think is safest and nets them the most dollars. Parker has a track record that could make those creditors very comfortable. They are businessmen. they will go for the money.

Quoting DAL767400ER (Reply 8):
DL would be too valuable of a customer for Boeing to lose, and I'm sure Grinstein&Co will mention that to Boeing on a regular basis .

Who says Boeing would lose? The alliances of today, may be different tomorrow. Parker will tell Boeing what they need to hear to make them comfortable to accept the deal. Or he would not be doing the deal.

US management has looked at this inside and out. I would not be surprised if they haven't already talked to AMEX, Boeing, GE and others (in a strictly off the record, golf game at the club over drinks and a steak kinda way.)

These are not stupid people.

I have looked at the Power Point presentation in the US website and listened to the conference call. From a business point of view, which I know a lot more about than the airline point of view, this is an unbelievably attractive deal. The assumptions are conservative, the labor costs assume the highest rate and the math adds up and makes sense--as presented.

Strong plan. Strong track record with Wall Street. Interesting to see what happens.
 
ScottB
Posts: 5507
Joined: Fri Jul 28, 2000 1:25 am

RE: Delta Seeks Creditor Help To Fend Off US Air Bid

Sat Nov 18, 2006 9:14 am

Quoting Planemaker (Reply 7):
FYI, the Financial Times reported that Delta's unsecured debt was recently trading at around 40 cents on the dollar. For creditors money is all that matters... and US is beating the current 40 cents with their cash and stock offer.

But the big question mark is the value of the stock being offered. Right now, LCC is trading at a P-E ratio of 128 (though the forward P-E ratio is 8). Moreover, LCC's share price is at a whopping 6.0 times the book value of the company; compare that to LUV at 1.91.

I don't believe this offer will be sweet enough to sway the creditors, and the escalation in the value of the unsecured debt to above the US Airways offer value probably corroborates that.
 
JetBlueGuy2006
Posts: 1482
Joined: Wed Jan 11, 2006 5:38 am

RE: Delta Seeks Creditor Help To Fend Off US Air Bid

Sat Nov 18, 2006 9:29 am

I really hope this doesn't go through. I just think some mergers are a good idea, i.e. US + HP, and others are an extreamly bad idea, the proposed US+DL. I really hope DL can fend this off.
Home Airport: Capital Region International Airport (KLAN)
 
Lufthansa
Posts: 2303
Joined: Thu May 20, 1999 6:04 am

RE: Delta Seeks Creditor Help To Fend Off US Air Bid

Sat Nov 18, 2006 9:37 am

Quoting TVNWZ (Reply 12):
Who says Boeing would lose? The alliances of today, may be different tomorrow. Parker will tell Boeing what they need to hear to make them comfortable to accept the deal. Or he would not be doing the deal.

Exactly! Well said!

I would assume it in many ways would actually be quite attractive to Boeing in terms of Additional 777 sales. We could see US Airways A333s dumped or redeployed elsewhere, and many of the 767 routes upgraded to larger equipment from a single hub. Operating the 764 or A333 that were previously 762/763 type flights will bring significant cost savings there in itself (provided they can be filled), now take that a step further and make all those flights 773ER or even as a stopgap measure some 744s, once again, provided they can be filled, you're going to see significant economies of scales gained. I' would think beoing's chances of scoring more longhaul aircraft is good. Possibly even additional 764 (because there are already a large fleet) and i'd say almost without question more 777s.

As for AMEX?
they'll go where the money is.
 
Evan767
Posts: 2198
Joined: Wed Aug 24, 2005 10:52 am

RE: Delta Seeks Creditor Help To Fend Off US Air Bid

Sat Nov 18, 2006 11:35 am

Please work. Can someone give me their opinion of if my mother would be O.K. if the merger were to go through with a senority date of 98 with DL? Nobody wants this to go through and if it does, it's bound to screw over thousands of employees. My mother says the new airline would have around 75,000 employees and DL currently employs about 65,000.
The proper term is "on final" not "on finals" bud...
 
DeltaGuy
Posts: 3965
Joined: Wed Sep 12, 2001 5:25 am

RE: Delta Seeks Creditor Help To Fend Off US Air Bid

Sat Nov 18, 2006 11:40 am

Quoting ScottB (Reply 5):
I believe the Pension Benefits Guarantee Corporation is also a large unsecured creditor.

They have 2.9B IIRC.

Quoting Evan767 (Reply 16):
Nobody wants this to go through and if it does, it's bound to screw over thousands of employees.

And how many other families? I hate how Parker uses that word "synergies"...basically means streamline by eliminating people.

Delta can and will ward this off. UselessAir is the worst choice for a merger, and I hope the creditors feel the same way.

