AtlBill
Topic Author
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Delta's Response To USAir

Sun Nov 19, 2006 12:19 am

Well it should be a no surprise that Delta responded and said no to the USAir proposal. However, just a day after meeting with its creditors, Delta responded very strongly saying the deal was bad for both airlines, bad for customers, bad for employees, and would not pass Anti-trust muster. This suggests that the Delta Board has some very strong support from its creditors. Thoughts and what will USAir do now?

http://www.ajc.com/business/content/...ories/2006/11/17/1118bizdelta.html
 
dallasnewark
Posts: 391
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RE: Delta's Response To USAir

Sun Nov 19, 2006 1:16 am

Delta has no say in this. They are in bankruptcy. It is up to the shareholders to decude Delta's fate. Let me ask you a question, if you're a shareholder of Delta would you rather lose money but let Delta exist as a standalone carrier or make money and let USAIR take over?
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okie73
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RE: Delta's Response To USAir

Sun Nov 19, 2006 1:28 am

Quoting Dallasnewark (Reply 1):
It is up to the shareholders to decude Delta's fate. Let me ask you a question, if you're a shareholder of Delta would you rather lose money but let Delta exist as a standalone carrier or make money and let USAIR take over?

actually the Delta shareholders have no say, its the Delta creditors who will decide.

Why do you think the creditors would lose money if Delta went alone. Keep in mind, half of what USAir is offering is in USAir stock. I can assure you, the deal will not allow the creditors to get the stock and immediately turn it over. Post merger that stock could stay the same, go up, go down. So really it boils down to this....does the merger make sense. If it does, post merger USAir stock will rise. If it does not, and the synergies, efficiencies, etc do not materialize, the USAir stock will go down.

Delta will be stronger as a stand alone airline. Delta stock will do better by itself than would the stock in the merged airline.
 
dallasnewark
Posts: 391
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RE: Delta's Response To USAir

Sun Nov 19, 2006 1:35 am

Quoting Okie73 (Reply 2):
actually the Delta shareholders have no say, its the Delta creditors who will decide.

Why do you think the creditors would lose money if Delta went alone. Keep in mind, half of what USAir is offering is in USAir stock. I can assure you, the deal will not allow the creditors to get the stock and immediately turn it over. Post merger that stock could stay the same, go up, go down. So really it boils down to this....does the merger make sense. If it does, post merger USAir stock will rise. If it does not, and the synergies, efficiencies, etc do not materialize, the USAir stock will go down.

Delta will be stronger as a stand alone airline. Delta stock will do better by itself than would the stock in the merged airline.

I still think that some other airline will come in and outbid USAIR, this potential hostile takeover will open the floodgates for others. I read in WSJ the other day that United can come in and outbid USAIR.

As I mentioned on the other thread as far as US/HP stock is rising, it just means that DELTA is undervalued or being run inefficiently.
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LAXdude1023
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RE: Delta's Response To USAir

Sun Nov 19, 2006 1:37 am

Quoting Dallasnewark (Reply 1):
Delta has no say in this. They are in bankruptcy. It is up to the shareholders to decude Delta's fate. Let me ask you a question, if you're a shareholder of Delta would you rather lose money but let Delta exist as a standalone carrier or make money and let USAIR take over?

If they have convenced the shareholders and creditors that they are on the upswing, then they could very well let them exit as a standalone. Of course DL doesnt want the merger. Its a losing situation for just about everyone there. DL has and is makeing a lot of changes and is improving. They have a lot to look forward to, so it would surprise me if they get to exit stand alone. It WOULD surprise me if this merger goes through.
It is what it is...
 
supa7E7
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RE: Delta's Response To USAir

Sun Nov 19, 2006 1:43 am

Quoting Dallasnewark (Reply 3):
As I mentioned on the other thread as far as US/HP stock is rising, it just means that DELTA is undervalued or being run inefficiently.

Neither one could hope to gain synergies unless they merge. If they do merge, higher value would result, according to the market. This is why the stock have risen for US anyway.

Today, if US and Delta collude over pricing, it would be illegal. But after a merger, it would be ok. Cooperatively operating aircraft, staffing and property of 2 airlines with 1 master goal results in tremendously friendlier game opportunities. Killing Comair gets some gains. And finally, removing Delta's overhead results in some gains.

