Delta May Start Merger Mania

EXAAUADL · Wed Nov 14, 2007 5:34 pm

Quoting DL767captain (Reply 9):
AA is kind of left out there in this combination, maybe if they were last they would just take up US airways, they are both the odd couple out and since US is so small its not a great deal

the smartest thing for AA to do is let their rivasls commit suicide and pick of the pieces here and there. AA's merger strategy was clear during UA/US back in 2000-01. Make the merged carrier spin off gates, slots and planes and then pick up those pieces....HAd UA/US gone thru, AA would likely be operating a BOS-LGA-DCA shuttle as that was part of the deal.....make the other merging carriers pay an extrememly high price of their merging, so that the new carrier is mortally wounded.

bobnwa · Wed Nov 14, 2007 6:33 pm

Quoting STT757 (Reply 34):
Golden share goes away if NWA merges with anyone, or outsiders buyout NWA. The Golden Share is non transferable.

I do not believe that is true.

Also regarding the golden share not applying if CO buys someone in an all cash transaction. The Continental CFO Jeff Misner said the following quote in article quoted in reply 1, "Continental's maneuverability is somewhat limited because Northwest holds a stake in continental and could block any merger efforts by its fellow carrier" No mention of excluding an all cash deal.

Quoting Centrair (Reply 2):
5th freedom rights from Japan...no NW name...no rights.

Again, this as an A.net myth.

yellowtail · Wed Nov 14, 2007 6:42 pm

Could AF/KLM finance a DL/MW merger....is it allowable legally?

STT757 · Wed Nov 14, 2007 7:06 pm

Quoting JFK787NYC (Reply 42):
Fleet will not be such a problem as both carriers will start recieving 787s in 2008-2009

Different engines, CO ordered GE NWA ordered RR.

Quoting JFK787NYC (Reply 42):
At the same time Delta merges with Jetblue & Alaska and gets JFK and West Coast and Skyteam emerges the most powerful alliance in the world.

That gives them nothing in Asia, where they are really weak.

Quoting Bobnwa (Reply 51):
Also regarding the golden share not applying if CO buys someone in an all cash transaction. The Continental CFO Jeff Misner said the following quote in article quoted in reply 1, "Continental's maneuverability is somewhat limited because Northwest holds a stake in continental and could block any merger efforts by its fellow carrier" No mention of excluding an all cash deal.

He said limited, limited in that they cannot offer stock in any transaction. I gave you the Bloomberg article where it specifically states CO can persue a merger if they acquire another carrier in an "all cash" transaction, this is fact.

Quote:
One potential complication in the United-Continental talks is the so-called golden share acquired by Northwest Airlines Corp. in 2001. In settling a dispute over an alliance to sell seats on each other's planes, Northwest got the power to block a Continental merger in cases involving a shareholder vote. If Continental makes an all-cash acquisition, it may avoid the golden-share provision.

http://www.bloomberg.com/apps/news?p...601087&sid=agUuK5eMAe3o&refer=home

Quoting Bobnwa (Reply 51):
Quoting STT757 (Reply 34):
Golden share goes away if NWA merges with anyone, or outsiders buyout NWA. The Golden Share is non transferable.

I do not believe that is true

Bob do you honestly think it's transferable? If it were why has there been no attempt to either sell it or solicitations to buy it?

[Edited 2007-11-14 11:09:07]

bobnwa · Wed Nov 14, 2007 7:08 pm

Quoting JFK787NYC (Reply 42):
32- Airbus A330 Northwest will obviously sell off these planes when 787s come on line.

I don't believe that is obvious to anyone working at Northwest. How is it obvious to you and not to them?

JTR · Wed Nov 14, 2007 7:28 pm

I just saw a report on CNBC about a rumor that DL and UA are talking, if a merger were to happen, the combined airline would keep the United name and be headquartered out of Chicago.

flydl2atl · Wed Nov 14, 2007 7:28 pm

It's official, UA and DL are in merger talks:

http://biz.yahoo.com/ap/071114/delta_united.html?.v=3

STT757 · Wed Nov 14, 2007 7:32 pm

Quoting Bobnwa (Reply 51):
Also regarding the golden share not applying if CO buys someone in an all cash transaction. The Continental CFO Jeff Misner said the following quote in article quoted in reply 1, "Continental's maneuverability is somewhat limited because Northwest holds a stake in continental and could block any merger efforts by its fellow carrier" No mention of excluding an all cash deal.

