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mayor
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RE: Delta Trying To Buy AA?

Mon Aug 13, 2012 6:51 pm

Quoting flyby519 (Reply 49):
They could, but there would be difficulties finding good infrastructure like gates/terminal areas. Also every time DL tried to add MIA capacity AA moves onto the route with overcapacity and destroys the fares. DL buying the AA MIA hub would eliminate any real competition in the MIA airport, so that is were the value comes.

And it's probably cheaper in the long run to buy a ready made hub rather than trying to build it piecemeal.
"A committee is a group of the unprepared, appointed by the unwilling, to do the unnecessary"----Fred Allen
 
peanuts
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RE: Delta Trying To Buy AA?

Mon Aug 13, 2012 6:57 pm

Quoting kl911 (Reply 47):
I dont get it.

Sure you will. Can you say: Brazil? And more specifically: Sao Paulo
It's controlled, meaning, DL can't just grow Brazil organically from MIA without shrinking Brazil frequencies elsewhere.

DL wants what AA has in MIA. There's no denying that.

[Edited 2012-08-13 11:59:15]
 
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DeltaMD90
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RE: Delta Trying To Buy AA?

Tue Aug 14, 2012 12:23 am

I very highly doubt DL wants all of AA. Just look at how dysfunctional they are, DL is doing pretty well these days. Angry unions are they last thing DL needs. I'm sure DL is trying to push the bid price up but I think they are genuinely interested to see what they can get. DL would love MIA, DFW would be nice, getting some more NYC action would be nice as well (even if they couldn't secure all NYC assets due to competition laws,) LAX could finally make DL a bigger player in that area, and ORD is completely useless to them IMO.

So besides ORD, almost anything DL can somehow snatch up would be beneficial to them. Can't blame DL for trying, why wouldn't they, even if odds were as low as 5% or something?
 
questions
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RE: Delta Trying To Buy AA?

Tue Aug 14, 2012 12:35 am

Seems like there is a lot of posts about DL cherry picking assets in a AA/US merger, presumably to enhance DL route structure and assets and provide the "new AA" with a cash infusion.

What would a swap look like, a la the route/slot swap DL and US completed in LGA and DCA?
 
NYCAdvantage
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RE: Delta Trying To Buy AA?

Tue Aug 14, 2012 4:13 am

I just wonder if they have had secret negotiations between DL/AA and BA if we remember back a few months ago W.W.
Said that in case DL bought AA Delta would leave SkyTeam in Favor of OneWorld, maybe that is not working the way W.W. wanted, and that is why he now backs the US/AA merger.
Delta most likely wants the most obvious hubs that we have read and not the whole spice enchilada, meaning that if DL ever gets as unlikely as it sounds what they want OneWorld could be in trouble, Who knows if that is the reason QF is wondering with EK just in case the other shoe drops.
 
hereandthere41
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RE: Delta Trying To Buy AA?

Tue Aug 14, 2012 6:03 am

If AA ever got to the point where they had to jettison their crown jewels, i.e, MIA...don't think for a minute that DL would be the only one bidding for it. My hunch is that UA is watching closely to see how it plays out. DL won't get MIA without a fight. UA still needs better feed to LATAM from South Florida. IAH and EWR can't do it all. There were strong rumors that UA would be building up MCO this year. Nothing has happened as of yet. I believe they're waiting to see what happens with MIA before they commit to major growth at MCO. Just my opinion.
 
bobnwa
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RE: Delta Trying To Buy AA?

Tue Aug 14, 2012 12:05 pm

Quoting hereandthere41 (Reply 55):
There were strong rumors that UA would be building up MCO this year. Nothing

How do you define a strong rumor from an ordinary rumor?
 
AAIL86
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RE: Delta Trying To Buy AA?

Tue Aug 14, 2012 12:51 pm

Quoting peanuts (Reply 51):
DL wants what AA has in MIA. There's no denying that.

(sarcasm on)

Canada probably wouldn't mind purchasing their mostly bankrupt, sometimes dysfunctional southern neighbor. Word on the street is that they only want the East Coast, Texas, and the Pacific Northwest.

(sarcasm off)

C'mon guys. History does teach us that anything is possible (see Hitler and Stalin doing business together for a while), but doesn't this idea really rank in the extremely speculative, very low probability column?
" Travel is fatal to prejudice, bigotry, and narrow-mindedness ... Broad, wholesome, charitable views of men and things cannot be acquired by vegetating in one little corner of the earth all one's lifetime. ” - Mark Twain, 1869
 
flyby519
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RE: Delta Trying To Buy AA?