So, if the government permits it, there are a number of gains that Delta could never achieve on its own. Maybe it would make good money, but would it be enough compared to the merger? To deny it one must say Doug Parker is full of beans. Maybe so, maybe not.
"Who's to say spaceships aren't fine art?" - Phil Lesh
 
OttoPylit
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RE: Delta's Response To USAir

Sun Nov 19, 2006 3:35 am

Parker's lie is already coming apart. In the initial bid, he said that the new carrier would operate with 10% less capacity, but no job losses would be expected. Now, according to the article:"US Airways Chief Executive Officer Doug Parker said this week that he expects job reductions to be accomplished without furloughs."

Its either one, or the other, buddy.


Its obvious that the only thing Parker plans out of this is to eliminate one of their main competitors, plain and simple. Something that the OLD US Airways is very fond of doing(Piedmont, PSA, Allegheny, etc.). Its a good thing that Delta has looked through and picked apart his lies, which account for just about every "pro" he has mentioned.

Why would Parker do this? Why would you want to take over an airline while its in bankruptcy and have to pay off all that debt? Could it be that the airline's transformation plan is on track and you(USAir) are about to get your a$$ kicked when they emerge in 6 months or so?

Yea, go ahead Parker, and keep wishing, but you don't have a chance. Delta's largest creditors are already sticking with Delta, they've made that clear. Sorry.



OttoPylit
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crogalski
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RE: Delta's Response To USAir

Sun Nov 19, 2006 3:38 am

Quoting AtlBill (Thread starter):
Thoughts and what will USAir do now?

make a bid for NW  duck 
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COERJ145
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RE: Delta's Response To USAir

Sun Nov 19, 2006 4:22 am

Quoting Crogalski (Reply 7):
make a bid for NW

you beat me to it.
 
surfdog75
Posts: 239
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RE: Delta's Response To USAir

Sun Nov 19, 2006 5:14 am

One very convincing argument for the creditors could be the fact that a takeover will most likely greatly increase the length of the bankruptcy process while the combined carrier finds more cost savings.

This would also likely add more affected creditors than the original bankruptcy as more aircraft and facilities leases would have to be rejected to get to the supposed synergies that Parker describes.

The existing creditors would also wait much longer to receive payoff/DL stock since they won't get it until the bankruptcy is concluded.

Over 4 Billion of the 8 Billion in the proposed payoff is in LCC stock with is up dramatically since issued last Spring and currently has a P/E of over 125. Could drop dramatically at any time.

Maybe not such a sweet deal for the creditors as more of them will be added, more leases rejected, and they will have to wait much longer for the payout.

Stock in the new non-merged Delta on the other hand would probably be issued in the Spring to early Summer 2007 right before the busiest travel period.

Why wait much longer for your payout in this volatile industry for something that will be extremely dragged out, face tons of regulatory scrutiny, will face boat loads of integration issues, and may not see many of the synergies promised.
 
AirEMS
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RE: Delta's Response To USAir

Sun Nov 19, 2006 5:28 am

Just a question here...

But why is USAir looking to merge again after the HP merge?

Do they want to be the biggest?

Is it a matter of survival?

Is there a threat to the new USAir that they are trying to avoid by gaining another airline?

Is this a hostile takeover bid?

Any Help would be great

-Carl
If Your Dying Were Flying
 
ksupilot
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RE: Delta's Response To USAir

Sun Nov 19, 2006 5:38 am

Quoting AirEMS (Reply 10):
But why is USAir looking to merge again after the HP merge?

Do they want to be the biggest?

Is it a matter of survival?

I began wondering this as well. This one isn't a matter of survival, as that was the purpose of the HP merger. The two would not exist today if it weren't for a merger. This is not the case of DL, so far they are showing that they will get back on their feet and be a strong airline.

I guess US is just getting greedy. They pulled of the HP merger, but HP was desperate. A classic airline like DL will not go so easily.
 
HPRamper
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RE: Delta's Response To USAir

Sun Nov 19, 2006 8:09 am

Quoting OttoPylit (Reply 6):
Parker's lie is already coming apart. In the initial bid, he said that the new carrier would operate with 10% less capacity, but no job losses would be expected.

