The Real USAirways Delta scenario

[Wiskey Driver]

While it has been fun teasing my Delta friends about this it's time to get real. This merger doesn't seem to make that much sense to me. Not that it has to in order to get done but it should at the very least pass the smell test. Bases too close to one another, only like equipment is Boeing 73 and 75-76 fleet and there are a few other things as well but the footbal game is about to start and I want to watch the Boys destroy the Giants.

I think that this deal is a ploy but one that will cost the Delta employees. Now the company is going to say that they can fight off the hostile takeover however they are going to need money to do it and what better way to get more concessions out of the delta bunch than a hostile takeover. Now even though they don't like the idea of even more give backs, they'll do it just so they won't have to be aquired bu us. We will bail on the idea and becasue Delta will take those concessions the company will then come to us looking for delta type wages for our NEW contract. USAirways will then focus on the real carrier they wanted all along UNITED!!!!

Do what ya gotta do Delta but know full well where ya headed!!!


WDimp:

 

[snow-back]

I think that this deal is a ploy but one that will cost the Delta employees. Now the company is going to say that they can fight off the hostile takeover however they are going to need money to do it and what better way to get more concessions out of the delta bunch than a hostile takeover. Now even though they don't like the idea of even more give backs, they'll do it just so they won't have to be aquired by us.

I've been thinking the same thing. It's amazing how quickly management can get the employees back on their side. DAL managers must chuckle themselves to sleep at night.

BOHICA

 

[Groucho]

I posted this idea right after the merger was announced. If this attempt doesn't fly, and it may very well not, then Delta will very possibly have to sweeten the pot for the creditors, thus weakening the company on Chapter 11 exit.

The damage done might be insignificant but I believe that Doug is betting that others will bid and therefore drive up the cost. It's sorta like going fishing, sometimes ya gotta "chum" the waters to draw the fish.

Doug would probably walk away from a real bidding war but it would make others, read NW, more inclined to a merger I think.

 

[machtuck]

all good points... Just curious why others have not thrown out bids yet?

 

[9rj9]

This isn't about synergies

This is about money. USAir aquires Delta and sells everything not bolted down. Gates, shed leases, cuts overhead (people) and closes bases. All this boosts stock price of LCC (USAir), and those boys hold millions of dollars worth. Its money, nothing but money, any talk about overlap is silly, they don't care.
For a history lesson research how K-mart bought Sears and what happened after, new stock ticker is SHLD. They sold all the overlap and made bank for the investors and managers.
borning ? not.

 

[Heavy Set]

While it has been fun teasing my Delta friends about this it's time to get real. This merger doesn't seem to make that much sense to me. Not that it has to in order to get done but it should at the very least pass the smell test. Bases too close to one another, only like equipment is Boeing 73 and 75-76 fleet and there are a few other things as well but the footbal game is about to start and I want to watch the Boys destroy the Giants.

I think that this deal is a ploy but one that will cost the Delta employees. Now the company is going to say that they can fight off the hostile takeover however they are going to need money to do it and what better way to get more concessions out of the delta bunch than a hostile takeover. Now even though they don't like the idea of even more give backs, they'll do it just so they won't have to be aquired bu us. We will bail on the idea and becasue Delta will take those concessions the company will then come to us looking for delta type wages for our NEW contract. USAirways will then focus on the real carrier they wanted all along UNITED!!!!

Do what ya gotta do Delta but know full well where ya headed!!!


WDimp:

That doesn't make sense. The offer from USAir has bolstered Delta's actual worth in Wall St.'s eyes, along with their own people that were going to do the exit financing anyway. The employees may want to "worship" management again, but in reality will thank Dalpa for their vote in the matter. Management is not on the unsecured creditor committe like Dalpa. And, the government won't allow this merger to pass anyway due to the overlap.

 

[Heavy Set]

This is about money. USAir aquires Delta and sells everything not bolted down. Gates, shed leases, cuts overhead (people) and closes bases. All this boosts stock price of LCC (USAir), and those boys hold millions of dollars worth. Its money, nothing but money, any talk about overlap is silly, they don't care.
For a history lesson research how K-mart bought Sears and what happened after, new stock ticker is SHLD. They sold all the overlap and made bank for the investors and managers.
borning ? not.