DeltaGuy
"The cockpit, what is it?" "It's the little room in the front of the plane where the pilot sits, but that's not importan
 
silentbob
Posts: 1541
Joined: Tue Aug 15, 2006 1:26 pm

RE: Delta Seeks Creditor Help To Fend Off US Air Bid

Sat Nov 18, 2006 11:53 am

Quoting Evan767 (Reply 16):
Please work. Can someone give me their opinion of if my mother would be O.K. if the merger were to go through with a senority date of 98 with DL? Nobody wants this to go through and if it does, it's bound to screw over thousands of employees. My mother says the new airline would have around 75,000 employees and DL currently employs about 65,000.

Depends on what she does and where she does it.
 
User avatar
SLCUT2777
Posts: 3411
Joined: Sun Jan 01, 2006 12:17 am

RE: Delta Seeks Creditor Help To Fend Off US Air Bid

Sat Nov 18, 2006 12:04 pm

Quoting DeltaGuy767 (Reply 6):
A company such as AMEX or GE Capital or Boeing is not going to give up 75% of their cash investments into DL just to let it be taken off their hands. Unless we see 8-12 billion in cash being offered, the creditors will not let DL merge.

And again, how much of DL would US really have to give up to please the FTC? A whole hell of alot more than one of the two east coast shuttles! They would have to cannibalize what is left between both of them that I highly doubt this plan will work. I think you're very correct that it will take more than $8 billion to get the big unsecured creditors at DL to fall for this manipulative scheme Parker has put into play.

Quoting ScottB (Reply 13):
I don't believe this offer will be sweet enough to sway the creditors, and the escalation in the value of the unsecured debt to above the US Airways offer value probably corroborates that.

Which is exactly what I'm trying to point out above. This deal is MUCH MORE COMPLICATED than what people think, and isn't a slam dunk for DL going over to US.

Quoting Haggis79 (Reply 9):
yeah, but it's cash AND STOCK.... and the stock might become worthless pretty quick, if the merger fails and the entire combined entity US/DL goes bankrupt...

And getting this thing to work is a major issue, and WILL GO BK faster than PanAm after they overbid for National.

Quoting Lufthansa (Reply 15):
As for AMEX?
they'll go where the money is.

They sure as heck won't take .25 cents on the $$$ owed them by DL and run. They know a stand alone DL will make money and then they can get a real return rather than a fast cut of nothing.

Quoting TVNWZ (Reply 12):
These are not stupid people.

But some are obviously on the crack-pipe on the golf course thinking this will work! Fourteen months ago maybe, but at this point of the BK game i think it is a little too late.

Quoting DeltaGuy (Reply 17):
Delta can and will ward this off. UselessAir is the worst choice for a merger, and I hope the creditors feel the same way.

If Boeing, GE Capitol and AMEX don't pull the plug on it first you can bet the FTC will say so.
DELTA Air Lines; The Only Way To Fly from Salt Lake City; Let the Western Heritage always be with Delta!
 
flydreamliner
Posts: 1928
Joined: Sat Jan 07, 2006 7:05 am

RE: Delta Seeks Creditor Help To Fend Off US Air B

Sat Nov 18, 2006 12:34 pm

My guess is that the creditors are looking long term. The US offer isn't the most viable long term. The analysts say right time, wrong airline. My guess is that the creditors don't find Parker's current offer big enough, appealing enough. If UAL made an offer 10-15% bigger, it might be a more viable deal all around. The last thing the creditors want is for DL to start spending money left and right on the merger and then have it fall through or get blocked by the regulators.... so unless the buyout offer is much more than they look to get out of DL alone, it's not worth whatever risk comes with the deal.

It's AMEX, GE Capital and USBancorp that are going to be pulling the decision here. Doug's offer is financed by Citigroup, is pretty much at the limits of its financing, maybe Citi will give them more, but given that the US/HP merger is still having issues, and things aren't in the full swing of working yet, i don't know.
"Let the world change you, and you can change the world"
 
User avatar
mariner
Posts: 18420
Joined: Fri Nov 23, 2001 7:29 am

RE: Delta Seeks Creditor Help To Fend Off US Air Bid

Sat Nov 18, 2006 12:57 pm

Quoting Flydreamliner (Reply 20):
Doug's offer is financed by Citigroup, is pretty much at the limits of its financing

Citigroup won't be putting up all that money themselves. They'll act as underwriters and farm a lot of it out, to make some money on the side.

mariner
aeternum nauta
 
dank
Posts: 928
Joined: Thu Jul 20, 2006 11:35 am

RE: Delta Seeks Creditor Help To Fend Off US Air Bid

Sat Nov 18, 2006 1:07 pm

Quoting DAL767400ER (Reply 8):
No doubt about that. Now, I don't know how much $$$ Boeing has actually given to Delta, but they definitely see the order potential they have with Delta, namely:
-At least 5 77Ls in addition to DL's current 5 777s on order
-At least 100 787s, if not even 150-200, depening on what DL would replace their 757s with
-Either around 100 additional orders, or (longterm) 200+ 737RS/Y1 orders.
In short, DL would be too valuable of a customer for Boeing to lose, and I'm sure Grinstein&Co will mention that to Boeing on a regular basis   .