Tue Aug 14, 2012 2:32 pm

Quoting bobnwa (Reply 56):
How do you define a strong rumor from an ordinary rumor?

Depends on how many people laugh at it  
 
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enilria
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RE: Delta Trying To Buy AA?

Tue Aug 14, 2012 3:39 pm

Quoting AAIL86 (Reply 57):
C'mon guys. History does teach us that anything is possible (see Hitler and Stalin doing business together for a while), but doesn't this idea really rank in the extremely speculative, very low probability column?

Well, we know that DL hired a strategic adviser for M&A related to the AMR Ch11, so this thread is not baseless. DL has definitely spent management time on this. Do I think it will happen? No, but maybe that's just hope. Until the DOT/DOJ grow some and start drawing a line in the national market share sand, we are going to keep merging down toward two airlines.
 
GSPSPOT
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RE: Delta Trying To Buy AA?

Tue Aug 14, 2012 4:33 pm

Quoting enilria (Reply 59):
Until the DOT/DOJ grow some and start drawing a line in the national market share sand, we are going to keep merging down toward two airlines.

Indeed. As a passenger it's frightening to see happening... "Ameriflot".
Great Lakes, great life.
 
HPRamper
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RE: Delta Trying To Buy AA?

Tue Aug 14, 2012 4:44 pm

We are nowhere close to Ameriflot nor will it ever happen. We still have what, 13 trunk airlines in the country plus regionals that can be booked separately in some cases. A heck of a lot more than what most other countries have.

[Edited 2012-08-14 09:44:57]
 
AADC10
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RE: Delta Trying To Buy AA?

Tue Aug 14, 2012 4:56 pm

I think DL mentioned that they would be interested in MIA and DFW but not AA as a whole. It is also widely believed that a purchase or merger would never be approved. The only way that DL could get MIA and DFW would be something similar to TW when AA purchased their assets as TW was about to liquidate. AA would not survive independently without those hubs, so I suspect that DL is circling for assets that may be cast off or forced divestiture in a merger.
 
ckfred
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RE: Delta Trying To Buy AA?

Tue Aug 14, 2012 6:18 pm

Quoting GSPSPOT (Reply 60):
Indeed. As a passenger it's frightening to see happening... "Ameriflot".

I remember some time ago on CNBC, someone was complaining that the airline industry had low barriers to entry and high barriers to exit. So long as that trend continues, we were going to see people willing to spend money (or lenders willing to loan money) to start an airline that fills some kind of niche that is being overlooked.

By the same token, the U.S. Bankruptcy Code makes it easy for a bankrupt carrier to keep flying.

This was around the time that United kept getting extensions on the filing of its reorganization plans. Some airline analysts just wanted to see United liquidate, so that every other carrier could get some pricing power.
 
AAIL86
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RE: Delta Trying To Buy AA?

Tue Aug 14, 2012 11:59 pm

Quoting AADC10 (Reply 62):
I think DL mentioned that they would be interested in MIA and DFW but not AA as a whole.

Like I said, Canada would prefer to purchase the east coast, texas, and the pacific northwest.....  
Quoting enilria (Reply 59):
Well, we know that DL hired a strategic adviser for M&A related to the AMR Ch11, so this thread is not baseless

Yes - I know. Delta did indeed issue that press release. I wasn't being critical of the thread - it was more of a gentle attempt at sarcasm  
" Travel is fatal to prejudice, bigotry, and narrow-mindedness ... Broad, wholesome, charitable views of men and things cannot be acquired by vegetating in one little corner of the earth all one's lifetime. ” - Mark Twain, 1869
 
GSPSPOT
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RE: Delta Trying To Buy AA?

Wed Aug 15, 2012 11:29 pm

Quoting HPRamper (Reply 61):
A heck of a lot more than what most other countries have.

...But nothing near what many of us over-40 year olds remember fondly! The future.... YECH!
Great Lakes, great life.
 
BDL757
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RE: Delta Trying To Buy AA?

Sun Aug 26, 2012 5:55 am

Is Delta Grounding Comair to take off with American Airlines?

Another "interesting" article about a DL/AA combo. It's funny how they take Delta shutting down Comair as a potential sign they are interested in something with American. I had never thought of that...kinda makes me chuckle.
 
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mayor
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RE: Delta Trying To Buy AA?

Sun Aug 26, 2012 6:16 am

Quoting BDL757 (Reply 66):
Is Delta Grounding Comair to take off with American Airlines?

Another "interesting" article about a DL/AA combo. It's funny how they take Delta shutting down Comair as a potential sign they are interested in something with American. I had never thought of that...kinda makes me chuckle.