The government will not allow that. Members of Congress, Oberstar in particular, want their constituents to have choice. Why shouldn't UAL and NW merge? What you say? They both have key Asian routes? Well, according to you, one of them should just sell them. That wouldn't happen, and USair and DL both have key routes (shuttles) and gates/slots that are just as coveted. USair should have gone for NW, where there is less overlap and many of the same type of planes.

 

[Eagle757shark]

Why is it that when the going gets tough we think the government is going to step in and not let something happen? Before you come back and say the DOJ blocked the US Air/United proposed merger think again. The government would have allowed US Air/United and American and TWA to have completed their deal if United had continued to come to the table to work with the regulators. However, because of internal issues going on at United, they walked away and did not fulfill the DOJ requirements and paid US Air 50 million dollars for not completing the merger. ALL FACT! DOJ would have allowed this and all involved know it. Folks, this is big business not personal and this is about Parker trying to weaken his largest competitor on the EAST Coast. He is either trying to force Delta out of Ch.11 prematurely not obtaining the cost advantages originally sought or start a bidding war that will break Delta up. 8 billion dollars will force Delta management to up what they have to offer the creditors to stay independent. Smart for US Air in the long run because there is the possibility Delta will have higher cost than the new US Airways once it has completed its current merger with America West. The DOJ has guide lines for mergers of this size and believe me, Parker and team know what they will have to do to appeal to the regulators if they can get it by the creditors. I wouldn't take this proposed merger at face value. More is happening than what we see and know at this point.

 

[flaps30]

yep

well said.

 

[737 Pylt]

The government will not allow that. Members of Congress, Oberstar in particular, want their constituents to have choice. Why shouldn't UAL and NW merge? What you say? They both have key Asian routes? Well, according to you, one of them should just sell them. That wouldn't happen, and USair and DL both have key routes (shuttles) and gates/slots that are just as coveted. USair should have gone for NW, where there is less overlap and many of the same type of planes.

What you're not realizing is 9rj9 is a pure genius! Everyone should listen to her.
(sarcasm off)

737

 

[afres bum]

I don’t think this is any different than a Texas Air style maneuver... Acquire Delta with a leveraged buy out, sell assets (there seems to be agreement that the DOJ will require this) and when the sale of assets is done USAIR has removed a bunch of competition and whatever is left they got for free. American, Continental, Southwest, Fed Ex, UPS all have money to buy some assets. Delta effectively did the same thing when they bought parts of Pan Am and Eastern (just buy the parts they wanted at a fire sale).

 

[FDJ2]

Delta effectively did the same thing when they bought parts of Pan Am and Eastern (just buy the parts they wanted at a fire sale).

Not really. DAL did not buy PAA or EAL and then sell off bits and parts. DAL bought what PAA and EAL were selling.

 

[afres bum]

Not really. DAL did not buy PAA or EAL and then sell off bits and parts. DAL bought what PAA and EAL were selling.

I am sorry, that was my point; DAL was willing to buy assets of other down on their luck carriers. The same as AA, SW, CAL, UPS, Fed Ex, UPS, etc will be willing to do...

 

[FDJ2]

I am sorry, that was my point; DAL was willing to buy assets of other down on their luck carriers. The same as AA, SW, CAL, UPS, Fed Ex, UPS, etc will be willing to do...

That's true. In their time EAL and PAA did the same. All carriers are looking for bargains, but just to be clear, DAL did not conduct a hostile takeover of any PAA assets.

 

[afres bum]

I think USAIR is copying Texas Air and Frank Lorenzo… Acquire a company with other people’s money (or very little investment) and sell the assets!