If Boeing sees better potential for increased profitability with US merging with DL, then they are going to support it, potentially, even being willing to help out with assurances of further orders. On a side note, why would anybody replace 757s with 787s of any type? 737s or whatever the Y1 in that size range would hopefully be much more likely (hopefully for DL's sake).

cheers.
 
halls120
Posts: 8724
Joined: Sun Jun 05, 2005 3:24 am

RE: Delta Seeks Creditor Help To Fend Off US Air Bid

Sat Nov 18, 2006 1:07 pm

Quoting Planemaker (Reply 7):
Quoting TVNWZ (Reply 1):The creditors will act like the deal is "insufficient" to force the price up a little more. and they will have "concerns" over some other aspects, for the same reason.
FYI, the Financial Times reported that Delta's unsecured debt was recently trading at around 40 cents on the dollar. For creditors money is all that matters... and US is beating the current 40 cents with their cash and stock offer.

My brother is a DL pilot, and the word among pilots is that their unsecured claim will go up to .50 cents on the dollar as this process goes forward.
"Suppose you were an idiot. And suppose you were a member of Congress. But I repeat myself." Mark Twain, a Biography
 
atlaaron
Posts: 973
Joined: Mon Apr 24, 2006 11:30 pm

RE: Delta Seeks Creditor Help To Fend Off US Air Bid

Sat Nov 18, 2006 3:24 pm

Quoting TVNWZ (Reply 12):
Who says Boeing would lose? The alliances of today, may be different tomorrow. Parker will tell Boeing what they need to hear to make them comfortable to accept the deal. Or he would not be doing the deal.

Correct. Boeing is probably talking to US, kind of like "ok we will go along with this if you promise us this . . ." Remember that US has fully repaid Airbus and no longer has a committment to them.

Quoting Lufthansa (Reply 15):
As for AMEX?
they'll go where the money is.

IIRC the US Airways credit card is issued by Bank of America. Bank of America has recently begun offering AMEX cards. If this goes through look for the US Airways card to become an AMEX branded card through Bank of America.  Wink Amex may not have as much of a problem with this as others think. As for those who are saying they will not accept 25% ~"because a stand alone Delta will pay them back more." That is not how it works, when the BK is discharged it is decided at that time how much they will get on their unsecured debt.

Also I am not positive if the pilots own that much of DL right now, or if that becomes once the new stock is issued after the BK discharge.

Another thing is don't be surprised if Citigroup and Bank of New York aren't talking and getting one another to sign off on the deals with some backend transactions.
 
surfdog75
Posts: 239
Joined: Thu Nov 17, 2005 5:39 am

RE: Delta Seeks Creditor Help To Fend Off US Air Bid

Sat Nov 18, 2006 4:48 pm

DL should flood every profitable US/AWA route pair with capacity until LCC's stock price craters and Parker calls uncle. When their stock price goes down 75% that 4 Billion in stock to the creditors looks more like 1 Billion. Can't hurt DL's stock price much. 

[Edited 2006-11-18 08:52:37]
 
Lufthansa
Posts: 2303
Joined: Thu May 20, 1999 6:04 am

RE: Delta Seeks Creditor Help To Fend Off US Air Bid

Sat Nov 18, 2006 5:06 pm

Quoting Surfdog75 (Reply 25):
DL should flood every profitable US/AWA route pair with capacity until LCC's stock price craters and Parker calls uncle. When their stock price goes down 75% that 4 Billion in stock to the creditors looks more like 1 Billion. Can't hurt DL's stock price much.

You forget, they're in bankruptcy. How do you think a bankruptcy court would react to that?(something to do with management not acting rationally and acting only to attempt to ensure they're own existance?) Furthermore, if they pushed themselves over in the mean time, somebody else (including possibly US airways) could just purchase the folded DL's assets dirt cheap and achieve pretty much what US wanted to do. Remember US is coming from the stronger position financially at the moment, not DL.
 
BlazingCessna
Posts: 99
Joined: Fri Dec 16, 2005 6:17 pm

RE: Delta Seeks Creditor Help To Fend Off US Air Bid

Sat Nov 18, 2006 5:11 pm

I will guarantee that the FTC will can this merger. This is an idea that is worse than the Brabazon. This kind of idea makes the Edsel look like a real winner! To me US Sacreways sees in DL chance to knock off two nav lights with one surge. One is the obvious getting rid of a competitor, the other is the liquidation assets of DL they would see after such merger.