Here's it from Gordon Bethune, who signed the agreement with NWA.

Quote:
Former CEO: 'Continental needs to acquire United'
Noting that "merger speculation is in the air" following US Airways' hostile bid for Delta, the Houston Chronicle takes a look at where Houston-based Continental could wind up in the fallout. Not surprisingly, some of the paper's most intriguing tidbits come from Gordon Bethune, the outspoken former Continental CEO. As industry observers speculate about a possible round of competing bids for Delta and the subsequent consolidation that could follow, some suggest Continental may be the legacy carrier left out in the cold. Bethune tells the Chronicle it could play out as an airline game of musical chairs. "When the music stops, you need a place to sit," he says, adding that current Continental CEO Larry Kellner "needs to think about watching the combinations because it's got to be something you can participate in."

So, if such a wave of merger speculation comes to pass, who does Bethune see as a good fit for Continental? "What needs to happen is Continental needs to acquire United in some fashion and run it out of Houston," Bethune tells the Chronicle. "The last thing Continental needs is to become United and run it out of Chicago. Continental just has way too much on the ball to sit in the back seat." Bethune, who is now chairman of the board at Aloha Airlines, also addresses the "golden share" that Northwest holds in Continental –- something that essentially gives Northwest veto power over any possible acquisition of Continental. Bethune, who was at Continental when the deal was put in place, says the agreement "just says we (Continental) can't be bought by another airline. But that didn't preclude Continental from buying someone else."

http://blogs.usatoday.com/sky/2006/11/index.html

EXAAUADL · Wed Nov 14, 2007 7:33 pm

Quoting JTR (Reply 55):
I just saw a report on CNBC about a rumor that DL and UA are talking, if a merger were to happen, the combined airline would keep the United name and be headquartered out of Chicago.

That wont go over well in ATL..also might induce FL to move their HDQ to ATL finally

I'd say nearly all the DL mgmt employees will get the axe. The WHQ is small as it is. How many years will it take to build a new one??? If I was AA, FL or WN,. I'd be dancing over this.

SESGDL · Wed Nov 14, 2007 7:45 pm

UA/DL is never going to be approved by the DOT. There's antitrust written all over it. The carrier would be simply too large. I can't stand these selfish people who want to screw over the majority of people so they can make a few extra dollars. It will be interesting to see, but a UA/DL merger will go nowhere.

Jeremy

yellowtail · Wed Nov 14, 2007 8:00 pm

another release http://www.breitbart.com/article.php?id=D8STKQ3G0&show_article=1

deltaflyertoo · Wed Nov 14, 2007 8:11 pm

Quoting SESGDL (Reply 59):
UA/DL is never going to be approved by the DOT. There's antitrust written all over it. The carrier would be simply too large. I can't stand these selfish people who want to screw over the majority of people so they can make a few extra dollars. It will be interesting to see, but a UA/DL merger will go nowhere.

Why not? They have virtually NO overlap.......

georgiaame · Wed Nov 14, 2007 8:15 pm

Quoting SESGDL (Reply 59):
There's antitrust written all over it

Golden rule: Those who have the gold, rule. Antitrust doesn't mean a thing as long as you have political support. United if I'm not mistaken is a union shop, Delta is not. The majority party in the congress at the moment is totally beholdent to unions everywhere. If the unions want this to happen, they will get it.

Quoting SESGDL (Reply 59):
I can't stand these selfish people who want to screw over the majority of people so they can make a few extra dollars

Caveat emptor. There is nothing wrong with making money. In fact, inspite of it's bad name among certain elements of the population, MAKING money results in more people getting jobs in the end, and your paying lower taxes in the end. All the more power to them.

Personally, I can't imagine this happening. I made Platinum Medallion with my favorite Atlanta airline this year. I wonder if Star Alliance will recognise it. What about the AF-DL inroads? What about the new Delta paint job? What about United's poor financial record compared to Delta's recent turn around? How long do we give the negotiations to breakdown?

yellowtail · Wed Nov 14, 2007 8:20 pm

Quoting GeorgiaAME (Reply 62):
How long do we give the negotiations to breakdown?

2Â¢ on Friday Nov 16

blrsea · Wed Nov 14, 2007 8:21 pm

United, Delta discuss combining

Quote:
UAL Corp.'s United Airlines and Delta Air Lines Inc. have been discussing a combination between the nation's second- and third-largest carriers that would keep the United name and the corporate headquarters in the Chicago area, The Associated Press has learned.
...
But the talks involve United being the name of the combined airlines, the headquarters staying in Chicago and Delta's Atlanta hub being an operational center for the two carriers, the official said. One possible scenario involves Delta CEO Richard Anderson being the chief of the combined airline, the official said.
...