Logically, I think it's within reason that if there were a merger, a bunch of pilots and senior employees in other areas would take their retirements early. Abracadabra....no layoffs needed.
 
OttoPylit
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RE: Delta's Response To USAir

Sun Nov 19, 2006 10:15 am

Quoting HPRamper (Reply 12):


Logically, I think it's within reason that if there were a merger, a bunch of pilots and senior employees in other areas would take their retirements early. Abracadabra....no layoffs needed.

Very possibly, but if you listened to his statement, he said the airline would operate with 10% less capacity, but there would be no job reductions. And now he is saying there will be. Looks like he just can't make up his mind.


OttoPylit
I don't have a microwave, but I do have a clock that occasionally cooks shit.
 
DeltaGuy
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RE: Delta's Response To USAir

Sun Nov 19, 2006 11:30 am

Quoting HPRamper (Reply 12):
Logically, I think it's within reason that if there were a merger, a bunch of pilots and senior employees in other areas would take their retirements early. Abracadabra....no layoffs needed.

I don't buy it. For example, think of how many hundreds of FA's and pilots that are on furlough for both US and DL. Spending money and doing another risky airline graft is completely irresponsible for those US employes out of a job, and is also completely insulting to those DL employees who are also out of a job. If this goes through, there'll be plenty more on the furlough list.

Think about this- this psycho Parker would be CEO of the new company. From what I've seen, this guy is better off as a lower end manager than a CEO of a major airline. Jerry Grinstein may have made some stupid choices before, but he has alot more potentional than Parker does.

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
 
FlyPNS1
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RE: Delta's Response To USAir

Sun Nov 19, 2006 11:33 am

Quoting OttoPylit (Reply 13):
Very possibly, but if you listened to his statement, he said the airline would operate with 10% less capacity, but there would be no job reductions. And now he is saying there will be. Looks like he just can't make up his mind.

I think you are basically just arguing semantics.

While I don't think this merger will actually happen, just attempting to buy DL could serve two purposes for Parker:

1) Get the ball rolling behind industry consolidation. Right now, the industry really has no need for consolidation as plenty of capacity has already been removed. However, Parker wants consolidation now so he can become CEO of a complete global airline (the guy has a huge ego). Going after DL, could get the whole merger frenzy going which is what Parker wants.

2) Even if industry consolidation doesn't pan out, the attempt to merge with DL will force DL to give more to its creditors in order to keep them happy. This could mean more debt for DL and make DL a slightly less robust competitor.
 
walter747
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RE: Delta's Response To USAir

Sun Nov 19, 2006 11:37 am

Damn shame I wish they would merge an keep the US name.

oh well it will be what it is.


we will soon be thinking of other important aviation news.

cheer walter
Hussel, Hussel, Husel, Grind, Grind, Grind
 
DeltaGuy
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RE: Delta's Response To USAir

Sun Nov 19, 2006 11:39 am

I hope DL and the FTC and creditors see behind Parker's twisted logic and screw him back over. The point that all of this commotion will cause the creditors to expect more is a valid one- too bad this deal couldnt have been kept under the rug- DL could have flipped them the bird the first time.

UselessAir is another bankruptcy waiting to happen- he'll get it back soon enough.

DeltaGuy
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FCYTravis
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RE: Delta's Response To USAir

Sun Nov 19, 2006 11:40 am

He said no union job furloughs, which is different than no job reductions.

The US Airways merger was accomplished without any unionized job furloughs, through normal attrition and early retirement offers. Management and administrative job reductions were accomplished with some layoffs, but mostly by the fact that most US East employees did not wish to to relocate to Tempe.

Quoting DeltaGuy (Reply 14):
For example, think of how many hundreds of FA's and pilots that are on furlough for both US and DL.

There are no furloughed US FAs. US has, in fact, hired several classes of FAs from the street since the merger, and has recalled 700 pilots.
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WJ
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RE: Delta's Response To USAir

Sun Nov 19, 2006 11:55 am

Quoting DeltaGuy (Reply 14):
Think about this- this psycho Parker would be CEO of the new company. From what I've seen, this guy is better off as a lower end manager than a CEO of a major airline. Jerry Grinstein may have made some stupid choices before, but he has alot more potentional than Parker does.