And I have to agree with those who say that the creditors will NOT take 25 cents on the dollar. I have never heard of any large corporation just walking a way from 50% of an owed debt, let alone 75%!!!!

Wake up people, look at the numbers and you will realize that unless US ponies up a LOT more marks, this deal is about as useful as a flashlight with a dead batteries.
Flown on:722, 731, 732, 742, 752, 763, DC8, DC9, DC10, A300, A319, A320, A330, PIC on C172, PA28R, D55, A36, DC3
 
leelaw
Posts: 4520
Joined: Sat May 29, 2004 4:13 pm

RE: Delta Seeks Creditor Help To Fend Off US Air Bid

Sat Nov 18, 2006 6:16 pm

US Air Seeks Allies for Bid
Among Delta Bondholders

By MELANIE TROTTMAN and EVAN PEREZ
November 18, 2006

US Airways Group Inc. has begun trying to build support for its $8.67 billion hostile takeover offer for Delta Air Lines from bondholders and other creditors who aren't part of the creditors committee in Delta's bankruptcy restructuring.

The move could bring US Airways new allies in its fight to force Delta to open itself up to due diligence by the Tempe, Ariz., airline. While the bondholders represent only about 30% of an estimated $16 billion to $18 billion in creditor claims, they are the most likely group to align itself with US Airways in its fight to force Delta to open itself up. Many of the unsecured bondholders are interested in short-term gains, and have seen the value of their positions rise with this week's takeover bid.

US Airways needs to win over at least a third of Delta's creditors to derail the existing restructuring plan. "We are not trying to target a splintered group of Delta creditors," US Airways Chief Executive Doug Parker said in an interview Friday. "We're trying to actually build consent, and consent with everyone....We think there's just enormous value here, and we have an obligation to pursue it..."


http://online.wsj.com/article/SB116382465079927250.html
Lex Ancilla Justitiae
 
User avatar
kc135topboom
Posts: 11022
Joined: Sun Jan 30, 2005 2:26 am

RE: Delta Seeks Creditor Help To Fend Off US Air Bid

Sat Nov 18, 2006 7:42 pm

Quoting Lufthansa (Reply 15):
Quoting TVNWZ (Reply 12):
Who says Boeing would lose? The alliances of today, may be different tomorrow. Parker will tell Boeing what they need to hear to make them comfortable to accept the deal. Or he would not be doing the deal.

Exactly! Well said!

I would assume it in many ways would actually be quite attractive to Boeing in terms of Additional 777 sales. We could see US Airways A333s dumped or redeployed elsewhere, and many of the 767 routes upgraded to larger equipment from a single hub. Operating the 764 or A333 that were previously 762/763 type flights will bring significant cost savings there in itself (provided they can be filled), now take that a step further and make all those flights 773ER or even as a stopgap measure some 744s, once again, provided they can be filled, you're going to see significant economies of scales gained. I' would think beoing's chances of scoring more longhaul aircraft is good. Possibly even additional 764 (because there are already a large fleet) and i'd say almost without question more 777s.

No, this is bad, very bad for Boeing. Remember that Airbus provided some of the BK exit money to US, after their second BK in 4 years. The money was provided based solely on future aircraft sales to US. So, if US buys out DL, no new Boeings will go to the new airline.

Quoting Evan767 (Reply 16):
Please work. Can someone give me their opinion of if my mother would be O.K. if the merger were to go through with a senority date of 98 with DL? Nobody wants this to go through and if it does, it's bound to screw over thousands of employees. My mother says the new airline would have around 75,000 employees and DL currently employs about 65,000.

It is not good for your Mom, no matter what her job at DL is. US is a union airline, and they already screwed many of the HP, and the unions will put the screws to the DL employees, too.

This is a bad, bad deal. But, I also wonder if Parker really wants to (or even can) buy DL. This may just be a scheme to increase the value of the current US and US/HP stock. Both stocks have already increased some 25% over the past few days. True, when investors figuer this out, the stocks will pluminit, but, by then US will already have their money.
 
TropicBird
Posts: 432
Joined: Sat May 28, 2005 9:13 am

RE: Delta Seeks Creditor Help To Fend Off US Air Bid

Sun Nov 19, 2006 12:41 am

HP/US has no obligation to Airbus, that debt (loan) has been repaid and according to Parker, they can do as they please on aircraft selection.
 
User avatar
kc135topboom
Posts: 11022
Joined: Sun Jan 30, 2005 2:26 am

RE: Delta Seeks Creditor Help To Fend Off US Air Bid

Sun Nov 19, 2006 12:47 am

Quoting TropicBird (Reply 30):
HP/US has no obligation to Airbus, that debt (loan) has been repaid and according to Parker, they can do as they please on aircraft selection.