EXAAUADL · Wed Nov 14, 2007 8:26 pm

Quoting GeorgiaAME (Reply 62):
If the unions want this to happen, they will get it.

Why would the unions want their futures to be decided by a wall street hedge fund who has no longer term interest in the surviving carrier.???? THe unions at UA and DL will oppose this, not support it. unions have been instrumental in blocking mergers not facilitating them...

Quoting GeorgiaAME (Reply 62):
Caveat emptor. There is nothing wrong with making money. In fact, inspite of it's bad name among certain elements of the population, MAKING money results in more people getting jobs in the end, and your paying lower taxes in the end. All the more power to them.

The people at Pardus arent interested in buidling wealth by growing an airline..they want a short sharp specualtive bump in the stock, so they can dump their poor investment

goomba · Wed Nov 14, 2007 8:29 pm

I for the record hope this one goes through. This would be the best thing that could happen in the industry IMO. Best merger possibility that makes the most sense.

EXAAUADL · Wed Nov 14, 2007 8:35 pm

Quoting Goomba (Reply 66):
for the record hope this one goes through. This would be the best thing that could happen in the industry IMO. Best merger possibility that makes the most sense.

You think Pardus Capital Mgmt is doing this cuz it is good for the industry???? This merger will result in the total failure of both airlines......if consolidation is to ocur, it should happen by ALLOWING failing airlines to FAIL

toltommy · Wed Nov 14, 2007 8:37 pm

Quoting USAirALB (Reply 8):
I think DL should go with CO.

That combo would have too much market share in NYC, and the maybe the entire eastern seaboard. Why buy something if the regulators are going to make you sell it off?

Quoting DL767captain (Reply 9):
UA and DL would be great partners: however UA is a big star alliance member and Delta is a big skyteam member

The DL/AF anti-trust agreement would tip the scale in favor of SkyTeam.

EXAAUADL · Wed Nov 14, 2007 8:38 pm

Quoting TOLtommy (Reply 68):
Quoting USAirALB (Reply 8):
I think DL should go with CO.

Why should there be any mergers?

bobnwa · Wed Nov 14, 2007 8:43 pm

Quoting STT757 (Reply 53):
Bob do you honestly think it's transferable? If it were why has there been no attempt to either sell it or solicitations to buy it?

How do you know there hasn't been any interest sell it or solicitations. Does NWA have to have a press conference to announce every possibility.
It hasn't been sold because with it, Northwest is somewhat in the drivers seat regarding mergers between airlines. Northwest aquired the golden share by by trading the 51% of the voting rights to CO, it had purchased from Bonderman. Actually we won't ever find out for sure, as CO. nor any other carrier could afford an all cash deal.

Alitalia744 · Wed Nov 14, 2007 8:59 pm

Pardus is looking to make a quick buck.

Long-term consolidation is necessary to create scale within an industry that is facing increasing costs (fuel...).

Whether it happens next week, or next year is anyone's guess.

It seems there are potential legs here, but nothing is set in stone.

EXAAUADL · Wed Nov 14, 2007 9:00 pm

Quoting Alitalia744 (Reply 71):
Pardus is looking to make a quick buck.

youre the only a.netter besides myself who seems to get it...all the others are besides themselves with glee

bucky707 · Wed Nov 14, 2007 9:13 pm

Quoting Alitalia744 (Reply 71):
Pardus is looking to make a quick buck.

I will further add, since the AP article quoted un-named sources, I bet the info about merger talks came from someone at Pardus. The short term pop in both UAL and DAL after the story hit the wire probably netted Pardus some money already.

ScottB · Wed Nov 14, 2007 9:20 pm

Quoting STT757 (Reply 53):
He said limited, limited in that they cannot offer stock in any transaction. I gave you the Bloomberg article where it specifically states CO can persue a merger if they acquire another carrier in an "all cash" transaction, this is fact.

The actual terms of the "golden share" (technically, the single share of Series B Preferred Stock) were filed as part of the company's 2000 Annual Report. The contents of the exhibit are here: http://www.sec.gov/Archives/edgar/da.../000031968701500005/exhibit31b.htm

The definition of a "Change of Control" for both airlines is also contained within the filing. Apparently, CO could purchase a carrier not determined to be a "Major Carrier" without triggering the "Change of Control" provision, and the revenue threshold for that is the inflation-adjusted value of $1 billion in year 2000 dollars.