Mmm, psycho Parker... Is that a clinical evaluation, or just anger, as your company is in bankruptcy, "Delta Guy"?

From what you have seen, if you had been looking, is one CEO who saved one airline (HP) and then saved another (US) and turned them together into a $300million/quarter profit. Don't forget that HP was pretty much one of the only profitable carriers along with WN for quite a nice run, so if there is anything to say, is that I guess Parker knows how to run an airline.

Who knows if this DL thing will happen or not, but to dismiss it just because it sounds too big to actualy come true is foolish. People said the same things about the US merger and as before, no one here has enough details to call this one, so all we are left here with are childish opinions.
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Charliejag1
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RE: Delta's Response To USAir

Sun Nov 19, 2006 12:13 pm

Quoting OttoPylit (Reply 6):
Now, according to the article:"US Airways Chief Executive Officer Doug Parker said this week that he expects job reductions to be accomplished without furloughs."

Its either one, or the other, buddy.

I disagree. If you eliminate outsourcing, you can utilize internal employees for those tasks. This would give jobs to the people that would otherwise be out of work (if any) after a 10% reduction.
 
WJ
Posts: 299
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RE: Delta's Response To USAir

Sun Nov 19, 2006 12:16 pm

Quoting Charliejag1 (Reply 20):
I disagree. If you eliminate outsourcing, you can utilize internal employees for those tasks. This would give jobs to the people that would otherwise be out of work (if any) after a 10% reduction.

That's correct, as well as offering early retirments packages, always a favorite...
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jimbobjoe
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RE: Delta's Response To USAir

Sun Nov 19, 2006 1:11 pm

Quoting AirEMS (Reply 10):
But why is USAir looking to merge again after the HP merge?

Isn't it possible that the goal was always a merger between US and DL, and that the HP/US was a baby step that is now allowing that to be possible/feasible?

On the other hand, I could also see him putting US/HP together and then finding out that the biggest source of weakness for the new US is the competition on the north-south routes from Delta. So why not take em over too?

Quoting AirEMS (Reply 10):
Do they want to be the biggest?

In certain markets, yes. In spite of the claims of US that there isn't much overlap, the overlap is definitely there. This is a way of controlling a lot of seats along the east coast and therefore the fares.

I thought this idea was rather daft until the analyst in the AJC article said that only a UA/AA merger would have more overlap.

Alot of my rejection was based on the idea that everyone and their grandma claims that the best merger would be a CO/UA--great fleet commonality, great synergies with non-overlapping and complimentary route systems.

Once I momentarily entertained the idea of a UA/AA merger, I saw the potential of controlling all the fares and essentially monopolizing the north-south routes by DL/US (which a UA/AA would do east-west.)

Perhaps Parker's vision is for one or two north-south carriers, one or two east-west carriers, and the LCCs competing with them everywhere they can on a point-to-point basis. If his thinking is sound for this idea of a merger to control the north-south, then a UA/NW would be the next most logical under such a framework (since AA would likely never merge with anyone.)

For an idea that hit me as initially dumb, Delta is fighting it hard, and I expect that to continue. I think the creditors might just buy into US's cash offer and higher airfares for all. I suspect US documents to delta creditors indicate exactly how much airfares will rise and how much more profitable the routes will become. I also suspect that US is telling the department of justice how much competition the LCCs and a never-to-be-merged CO will throw at the US/DL behemoth.

I'm starting to appreciate the proposal.
 
steeler83
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RE: Delta's Response To USAir

Sun Nov 19, 2006 1:58 pm

Quoting Okie73 (Reply 2):
If it does not, and the synergies, efficiencies, etc do not materialize, the USAir stock will go down.

And their stalks have already closed down for the day. Will this continue?

Quoting COERJ145 (Reply 8):
Quoting Crogalski (Reply 7):
make a bid for NW

you beat me to it.

I already brought this up on other threads...
Do not bring stranger girt into your room. The stranger girt is dangerous, it will hurt your life.
 
TPASXM787
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RE: Delta's Response To USAir

Mon Nov 20, 2006 12:14 am

This is not a merger. If the creditors (and that is who will decide, no one else) decide this is a good plan, this is a "hostile takeover." Parker already gave them the chance to merge. They said no. He said ok, we're going to try to do it anyways. Apparently investors(who know a lot more than us) thought this was a good idea as stock of US went up over $9 this week.