Then why is Airbus still showing the US order for the A-350-800-Mk.1?
 
dallasnewark
Posts: 391
Joined: Tue Nov 08, 2005 4:33 pm

RE: Delta Seeks Creditor Help To Fend Off US Air Bid

Sun Nov 19, 2006 1:29 am

Quoting KC135TopBoom (Reply 29):
It is not good for your Mom, no matter what her job at DL is. US is a union airline, and they already screwed many of the HP, and the unions will put the screws to the DL employees, too.

This is a bad, bad deal. But, I also wonder if Parker really wants to (or even can) buy DL. This may just be a scheme to increase the value of the current US and US/HP stock. Both stocks have already increased some 25% over the past few days. True, when investors figuer this out, the stocks will pluminit, but, by then US will already have their money.

I fail to follow your logic. If the stock of a company that made a bid goes up, it has been calculated that the company that is being taken over is undervalued, if US proposed to pay a premium for Delta, their share value would decline. Investors already figured it out and that is why the price of USAIR has gone up and not the other way around

It leads me to believe that Delta is not being run very efficiently and whoever takes it over would make it more profitable
B732/3/4/5/6/7/8/9, B742/4, B752/3,B762/3/4, B772/3, A306, A318/9/20/21, A332/3, A343/6, MD80/83/88, L1011, TU104/134, F
 
surfdog75
Posts: 239
Joined: Thu Nov 17, 2005 5:39 am

RE: Delta Seeks Creditor Help To Fend Off US Air Bid

Sun Nov 19, 2006 1:42 am

Quoting Lufthansa (Reply 26):
You forget, they're in bankruptcy. How do you think a bankruptcy court would react to that?(something to do with management not acting rationally and acting only to attempt to ensure they're own existance?) Furthermore, if they pushed themselves over in the mean time, somebody else (including possibly US airways) could just purchase the folded DL's assets dirt cheap and achieve pretty much what US wanted to do. Remember US is coming from the stronger position financially at the moment, not DL.

It pretty obvious they're just trying to kill off a stronger/better product before it can completely reorganize and put the hurt on them.

$29 one-way shuttle fares. They would love DL in Washington and New York.

$49 PHX/PHL/CLT to anywhere domestic. $59 PHL to anywhere international that HP/US flies. With all the great publicity the takeover wouldn't have a chance. Smile
 
surfdog75
Posts: 239
Joined: Thu Nov 17, 2005 5:39 am

RE: Delta Seeks Creditor Help To Fend Off US Air Bid

Sun Nov 19, 2006 1:44 am

Quoting Lufthansa (Reply 26):
You forget, they're in bankruptcy. How do you think a bankruptcy court would react to that?(something to do with management not acting rationally and acting only to attempt to ensure they're own existance?) Furthermore, if they pushed themselves over in the mean time, somebody else (including possibly US airways) could just purchase the folded DL's assets dirt cheap and achieve pretty much what US wanted to do. Remember US is coming from the stronger position financially at the moment, not DL.

It pretty obvious they're just trying to kill off a stronger/better product before it can completely reorganize and put the hurt on them.

What would Crandall do?
$29 one-way shuttle fares. They would love DL in Washington and New York.

$49 PHX/PHL/CLT to anywhere domestic. $59 PHL to anywhere international that HP/US flies. With all the great publicity the takeover wouldn't have a chance. Smile
 
SpruceMoose
Posts: 72
Joined: Sun Jan 08, 2006 9:12 am

RE: Delta Seeks Creditor Help To Fend Off US Air Bid

Sun Nov 19, 2006 1:57 am

Quoting Leelaw (Reply 28):
The move could bring US Airways new allies in its fight to force Delta to open itself up to due diligence by the Tempe, Ariz., airline.

I hadn't thought of this angle before. Could this whole thing be a ploy to get into Delta's books in advance of some other move by US?

I mean, buying and scuttling a major competitor is not an implausible goal, but folks who'd listened to the conference call were reporting here that it sounded like Parker et. al. weren't as prepared as you'd think they'd be for this sort of thing. It doesn't prove anything, but it does fuel speculation that this could be a feint in a bigger plan and not the end goal.

Getting into Delta's books could be a big advantage, yes?