 

[Marko Ramius]

Yup

Why is it that when the going gets tough we think the government is going to step in and not let something happen? Before you come back and say the DOJ blocked the US Air/United proposed merger think again. The government would have allowed US Air/United and American and TWA to have completed their deal if United had continued to come to the table to work with the regulators. However, because of internal issues going on at United, they walked away and did not fulfill the DOJ requirements and paid US Air 50 million dollars for not completing the merger. ALL FACT! DOJ would have allowed this and all involved know it. Folks, this is big business not personal and this is about Parker trying to weaken his largest competitor on the EAST Coast. He is either trying to force Delta out of Ch.11 prematurely not obtaining the cost advantages originally sought or start a bidding war that will break Delta up. 8 billion dollars will force Delta management to up what they have to offer the creditors to stay independent. Smart for US Air in the long run because there is the possibility Delta will have higher cost than the new US Airways once it has completed its current merger with America West. The DOJ has guide lines for mergers of this size and believe me, Parker and team know what they will have to do to appeal to the regulators if they can get it by the creditors. I wouldn't take this proposed merger at face value. More is happening than what we see and know at this point.

No guarantee that this will or won't happen, but for many of the reasons you pointed out I think it is foolish for employees to hang their hats on the DOJ or big business. It'd be nice if they came through, but I hope DALPA is contemplating all the angles behind the scenes because powers bigger than them might force an undesirable outcome.

 

[FDJ2]

I think USAIR is copying Texas Air and Frank Lorenzo… Acquire a company with other people’s money (or very little investment) and sell the assets!

You might be right. LCC is coming in with none of their own money. LCC is borrowing approx. $8B, using $4B to refinance their own loans, $4B to pay off DAL creditors and then $4B in stock from the new corporation. LCC acknowledges that the "new Delta" will be smaller than the combined LCC and DAL operations, so obviously assets must be sold, leases terminated and employees let go. At the end of the day you end up with a smaller company and $8B in additional debt, which the "new Delta" employees will have hanging over their heads for the rest of their careers, and not a single new aircraft to show for all that debt. Parker makes money, the banks make money, the creditors might make more money and the employees are left holding the bag in a new corporation that is ultimately doomed to failure.

 

[General Lee]

No guarantee that this will or won't happen, but for many of the reasons you pointed out I think it is foolish for employees to hang their hats on the DOJ or big business. It'd be nice if they came through, but I hope DALPA is contemplating all the angles behind the scenes because powers bigger than them might force an undesirable outcome.

Nah, doubtful. Just like if people asked "how about UAL and NWA?" Immediately people think about the Asian routes both have, and then they think about another pairing. Same here. Parker somehow thinks, with a straight face, that DL and USAir don't overlap. That is ridiculous. The Gov't actually does care about this, and local politicians WILL be up in arms about losing potential service. The other LCCs could not fill in the void, since none of them have planes that are right sized for smaller cities.

Besides all of that, Oberstar doesn't want any mergers, and he is incharge. The DOJ won't be easy to win over because of the overlapping hubs and small city service losses. The Fleets aren't close, and the integration at USAir and AWA isn't even close to being done, along with contract talks. (notice 600 picketing pilots)

And Dalpa has been watching this close for sometime, even tagging on a merger assessment to our pay for about a year. (for potential lawyer fees) They are ready for anything.

People have also talked about Boeing being in the Catbird seat. Hmmm. Our management has been paying lawyers and Blackstone Partner firms a lot of money to get through this, and I have a feeling we have been talking to Boeing, and I have a feeling strong rumors about "the largest Boeing Order FROM DELTA upon emergence from BK" might be correct. Expect many 787 and 737-700 orders. And what about USAir and Boeing? Airbus was the largest unsecured creditor at the USAir BK, and they made sure USAir would order 20 A350s upon exit. Those orders are temporarily on hold due to the A350 program being stalled, but USAir just ordered 7 A321s for AWA/US, and other A320 planes. Boeing knows this.

Unlikely. 5% chance.


Bye Bye--General Lee

 

[Quack]

Even if this thing never gets off the ground for US Air, it is still a win win situation for them. So they don't get Delta, but they force them to cough up top dollar to every creditor (which I am sure the list is long and distinguished), thus costing them much more money and lowering their worth as a stand alone. If you were a creditor and knew that a company was willing to give you 125% of what I was owed, Delta better come up with something just sweet. As someone else said, it gives Delta's mgmnt. more leverage against their employee's contracts to grant long term survival. US just goes about their business as nothing happened if the deal fails.