Now, the fact remains that this could be a ploy to pump up the vaule of the stock for some to sell. If so it has worked. Fleet-wise anyways the companies are quite imcompatible. But, it would be interesting to see what happenes.

Remember this is a bid, not a set in stone contract. But, make no doubt, this is not a peaceful "merger" it is a hostile takeover bid for US to take over Delta and it's assets. This will be determined by the creditors of Delta, not the board, employees, or shareholders.
This is the Last Stop.
 
bobnwa
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RE: Delta's Response To USAir

Mon Nov 20, 2006 12:55 am

Quoting DeltaGuy (Reply 14):
Think about this- this psycho Parker would be CEO of the new company. From what I've seen, this guy is better off as a lower end manager than a CEO of a major airline

What airline experience do you have that would justify calling Parker a psycho and only qualified to be a low end manager. I am sure that you have never been in the same room with him, yet you feel justified making that statement?
 
BizFlyer
Posts: 39
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RE: Delta's Response To USAir

Mon Nov 20, 2006 1:51 am

I want to offer another thought to this thread, which lies outside of the United States:

Delta is in the same frequent flyers program as KLM/Air France and US Air is associated with the Star Alliance (Lufthansa etc.).

Couldn´t it be feasible, that US Air has the backing of (at least a few) members of the Star Alliance and by absorbing Delta they cause a big problem for KLM/Air France?

Regards,

BizFlyer
Stay belted as long as you can!
 
USPIT10L
Posts: 1868
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RE: Delta's Response To USAir

Mon Nov 20, 2006 2:08 am

Quoting AirEMS (Reply 10):
But why is USAir looking to merge again after the HP merge?



Quoting KSUpilot (Reply 11):
I began wondering this as well. This one isn't a matter of survival, as that was the purpose of the HP merger. The two would not exist today if it weren't for a merger. This is not the case of DL, so far they are showing that they will get back on their feet and be a strong airline.

Parker said over a year ago that industry consolidation was occurring and that he wanted to be a player in it. It was mentioned in a NY Times article last August. After I read it, I knew what direction US was going in. Now this attempt at a DL acquisition/takeover out of bankruptcy is very, very intriguing, especially when you realize how much outsourcing DL likes to do (ramp, maintenance, etc). There would less integration on the part of US because DL is almost exclusively non-union. NW, the other potential partner, is so entrenched with unions that a smooth integration would be almost impossible. Don't forget to factor in the bitterness of NW employees toward the executives, and you've got a recipe for disaster. Also, don't forget about the competition. If this deal goes through, look for AA and UA to have to step up to the plate and acquire someone as well. They have to keep up with the competition to stay competitive and relevant. Stay tuned. It's gonna get very, very interesting in the next few months.
It's a Great Day for Hockey!
 
jacobin777
Posts: 12262
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RE: Delta's Response To USAir

Mon Nov 20, 2006 2:29 am

Quoting USPIT10L (Reply 27):
If this deal goes through, look for AA and UA to have to step up to the plate and acquire someone as well.

Though I think AA will go it alone...AS would be a good carrier to pick up..they have a strong west coast route (something which AA lacks)....AS have different versions of 737's, but it shouldn't be too much of a problem...
"Up the Irons!"
 
HPRamper
Posts: 4595
Joined: Sat May 14, 2005 4:22 am

RE: Delta's Response To USAir

Mon Nov 20, 2006 2:33 am

Quoting TPASXM787 (Reply 24):
Fleet-wise anyways the companies are quite imcompatible.

Unless US is privately planning to go Boeing after this A350 fiasco....

Quoting Jacobin777 (Reply 28):
Though I think AA will go it alone...AS would be a good carrier to pick up..they have a strong west coast route (something which AA lacks)....

Something which CO lacks as well. Keep in mind AS is dumping their MD fleet.
 
surfdog75
Posts: 239
Joined: Thu Nov 17, 2005 5:39 am

RE: Delta's Response To USAir

Mon Nov 20, 2006 12:04 pm

Quoting USPIT10L (Reply 27):
There would less integration on the part of US because DL is almost exclusively non-union.