-SpruceMoose
It flew at an altitude of six feet for a distance of four and a half feet. Then we discovered rain makes it catch fire.
 
stewardess4u
Posts: 17
Joined: Thu Nov 03, 2005 3:19 am

RE: Delta Seeks Creditor Help To Fend Off US Air Bid

Sun Nov 19, 2006 3:39 am

About the Boeing thing. Who's to say US won't go all Boeing. They might. There has been some focus about US made products and the out-sourcing of jobs to other countries. Many people look at Airbus as an import product. I wouldn't be surprised if US does go all Boeing eventually. Doesn't Boeing have the 797 project ahead? A better narrow-body? Who knows what the future holds, but if there is a merger, they should come up with a whole new identity and start fresh! Like Trans Global Air Lines or something like that.
I live above the Earth......
 
Zone1
Posts: 894
Joined: Sun Jan 09, 2005 4:47 am

RE: Delta Seeks Creditor Help To Fend Off US Air Bid

Sun Nov 19, 2006 4:00 am

Quoting SpruceMoose (Reply 35):

Getting into Delta's books could be a big advantage, yes?

Yes it is an advantage. It will allow them to see exactly where Delta makes their money. I read that Whithurst is really mad about this one. Naturally, since all of his hard work will be shown to one of their largest competitors. The good news is I doubt Delta will have to do anything until at least the February deadline to file their reorganization plan. However, they were probably banking on another extension for this deadline. Now they will be in a crunch to finish it up. This could be in US Airway's greater plan--to force Delta to shoddily finish the bankruptcy forcing them not to realize all the possible cost savings.
/// U N I T E D
 
bmacleod
Posts: 2600
Joined: Sat Aug 25, 2001 3:10 am

RE: Delta Seeks Creditor Help To Fend Off US Air Bid

Sun Nov 19, 2006 4:14 am

What is DL's current cash-on-hand position? It's balance sheet must be still quite bad to attract a takeover by US Air, the smallest of the "Big Six - AA UA DL CO NW & US". How can an airline as small as US mount a takeover of the third largest carrier?

Well history does repeat ifself. 20 years ago tiny PWA - Pacific Western Airlines took over CPair and Wardair to become CP. CPair was a sitting duck financially and didn't have the muscle to fend off that takeover. Will the same happen to DL?   

[Edited 2006-11-18 20:15:36]
"What good are wings without the courage to fly?" - Atticus
 
Alitalia744
Posts: 3777
Joined: Thu Mar 30, 2000 8:22 am

RE: Delta Seeks Creditor Help To Fend Off US Air Bid

Sun Nov 19, 2006 4:24 am

Quoting Bmacleod (Reply 38):
What is DL's current cash-on-hand position? It's balance sheet must be still quite bad to attract a takeover by US Air, the smallest of the "Big Six - AA UA DL CO NW & US". How can an airline as small as US mount a takeover of the third largest carrier?

DL has $4b cash on hand of which $3b is unrestricted.
Some see lines, others see between the lines.
 
TropicBird
Posts: 432
Joined: Sat May 28, 2005 9:13 am

RE: Delta Seeks Creditor Help To Fend Off US Air Bid

Sun Nov 19, 2006 4:39 am

Quoting KC135TopBoom (Reply 31):
Quoting TropicBird (Reply 30):
HP/US has no obligation to Airbus, that debt (loan) has been repaid and according to Parker, they can do as they please on aircraft selection.

Then why is Airbus still showing the US order for the A-350-800-Mk.1?

My point was that they are not required to buy any aircraft from Airbus and I seem to recall one of their executives (Mr. Kirby?) mentioning they could still go with the 787 because Airbus had not yet committed to producing the A350 nor how much it will cost if they do.
 
atlaaron
Posts: 973
Joined: Mon Apr 24, 2006 11:30 pm

RE: Delta Seeks Creditor Help To Fend Off US Air Bid

Sun Nov 19, 2006 4:43 am

Quoting KC135TopBoom (Reply 29):
This may just be a scheme to increase the value of the current US and US/HP stock. Both stocks have already increased some 25% over the past few days.

That would be called illegal and it would be hard for Parker to make deals from behind a cell. I don't think that is what is going on here.

Quoting Bmacleod (Reply 38):
How can an airline as small as US mount a takeover of the third largest carrier?

One word . . . bankruptcy.
 
LAXdude1023
Posts: 4498
Joined: Thu Sep 07, 2006 3:16 pm

RE: Delta Seeks Creditor Help To Fend Off US Air Bid

Sun Nov 19, 2006 4:53 am

Quoting ATLAaron (Reply 41):
That would be called illegal and it would be hard for Parker to make deals from behind a cell.

That doesnt stop upper management from doing things like that (im not talking about Parker specifically). White Collar crime like that is quite rampant in the USA. Until very recently, it seems like it went mostly unpunished.
It is what it is...
 
jcavinato
Posts: 392
Joined: Sun Jan 02, 2005 9:14 am

RE: Delta Seeks Creditor Help To Fend Off US Air Bid

Sun Nov 19, 2006 4:53 am

The following was from an email a colleague sent along. It's insightful to this entire debate.