Especially since DL has been trying to sell Comair for HOW many years, now?
"A committee is a group of the unprepared, appointed by the unwilling, to do the unnecessary"----Fred Allen
 
BDL757
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RE: Delta Trying To Buy AA?

Sun Aug 26, 2012 6:47 am

Quoting mayor (Reply 67):
Especially since DL has been trying to sell Comair for HOW many years, now?

Exactly!! It must have been a slow news day or something; I have to admit that it is quite creative. The aggressive pay down of debt plus the pretty much unheard of early/quick contract with the pilots makes me think DL is up to something but I'm not sure what at this point.
 
EricR
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RE: Delta Trying To Buy AA?

Sun Aug 26, 2012 2:43 pm

Quoting BDL757 (Reply 66):

In typical media fashion, they take two separate actions (AA in BK and DL selling Comair) and try to link them to create a sensationalized story with the objective of increasing ratings. The Sun is setting....uh oh that must mean the world is ending....let's write a story about that.
 
jfk777
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RE: Delta Trying To Buy AA?

Sun Aug 26, 2012 3:49 pm

Quoting AADC10 (Reply 62):
I think DL mentioned that they would be interested in MIA and DFW but not AA as a whole. It is also widely believed that a purchase or merger would never be approved. The only way that DL could get MIA and DFW would be something similar to TW when AA purchased their assets as TW was about to liquidate. AA would not survive independently without those hubs, so I suspect that DL is circling for assets that may be cast off or forced divestiture in a merger.

AA also has about 17 LHR slots which could be worth a billion dollars.
 
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macsog6
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RE: Delta Trying To Buy AA?

Sun Aug 26, 2012 7:03 pm

I strongly suspect that DL's interest in AA is based upon escalating the price that would be paid by any potential purchaser. The higher the capital structure is, the more money will have to go to debt service and the less profitable the competitor will be as they will have less money to invest.

DL is not dumb and yes, they are looking at purchasing AA; but the chances of getting regulatory approval are quite slim; but the chance of making the competition weaker is quite real and a legitimate business purpose.

Thus, I suspect we will see DL sniffing about the edges and even making an offer - but it will solely designed to drive the price up.
Sixty Plus Years of Flying! "I fly because it releases my mind from the tyranny of petty things." - Saint Ex
 
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mayor
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RE: Delta Trying To Buy AA?

Sun Aug 26, 2012 7:49 pm

Quoting macsog6 (Reply 71):
I strongly suspect that DL's interest in AA is based upon escalating the price that would be paid by any potential purchaser. The higher the capital structure is, the more money will have to go to debt service and the less profitable the competitor will be as they will have less money to invest.

DL is not dumb and yes, they are looking at purchasing AA; but the chances of getting regulatory approval are quite slim; but the chance of making the competition weaker is quite real and a legitimate business purpose.

Thus, I suspect we will see DL sniffing about the edges and even making an offer - but it will solely designed to drive the price up.

As I mentioned earlier, this was done to DL by Carl Icahn of TWA and Bob Crandall of AA during the bidding for PA's assets in the early 90s.
"A committee is a group of the unprepared, appointed by the unwilling, to do the unnecessary"----Fred Allen
 
klkla
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RE: Delta Trying To Buy AA?

Sun Aug 26, 2012 9:21 pm

Quoting macsog6 (Reply 71):
I strongly suspect that DL's interest in AA is based upon escalating the price that would be paid by any potential purchaser. The higher the capital structure is, the more money will have to go to debt service and the less profitable the competitor will be as they will have less money to invest.

That is the most likely scenario IMO.

But, another option is that DL uses it's strong balance sheet and cah position to make an offer for the entire company that beats US' offer knowing that in order for the merger to be approved they would have to divest some assets and then they would get to keep what they really want (MIA operations and maybe JFK terminal, LHR slots, some 737/777's, e.t.c...).
 
questions
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RE: Delta Trying To Buy AA?

Sun Aug 26, 2012 9:31 pm

Quoting klkla (Reply 73):
That is the most likely scenario IMO.

But, another option is that DL uses it's strong balance sheet and cah position to make an offer for the entire company that beats US' offer knowing that in order for the merger to be approved they would have to divest some assets and then they would get to keep what they really want (MIA operations and maybe JFK terminal, LHR slots, some 737/777's, e.t.c...).

Or...
We know what DL wants from AA (e.g., MIA, DFW, JFK facilities) would make an AA-US merger less attractive. However, could an AA-US merger need the cash that could be raised from divesting some part of AA to offset the potential debt? If so, what might that scenario look like, i.e., without diluting the potential value of an AA-US merger?
 
jfk777
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RE: Delta Trying To Buy AA?