Believe me the employees are already marshalling the troops against this takeover. If you were planning on a staple or other heinous treatment of the non-union Delta employees you're in for a world of hurt. It's been tested lately but Delta has a long tradition of family.
 
gigneil
Posts: 14133
Joined: Fri Nov 08, 2002 10:25 am

RE: Delta's Response To USAir

Mon Nov 20, 2006 12:09 pm

Quoting OttoPylit (Reply 6):
"US Airways Chief Executive Officer Doug Parker said this week that he expects job reductions to be accomplished without furloughs."

And you have no reason to believe otherwise.

Its not "one or the other". Retirement packages are popular. Cancelling open headcount is also a primary strategy.

"Lies" is an awfully vicious way to refer to statements by someone you don't know.

Quoting OttoPylit (Reply 6):
Delta's largest creditors are already sticking with Delta, they've made that clear. Sorry.

No, they haven't. In any way.

N
 
steeler83
Posts: 7391
Joined: Sat Feb 25, 2006 2:06 pm

RE: Delta's Response To USAir

Mon Nov 20, 2006 1:03 pm

I believe on the pittsburgh tribune review website, there is an article about US talking to the DL creditors...

"US Airways Turns to Delta's Creditors"

Quote:
With Delta management resisting the cash-and-stock bid, US Airways is appealing to the bankrupt carrier's creditors. They are owed approximately $16 billion.

The creditors' committee will have the most say in how Delta reorganizes in bankruptcy -- via management's stand-alone plan, US Airways' merger offer, or even a competing merger bid that's likely to emerge.

That looks like a big chunk of change. So it appears that DL has given an emphatic NO to this proposal. Do you think US is right in stepping over DL management and going right to their creditors to see how they feel about the merger? Talking about cut-throat...

Quote:
Industry watchers say US Airways' offer could spur bids from competitors. Most often mentioned are United and Northwest airlines. "This might trigger a wave of consolidation in the industry," Turner said.

Consolidation in the airline industry? Terrific. This is not exactly a good thing of you ask me, especially to monopoly laws. BTW, didn't somebody by the name of Theodore Roosevelt come up with such laws more than 100 years ago to bust trusts such as Rockefeller Oil and US Steel? If such a thing were to happen, there would be a massive earthquake in this country... Epicenter: the resting place of TR, as in, he's turning in his grave...

You all can continue to read the article at...
http://www.pittsburghlive.com/x/pittsburghtrib/business/s_480483.html
Do not bring stranger girt into your room. The stranger girt is dangerous, it will hurt your life.
 
gigneil
Posts: 14133
Joined: Fri Nov 08, 2002 10:25 am

RE: Delta's Response To USAir

Mon Nov 20, 2006 1:25 pm

Quoting Steeler83 (Reply 32):
This is not exactly a good thing of you ask me, especially to monopoly laws.

Everything in the US is trending back towards it... telecommunications, airlines, you name it.

Having 3 major network carriers is not going to really affect competition in this country, especially with the wave of LCCs.

NS
 
HPRamper
Posts: 4595
Joined: Sat May 14, 2005 4:22 am

RE: Delta's Response To USAir

Mon Nov 20, 2006 2:59 pm

Quoting Steeler83 (Reply 32):
This is not exactly a good thing of you ask me, especially to monopoly laws. BTW, didn't somebody by the name of Theodore Roosevelt come up with such laws more than 100 years ago to bust trusts such as Rockefeller Oil and US Steel?

Monopoly laws have their loopholes, and companies like Microsoft have utilized them for many years. Look at when telecom companies merge....huge sections of this country do not have choices when it comes to things like phone service, cable service, privately-owned utilities etc. So even if DL merges with US, and, say, UA with NW, and CO or AA with AS, we are still looking at an industry with a large number of players.
 
LASoctoberB6
Posts: 1936
Joined: Thu Nov 09, 2006 4:23 pm

RE: Delta's Response To USAir

Mon Nov 20, 2006 3:26 pm

Quoting Steeler83 (Reply 23):
I already brought this up on other threads...

well obviously not in this thread......

did DL really say no already? i keep reading that they have said yes and no, so i really dont know what to believe.......
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