 

[tomgoodman]

Maneuvering

Even if this thing never gets off the ground for US Air, it is still a win win situation for them. So they don't get Delta, but they force them to cough up top dollar to every creditor (which I am sure the list is long and distinguished), thus costing them much more money and lowering their worth as a stand alone. If you were a creditor and knew that a company was willing to give you 125% of what I was owed, Delta better come up with something just sweet. As someone else said, it gives Delta's mgmnt. more leverage against their employee's contracts to grant long term survival. US just goes about their business as nothing happened if the deal fails.

Hmmm---you may be right. Perhaps the merger offer was made knowing it would never happen, but for other reasons. Delta may have encouraged the offer too, in order to flush out the bidder it REALLY wants.

 

[737 Pylt]

Hmmm---you may be right. Perhaps the merger offer was made knowing it would never happen, but for other reasons. Delta may have encouraged the offer too, in order to flush out the bidder it REALLY wants.

Tom:
Of all the BS (from arm chair ceo's) I've read on this board, yours makes about the most sense, and I often wonder that myself.

737

 

[Marko Ramius]

And Dalpa has been watching this close for sometime, even tagging on a merger assessment to our pay for about a year. (for potential lawyer fees) They are ready for anything.


Bye Bye--General Lee

The consensus for most pilots seems to be that this isn't going to go through, primarily for many of the reasons you posted General. It all seems so obvious that I just wonder if we all aren't missing something here. Wouldn't be the first time. You said DALPA is on all of the potential angles here which is good. What are your thoughts on the possibility/probability of what the thread starter posted: Delta asking for additional concessions in support of their independant plan ala Independence Air? That would be a tough deal because with that Feb 15th deadline looming, there wouldn't be alot of time for DALPA and the pilots to look under the hood of what's being presented to them. Also there would be a high likelihood that there would be alot of company claims of 'fluidity' of accurate information due to the time crunch and all. In other words, pilots aren't James Bond-put us in a room where the walls are closing in quickly and we typically do whatever we're told.

Am I jumping the gun a bit here? Yeah, probably but it would make sense for Delta to wait till the end of the month after the holidays if they're filing a plan that involves more employee love. Since DAL isn't unionized beyond the pilots, they can pretty much do what they want but why have a potential operational meltdown like Airways in PHL over the holidays when you can wait and officially deliver the news later?

 

[Noserider76]

Even if this thing never gets off the ground for US Air, it is still a win win situation for them. So they don't get Delta, but they force them to cough up top dollar to every creditor (which I am sure the list is long and distinguished), thus costing them much more money and lowering their worth as a stand alone. If you were a creditor and knew that a company was willing to give you 125% of what I was owed, Delta better come up with something just sweet. As someone else said, it gives Delta's mgmnt. more leverage against their employee's contracts to grant long term survival. US just goes about their business as nothing happened if the deal fails.

The problem is US/HP management will have concentrated so many resources on the takeover that their own plan will fall behind. Talking with some US crews over the weekend there weren't many Parker fans. He needs to get his own house in order in a big way.

 

[Marko Ramius]

??????????? for FD2, General or whoever

I haven't read the big UsAirways .pdf merger presentation but how do they envision closing the transaction? In the Airways/AWA merger I think they put both companies into a new holding company that they renamed later. I think it was more complicated than that, but that's the basic picture. Is that how they are planning to do this deal with Delta? Also, is Airways' offer to purchase DAL contingent on regulatory approval? I'm not asking whether the DOJ and others have to approve for it to be final, I'm asking if Airways is willing to close if they only get past the creditors and judge. The DOJ could sue like they would have with UA/US if they closed in the fashion proposed, but maybe that's what Parker wants. If he gets past the judge and creditors, is there anything stopping Parker from being Lorenzo and owning Delta and Airways under some sort of holding company?

 

[General Lee]

The consensus for most pilots seems to be that this isn't going to go through, primarily for many of the reasons you posted General. It all seems so obvious that I just wonder if we all aren't missing something here. Wouldn't be the first time. You said DALPA is on all of the potential angles here which is good. What are your thoughts on the possibility/probability of what the thread starter posted: Delta asking for additional concessions in support of their independant plan ala Independence Air? That would be a tough deal because with that Feb 15th deadline looming, there wouldn't be alot of time for DALPA and the pilots to look under the hood of what's being presented to them. Also there would be a high likelihood that there would be alot of company claims of 'fluidity' of accurate information due to the time crunch and all. In other words, pilots aren't James Bond-put us in a room where the walls are closing in quickly and we typically do whatever we're told.