-----------

With US proposing this merger it will drive DL's costs WAY WAY up if it does not go through in the end. The point of Chap. 11 is to renegotiate debit and in most cases (ala UAL) you come out the other end paying your creditors pennies on the dollar and that is how you make your business more lean and competitive than before the BK. Now that US is proposing this DL will have to at least match what US is willing to pay the creditors or they will take the offer that US is making. All the creditors are out there to get the most money possible just like every other business in the world. A lot of people have been talking about how this merger just doesnt make any since because too many things overlap yet I havent seen anyone question the motives of US. To me it seems that it has to be at least questioned. If DL was to sail through BK and lower their costs they would be a much tougher competitor to US, with US making this offer it is going to NO MATTER WHAT force DL to have higher!
costs when and if they do exit BK a standalone carrier making it easier to US to compete in the large east coast market they both share.......
 
atlaaron
Posts: 973
Joined: Mon Apr 24, 2006 11:30 pm

RE: Delta Seeks Creditor Help To Fend Off US Air Bid

Sun Nov 19, 2006 5:03 am

Quoting Jcavinato (Reply 43):
The following was from an email a colleague sent along. It's insightful to this entire debate.

That is a very good point that I had not yet thought about. He is right if they do not accept this, and they have to pay back higher amount to their creditors (which they will if they do not accept US offer) their CASM is going to be much higher than everyone else because they were not able to shed as much debt in BK.
 
airfrnt
Posts: 2003
Joined: Fri Jul 02, 2004 2:05 am

RE: Delta Seeks Creditor Help To Fend Off US Air Bid

Sun Nov 19, 2006 5:05 am

Wow. After reading these posts, I really hope that we are a lot better about talking about Airlines, then we are about talking about financing. Some of these statements are absolutely shocking in how ignorant/wishful thinking they are.

Quoting DAL767400ER (Reply 8):
No doubt about that. Now, I don't know how much $$$ Boeing has actually given to Delta, but they definitely see the order potential they have with Delta, namely:
-At least 5 77Ls in addition to DL's current 5 777s on order
-At least 100 787s, if not even 150-200, depening on what DL would replace their 757s with
-Either around 100 additional orders, or (longterm) 200+ 737RS/Y1 orders.
In short, DL would be too valuable of a customer for Boeing to lose, and I'm sure Grinstein&Co will mention that to Boeing on a regular basis

Your statement is based on the thesis that Boeing simply won't ask Airbus for a major set of orders from the combined entity to sign off on the deal.

Quoting SLCUT2777 (Reply 19):

And again, how much of DL would US really have to give up to please the FTC? A whole hell of alot more than one of the two east coast shuttles! They would have to cannibalize what is left between both of them that I highly doubt this plan will work. I think you're very correct that it will take more than $8 billion to get the big unsecured creditors at DL to fall for this manipulative scheme Parker has put into play.

Do you know what the law is? Do you even know what the combined percentage of the market US and DL would have? Here is a hint, the FTC has not blocked deals with less then 30% of a combined market after merger. This has a combined market of about ~19%. At least three of their hubs have at least 200 flights a day from a single other carrier. All of their hubs have at least 100 flights a day from other carriers.

There will be about 11 routes that the FTC will force DL and US to split (where there is no competition on the route). That's only 1.3% of the combined route system.

Quoting SLCUT2777 (Reply 19):

They sure as heck won't take .25 cents on the $$$ owed them by DL and run. They know a stand alone DL will make money and then they can get a real return rather than a fast cut of nothing.

I have no idea where you are getting your numbers from, but it doesn't jive with the WSJ or the NYT's analysis.

Quoting Flydreamliner (Reply 20):
My guess

Doug's offer is financed by Citigroup, is pretty much at the limits of its financing, maybe Citi will give them more

Have you looked at Citigroups bank sheet lately? One you assume that they manage that all internally (Citigroup will parcel it out), but two Citigroup could easily run this investment in their sleep. The amount of capitilization they have dwarfs this.

Quoting BlazingCessna (Reply 27):
I will guarantee that the FTC will can this merger.

Again, based on what facts?

Quoting KC135TopBoom (Reply 29):

No, this is bad, very bad for Boeing. Remember that Airbus provided some of the BK exit money to US, after their second BK in 4 years. The money was provided based solely on future aircraft sales to US. So, if US buys out DL, no new Boeings will go to the new airline.

Guess. Speculation. The reverse may (and probably is) true.

Quoting KC135TopBoom (Reply 31):

Then why is Airbus still showing the US order for the A-350-800-Mk.1?

BEcause Airbus's booking keeping is legandarily wishfull thinking. They had the A300 for Fedex on their books for how long? They also have EK's A346 orders on books.
 
