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Delta Buyout Being Reported

Fri Oct 06, 2000 10:58 am

Delta Air Lines Inc., the third-largest U.S. carrier, is a possible buyout target at a price of $61 a share in cash, Business Week reported in its ``Inside Wall Street'' column.

A buyout group and two former airline executives are preparing to make a cash bid of $7.5 billion for Delta, the magazine said, citing unidentified ``industry insiders.'' The buyout group has been talking with a couple of banks to secure financing for the transaction, the magazine said.

``It's a speculative story and we really can't comment on rumors,'' said Delta spokesman Russ Williams. The company's shares, which fell 50 cents to 45.25 today, have fallen 14 percent over the past year.

Delta and other major airlines engaged in acquisition discussions following a May 24 announcement from UAL Corp., parent to United Airlines, that it agreed to buy US Airways Group Inc. for $11.6 billion. Subsequently, Delta Chief Executive Leo Mullin said his airline has studied the possibility of buying Continental Airlines Inc., which it also pursued three years ago.

Meanwhile, some airline executives, including those at Continental, have suggested airline stocks are so cheap it might be the right time for taking an airline private. Most of the stocks in the group are trading at less than 8 times earnings.

UAL agreed to pay $60 a share for US Airways, or more than twice the value of the shares on the day before the acquisition proposal was announced. US Airways shares closed at 31.38 today because of investor concerns about securing government approvals for the proposed merger.

Based on earnings and assets, Delta shares could rise to $83 in a year, Business Week said, citing Deutsche Banc Alex. Brown analyst Susan Donofrio. Atlanta-based Delta has a price-earnings ratio of 5.3, based on an estimated $8 a share in earnings in the year ending June 30, 2001, the magazine said.

Mullin told analysts last week at a breakfast meeting that Delta ``is ready to be aggressive with its own merger proposals, should this prove necessary,'' according to a report from Donofrio.

Leveraged buyouts in the airline industry have been very difficult in the past and only one at Northwest Airlines Corp. was successful because that company, unlike other airlines, had very little debt, said CIBC Oppenheimer analyst Julius Maldutis. It would be difficult to raise funds for an airline transaction of that size, he said.
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RE: Delta Buyout Being Reported

Fri Oct 06, 2000 11:31 am

two former airline executives

Say your prayers that it isnt good ol' Frank from Texas Air.
My views as expressed above are my views alone and do not constitute the views of my employer.
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RE: Delta Buyout Being Reported

Fri Oct 06, 2000 11:33 am

Lorenzo is dead.

The beauty of this is that since its not one carrier buying another, there's no speculation of whether or not the DOJ will let it happen.  
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RE: Delta Buyout Being Reported

Fri Oct 06, 2000 12:02 pm

I recall when the DL Board of Directors was looking for a replacement for Ron Allen and Hollis Harris name was on the pilots union wish list. Harris is a former DL executive and past CEO of Continental Airlines (among others), and I wonder if he has anything to do with this deal. I just hope that it is an airline person who comes in and not some number cruncher types who screw the employees of DL.
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RE: Delta Buyout Being Reported

Fri Oct 06, 2000 12:35 pm

So when did Lorenzo die, or is he just "dead" in the airline industry?
"There is no victory at bargain basement prices."
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RE: Delta Buyout Being Reported

Fri Oct 06, 2000 12:44 pm

him and hoffa**
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RE: Delta Buyout Being Reported

Fri Oct 06, 2000 1:46 pm

This is a long shot i know, but maybe the new owners will have the common sense to keep Delta's international operations at PDX alive!
those who have no vices have very few virtues
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RE: Exusair

Fri Oct 06, 2000 4:32 pm


RE: Hypermike

Fri Oct 06, 2000 4:40 pm

I'm very much alive.

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RE: Delta Buyout Being Reported

Fri Oct 06, 2000 8:24 pm

I heard that it was Lewis Jordan of Valujet fame? Now wouldn't that be a collective kick in the rear for the all "high and mighty" Delta to be bought out by their biggest nemesis?..........I really think that Lewis could turn that rag tag bunch around.

long live the critter
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RE: Delta Buyout Being Reported

Fri Oct 06, 2000 9:04 pm

Save up your pennies and go and buy some Delta shares which are trading around $45.00. Even if the sale comes does not come of they have been as high as $58.00 so there is some chance that they could go back up. High fuel prices I think are keeping them down.
Why fly non stop when you can connect
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RE: Critter

Fri Oct 06, 2000 9:18 pm

Are you willing to reveal your sources? If your psychologist mentions that it's all in your head please don't bother to mention it!!!.

Thanks anyway.
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RE: Delta Buyout Being Reported

Fri Oct 06, 2000 9:19 pm

People, please have a look at the the userprofile of Lucifer 666!  


the WorldTraveller
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RE: Delta Buyout Being Reported

Fri Oct 06, 2000 11:55 pm

Here's a link to the story from Business Week:

There's also word that DL and UA may need to start buying stakes in AeroMexico and Mexicana, respectively, to protect their interests there... the story is at

This could get very interesting... DL has always been known as a cash-driven, line, so taking it private could only reinforce that philosophy...

I'd love to see DL be taken private, and then have that new private group go after AS, so that finally, DL would have a west-coast strategy that made some sense.
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An Update.......

Sat Oct 07, 2000 3:49 am

......It appears that there is some truth to the reports from Business Week. From what I've been reading and gathering there is a certain plan to the madness that is taking place. When and if the 2 unknown buyers come to an agreement DL stock would no longer trade on the stock exchange. All owners at that time will remain owners for life, I believe. It would mean more profits and probably better service to the public. The pilots have always supported going private as benefits are more numerous to them, that is atleast with certain companies.

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