Alitalia744 · Wed Nov 14, 2007 9:23 pm

Quoting EXAAUADL (Reply 72):
youre the only a.netter besides myself who seems to get it...all the others are besides themselves with glee

I don't think long-term consolidation is wrong, nor do I think a potential combination with United is wrong, but I think these things need to be more thought out and fleshed out in theory and in plan before moving forward.

That said, there are huge opportunities should DELTA and United combine - from a network, scale and synergy perspective. But United isn't the only airline that provides DELTA with those opportunities.

Either way, from now until anything is official, it's anyone's guess.

What gets at me is potentially losing the DELTA name. A name that, while recently tarnished a little, for years has stood for Service and Hospitality from the heart. No ill-will against the United folk, as you never know what will happen.

SPREE34 · Wed Nov 14, 2007 9:28 pm

Quoting EXAAUADL (Reply 58):
That wont go over well in ATL..also might induce FL to move their HDQ to ATL finally

If the Ops center for the combined carrier is going to be in ATL, I'd think ATL has plenty to be happy about. More jobs in ATL.

Why would AirTran move their HQ out of Orlando?

Quoting SESGDL (Reply 59):
UA/DL is never going to be approved by the DOT. There's antitrust written all over it. The carrier would be simply too large.

Ahhh....what? Probably the least overlap of any two systems so where's the antitrust issue.

Simply too large? If that is going to be a measure there will be no merger of any of the carriers.

Quoting EXAAUADL (Reply 67):
if consolidation is to occur, it should happen by ALLOWING failing airlines to FAIL

Too late. The US Government screwed that up already.

avek00 · Wed Nov 14, 2007 9:36 pm

Quoting SPREE34 (Reply 76):
If the Ops center for the combined carrier is going to be in ATL, I'd think ATL has plenty to be happy about. More jobs in ATL.

Quoting SESGDL (Reply 59):
UA/DL is never going to be approved by the DOT.

UA/DL won't be happening anytime soon, but even if it did (and it won't), it'd face smooth sailing through DOT and DOJ reivew.

What must be remembered is that DOT/DOJ does NOT define "market" in the context of a particular city or airport, but rather in the context of specific ROUTES.

ScottB · Wed Nov 14, 2007 9:44 pm

Quoting SPREE34 (Reply 76):
Quoting SESGDL (Reply 59):
UA/DL is never going to be approved by the DOT. There's antitrust written all over it. The carrier would be simply too large.

Ahhh....what? Probably the least overlap of any two systems so where's the antitrust issue.

Actually, a combination like that would be problematic for a number of markets in the Mountain West where Delta and United (or their affiliates) are the two largest (or two only) carriers. It's also likely that at certain airports where gates are currently scarce and the two airlines have significant gate holdings (ORD, LAX, ATL, LGA, DEN, etc.) the DOT might require a hypothetical combined carrier to cede a significant number of gates to anyone who might request them (this was a condition of approval for the limited DL/NW/CO codeshare).

But in any event, Delta has issued press releases expressly denying the existence of talks with United regarding "consolidation" -- and typically releases like that are filed with the SEC. Knowingly filing false information with the SEC is a very serious no-no these days.

EXAAUADL · Wed Nov 14, 2007 9:48 pm

Quoting SPREE34 (Reply 76):
If the Ops center for the combined carrier is going to be in ATL, I'd think ATL has plenty to be happy about. More jobs in ATL.

Why would AirTran move their HQ out of Orlando?

1. there wont be more jobs in ATL when all those white collar mgmt jobs are lost or move to ORD. Adding Ops doest offest the loss of all the jobs at HDQ

2. FL would possible move to ATL as they would be ATL's home town airline, not UNITED. I dont think an LF move would be 100% but ATL has tried to get FL to move there before.

bobnwa · Wed Nov 14, 2007 10:05 pm

Quoting ScottB (Reply 74):
The definition of a "Change of Control" for both airlines is also contained within the filing. Apparently, CO could purchase a carrier not determined to be a "Major Carrier" without triggering the "Change of Control" provision, and the revenue threshold for that is the inflation-adjusted value of $1 billion in year 2000 dollars.

I believe that to be true. Seems to bear out what I have saying and it is a CO document. Any comment from STT757?