Zone1
Posts: 894
Joined: Sun Jan 09, 2005 4:47 am

RE: Delta Seeks Creditor Help To Fend Off US Air Bid

Sun Nov 19, 2006 6:35 am

Quoting AirFrnt (Reply 45):
Here is a hint, the FTC has not blocked deals with less then 30% of a combined market after merger.

How much was the UA/US deal a few years ago? One thing that people have forgotten is that many people from congress have already come out against the merger. Delta is rallying senators from many states. Also, one of the first things the new Democratic congress will ask for is another review of the AT&T/BellSouth merger. I don't think the new congress is going to be happy with this merger either. US is going to have a strong headwind to get this merger done with labor from both companies, politicians, and Delta against it.

Quoting AirFrnt (Reply 45):
Your statement is based on the thesis that Boeing simply won't ask Airbus for a major set of orders from the combined entity to sign off on the deal.

I'm not sure, but this sounds like collusion which is illegal.
/// U N I T E D
 
dank
Posts: 928
Joined: Thu Jul 20, 2006 11:35 am

RE: Delta Seeks Creditor Help To Fend Off US Air Bid

Sun Nov 19, 2006 7:50 am

Quoting KC135TopBoom (Reply 31):
Quoting TropicBird (Reply 30):HP/US has no obligation to Airbus, that debt (loan) has been repaid and according to Parker, they can do as they please on aircraft selection.
Then why is Airbus still showing the US order for the A-350-800-Mk.1?

How are those mutually exclusive???? Just because they are no longer obligated to buying the plane doesn't mean that they don't want to. You imply by your comment that the 350 (in whatever form it may end up) with the deal that US negotiated with them are inherently a poor fit for US.

cheers.
 
Charger
Posts: 264
Joined: Mon Oct 16, 2006 11:20 am

RE: Delta Seeks Creditor Help To Fend Off US Air Bid

Sun Nov 19, 2006 8:26 am

Quoting TropicBird (Reply 30):
HP/US has no obligation to Airbus, that debt (loan) has been repaid and according to Parker, they can do as they please on aircraft selection.

Us repaid the loan, but until I see a credible source, (and not Parker said so, so it must be true), that says US has no obligation to buy Airbus products, I'll take it with a grain of salt. I'm sure Airbus was paid nice interest on the loan but I find it very hard to believe thay would just lend money with no strings attached.

Quoting Surfdog75 (Reply 33):
It pretty obvious they're just trying to kill off a stronger/better product before it can completely reorganize and put the hurt on them.

That is part of it. I think the other part is that US doesn't exactly have the best reputation. This could be a quick temporary fix to boost their product. Until they start actually running the airline, then it will be right back in the dumper.

Quoting Stewardess4u (Reply 36):
Who's to say US won't go all Boeing. They might.

As I stated above, until I see a reliable source that says there isn't some kind of deal still in place between Airbus and US, I won't believe it. Airbus didn't just lend US all that money to make a few bucks in interest. There is alot more to it than that.
 
atlaaron
Posts: 973
Joined: Mon Apr 24, 2006 11:30 pm

RE: Delta Seeks Creditor Help To Fend Off US Air Bid

Sun Nov 19, 2006 8:52 am

Quoting Charger (Reply 48):
As I stated above, until I see a reliable source that says there isn't some kind of deal still in place between Airbus and US, I won't believe it. Airbus didn't just lend US all that money to make a few bucks in interest. There is alot more to it than that.

Here is your proof. People forget that US Airways under the loan agreement purchased 20 A350's, that was all that was required. This story also confirms that the loan was refinanced and US Airways is longer held liable to the terms.

http://biz.yahoo.com/ap/060830/us_airways_airbus_order.html?.v=2

Popular Searches On Airliners.net

Top Photos of Last:   24 Hours  •  48 Hours  •  7 Days  •  30 Days  •  180 Days  •  365 Days  •  All Time

Military Aircraft Every type from fighters to helicopters from air forces around the globe

Classic Airliners Props and jets from the good old days

Flight Decks Views from inside the cockpit

Aircraft Cabins Passenger cabin shots showing seat arrangements as well as cargo aircraft interior

Cargo Aircraft Pictures of great freighter aircraft

Government Aircraft Aircraft flying government officials

Helicopters Our large helicopter section. Both military and civil versions

Blimps / Airships Everything from the Goodyear blimp to the Zeppelin

Night Photos Beautiful shots taken while the sun is below the horizon

Accidents Accident, incident and crash related photos

Air to Air Photos taken by airborne photographers of airborne aircraft

Special Paint Schemes Aircraft painted in beautiful and original liveries

Airport Overviews Airport overviews from the air or ground

Tails and Winglets Tail and Winglet closeups with beautiful airline logos