Am I jumping the gun a bit here? Yeah, probably but it would make sense for Delta to wait till the end of the month after the holidays if they're filing a plan that involves more employee love. Since DAL isn't unionized beyond the pilots, they can pretty much do what they want but why have a potential operational meltdown like Airways in PHL over the holidays when you can wait and officially deliver the news later?

Wouldn't be the first time missing something? Thanks. I try to cover all of the bases, but may not see every angle I suppose.

As far as Dalpa watching this, they have since 9-11. They actually came out with a potential merger scenario bulletin after 9-11, watching the airlines as they started to go BK. (UAL first) They started early with a merger assesment on our pay, and say they are ready, if needed, to defend us.

You compare our future plan to "Independence Air's plan." Come on now, we have had a great plan and have had a great history as an independent carrier, longer than most. I would say our new plan is a lot better than our most recent plans that have since gone out the window. We have done a great job coming back from the brink, and now just have to go through the motions of a BK exit, which have been known all along. Our guys expected bids and potential hostile takeovers to occur. These guys aren't dumb, and the people that really caused us to get into this position are long gone. Leo, Fred Greed, Micheal Burns, they are gone.


Bye Bye--General Lee

 

[Marko Ramius]

General,

I was saying that it wouldn't be the first time that we as pilots/employees missed something that management was pulling on us, not you in particular. There is no comparison of the specific business plans of Independence and Delta. Two different airlines, working different segments of the business and in their particular predicaments for entirely different reasons. The similiarity imo, could come if DALPA is faced with a concession request to help secure the financing needed for an independant DAL plan. In that scenario, they basically have to look at US's plan, DL's plan and figure out which one is best for their pilots or come up with a viable plan C alternative of their own. The assumption right now is that the independant DAL is the best for the pilots and other employees, but the details of that plan could change that assumption. After alot of flirtation, ATA management went with a plan(AirTran) that wasn't good for their employees vs. one from AWA that was only to end up with plan C from Southwest that I'd bet their employees feel is a mixed bag at best.

The Indy ALPA guys chose between a hostile takeover from Mesa that would have kept them with UAX or an independant plan. They supported the independant plan, and it didn't work out for them. That plan was better for ACA management, but not so much for the employees. I always thought they should have gone with plan C and go to the shareholders meeting and demand that in return for concessions, the board oust top management and replace them with someone who could work with UA since the whole thing was basically a management sandbox fight. I don't know if it would've worked, I say it just to point out that there is often an option C that management tends to forget to mention.

The common theme is something bad (ie. merger, bk, losing express contract) and a decision for employees to make under a compressed time frame often with half a$$ info from the company. I don't think DAL would offer up any plan that calls for concessions before the new year, giving you guys @ a month to decide what should be done because I'm sure they'll want ratification a few weeks ahead of the Feb. 15th court date. Hopefully it doesn't come to another concession run, but I can't see the money people financing an independant DAL without one-it's just their nature and all of the employee eagerness to keep DAL independant only strengthens that resolve unfortunately.

 

[SkiFishFly]

I'm an outsider looking in but it seems to me that perhaps Parker and US Airways will win no matter what happens.
If they succeed in the hostile takeover, they get Delta for a Song (pun intended). They sell off parts they don't want/need and reduce competition and capacity.
If they don't succeed, they have made it much more expensive for Delta to exit bankruptcy - DL has to make their plan look better than what LCC has offered and that is going to have a cost associated with it.

 

[PHXFLYR]

The problem is US/HP management will have concentrated so many resources on the takeover that their own plan will fall behind. Talking with some US crews over the weekend there weren't many Parker fans. He needs to get his own house in order in a big way.

I am no Parker fan. But with that said,can you show me a management team ,any management team,that US crews were enamored with? Didn't think so. Let's face it,the average US East employee can elevate being pi$$ed off into an art form given enough time. And don't sit there and tell me if I went through what they went through the last several years I would be pi$$ed off too, because they were that way even when they were making A scale money and had retirement plans in place. The leopard will never change it's spots,no matter who's at the helm.


PHXFLYR