Delta767300ER · Wed Nov 14, 2007 10:54 pm

Quote:
Ah hell, lets just consolidate everyone:

Delta, you get Continental and Midwest
US Airways, you get Northwest, jetBlue and Frontier
American, you get Alaska and Hawaiian
SkyWest gets Comair
Republic gets Mesa
Virgin gets United, Spirit and Skybus
AirTran gets Sun Country and ATA
Southwest picks up all 737-700 metal that gets parked.

In 20 years...

DL and AA Merge
US and Virgin Merge
Southwest and AirTran Merge

5 years after that we all get taken at the wallet, if not sooner.

LMAO. I am against mergers. It sounds like they are trying to create "Ameriflot"

-Delta767300ER

ScottB · Wed Nov 14, 2007 11:08 pm

Quoting Bobnwa (Reply 80):

In any event, I suspect that NWA's motivation, in general, would be to protect its business and its relationship with CO and/or a possible successor, given that both airlines have stated in the past that the code share brings significant revenue benefits. If, hypothetically, CO were to try to buy US (as an unlikely example), it wouldn't be entirely surprising to see NW go along if the code share were preserved and if they were allowed to purchase assets like US's PHL and LGA operations.

There are plenty of scenarios involving CO where a merger of its partner would be beneficial to NWA.

LawnDart · Wed Nov 14, 2007 11:18 pm

Good Lord...

Pardus Capital Management owns barely 2.5% of Delta Air Lines...they took a risk in acquiring the stock, it hasn't done all that well lately (few airlines have), and they want to cash out and make a profit.

So they write a letter to Delta management suggesting they get the consolidation ball rolling, and then publicize the contents, and everyone goes ape-sh*t thinking a Delta / United merger is imminent!

Psst...hey. Have I got a deal for you...Skybus is about to be acquired by... wink

DLPMMM · Wed Nov 14, 2007 11:22 pm

Quoting Bucky707 (Reply 73):
I will further add, since the AP article quoted un-named sources, I bet the info about merger talks came from someone at Pardus. The short term pop in both UAL and DAL after the story hit the wire probably netted Pardus some money already.

Today both DL and UA made official announcements denying any merger talks have taken place or are being considered between the companies.

From the way the article was written, it is pretty clear the the rumor was started by Pardus or another party with a similar financial position.

Nothing to this UA/DL deal, but I would keep my eye on a DL/NW possibility.

STT757 · Thu Nov 15, 2007 12:24 am

Quoting Bobnwa (Reply 80):
I believe that to be true. Seems to bear out what I have saying and it is a CO document. Any comment from STT757?

You have been saying the opposite, in post #51 you state Quote:

STT757

Quote:
(Reply 34):
Golden share goes away if NWA merges with anyone, or outsiders buyout NWA. The Golden Share is non transferable.

Bobnwa

Quote:
I do not believe that is true.

And for some reason your totaly ignoring the direct quote from Gordon Bethune (who made the agreement with NWA in question), where he clearly states CO in the drivers seat of an all cash acquasition avoids the NWA voting share.

jfk787nyc · Thu Nov 15, 2007 2:45 am

Quoting STT757 (Reply 53):
Quoting JFK787NYC (Reply 42):
Fleet will not be such a problem as both carriers will start recieving 787s in 2008-2009

Different engines, CO ordered GE NWA ordered RR.

That does not mean anything the engines are interchangable on the 787

STT757 · Thu Nov 15, 2007 2:23 pm

Quoting JFK787NYC (Reply 86):
That does not mean anything the engines are interchangeable on the 787

I think they dropped that feature in the design process.

bobnwa · Thu Nov 15, 2007 2:47 pm

Quoting STT757 (Reply 85):
And for some reason your totaly ignoring the direct quote from Gordon Bethune (who made the agreement with NWA in question), where he clearly states CO in the drivers seat of an all cash acquasition avoids the NWA voting share.

And you are ignoring the filing that CO made with its annual report. Didn't they check with Bethune before the filing, or was that filing a mistake, or was Bethune misquoted?
But as I have already said, neither CO or any carrier could afford to buy another major carrier in a cash only deal. All carriers with the exception of WN have a negative net worth.

STT757 · Thu Nov 15, 2007 7:08 pm

Quoting Bobnwa (Reply 88):
But as I have already said, neither CO or any carrier could afford to buy another major carrier in a cash only deal. All carriers with the exception of WN have a negative net worth.

Which necessitates the involvement of an outside investor group (TPG), CO wants to avoid that but will go down that road if forced.

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