Sun Aug 26, 2012 10:02 pm

Delta wants Miami then DFW hub and 777 perhaps some LHR slots and routes. Delta has never flown LAX to LHR.
 
HPRamper
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RE: Delta Trying To Buy AA?

Sun Aug 26, 2012 10:06 pm

Quoting questions (Reply 74):
We know what DL wants from AA (e.g., MIA, DFW, JFK facilities) would make an AA-US merger less attractive. However, could an AA-US merger need the cash that could be raised from divesting some part of AA to offset the potential debt? If so, what might that scenario look like, i.e., without diluting the potential value of an AA-US merger?

Anything that is easily divestible would dilute the value. Specifically, slots at LGA, JFK, DCA and LHR. Maybe they would choose to continue the US pattern of divesting at LGA - airlines would certainly be lined up with cash on hand if those slots were made available.
 
commavia
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RE: Delta Trying To Buy AA?

Sun Aug 26, 2012 10:24 pm

Quoting HPRamper (Reply 76):
Anything that is easily divestible would dilute the value. Specifically, slots at LGA, JFK, DCA and LHR. Maybe they would choose to continue the US pattern of divesting at LGA - airlines would certainly be lined up with cash on hand if those slots were made available.

  

Precisely. The things that Delta would obviously want are also, not coincidentally, the same things that AA - and Parker - want, because of course those are the things that are the most valuable to AA. Thus, the only plausible scenario under which those would end up with Delta would be if Delta so bought up the price as to overpay, or if AA liquidates and is broken up, and neither is at all likely.
 
greenwichsud
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RE: Delta Trying To Buy AA?

Sun Aug 26, 2012 10:35 pm

Quoting klkla (Reply 73):
That is the most likely scenario IMO.

But, another option is that DL uses it's strong balance sheet and cah position to make an offer for the entire company that beats US' offer knowing that in order for the merger to be approved they would have to divest some assets and then they would get to keep what they really want (MIA operations and maybe JFK terminal, LHR slots, some 737/777's, e.t.c...).

I was also under the impression that, when an entity is bankrupt, a potential acquiring entity can generally access a level of proprietary information in the bankrupt entities books that would normally be considered collusive. Can any lawyers or other knowledgeable folks chime in?
 
avek00
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RE: Delta Trying To Buy AA?

Mon Aug 27, 2012 2:00 pm

Quoting greenwichsud (Reply 78):
I was also under the impression that, when an entity is bankrupt, a potential acquiring entity can generally access a level of proprietary information in the bankrupt entities books that would normally be considered collusive. Can any lawyers or other knowledgeable folks chime in?

In general, a company is bankruptcy is forced to be much more "transparent" with respect to its finances and strategic plans than a company not in bankruptcy - at minimum, the creditors' committees and their lawyers get to access everything, meaning that corporate decisions that would ordinarily involve 20 people at the table outside of bankruptcy now involve 200 people during restructuring. And yes, any competent third party who expresses a significant interest in a transaction with a bankrupt company can usually get some access to the bankrupt company's books.
Live life to the fullest.
 
greenwichsud
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RE: Delta Trying To Buy AA?

Mon Aug 27, 2012 4:44 pm

Quoting avek00 (Reply 79):
And yes, any competent third party who expresses a significant interest in a transaction with a bankrupt company can usually get some access to the bankrupt company's books.

So, it's quite possible that DL has no real interest whatsoever and is simply being opportunistic - gaining detailed access to yields, revenue, business plans, etc. Escalating the price for an eventual merger partner is just icing on the cake. It will be that much harder for a merged entity to succeed while DL uses the "look into the books" to chase the same opportunities organically.
 
FWAERJ
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RE: Delta Trying To Buy AA?

Mon Aug 27, 2012 4:56 pm

Quoting jfk777 (Reply 75):
Delta has never flown LAX to LHR.

AF did fly LAX-LHR for a while, which was codeshared with DL. It didn't last.
B721/722/731/732/733/735/73G/738/739/742/752/753/762/763, A300/319/320, DC-9/10, MD-82/83/88/90, ERJ-140/145, CRJ-200/700, Q200, SF340, AS350
 
tommy767
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RE: Delta Trying To Buy AA?

Mon Aug 27, 2012 5:31 pm

If AA was ever up for an auction, I'd forsee it to go this way:

UA/DL split MIA
US gets ORD
DL/US/NK split DFW
UA/DL ramp up LAX ops
JFK T-8 becomes another international terminal


But of course there is only a .05% chance of this ever happening.
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