General Lee
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UPDATE 2-US Justice Dept seeks info from Delta, Northwest
Tue Jun 3, 2008 6:51pm EDT
By John Crawley
WASHINGTON, June 3 (Reuters) - Antitrust officials at the U.S. Justice Department have asked Delta Air Lines Inc (DAL.N: Quote, Profile, Research) and Northwest Airlines Corp (NWA.N: Quote, Profile, Research) for more information on their merger proposal, the carriers said on Tuesday.
The government request was made recently and was expected. It is the first formal indication that the investigation of Delta's friendly bid to buy Northwest is moving forward on a timetable largely anticipated by legal and aviation experts.
The Justice Department, which must determine if the deal would impede competition and hurt consumers, confirmed its review but had no additional comment.
Delta submitted the proposal to antitrust enforcers and shareholders in April. The filing was timed to ensure antitrust review before the Bush administration leaves office in January. The administration is considered business friendly.
Northwest and Delta confirmed the notice. Northwest had no additional comment. But Delta said in a statement it is "committed to working cooperatively" with the Justice Department and "remains confident of a successful close" of the deal.
Edward Faberman, an aviation attorney with Wiley Rein LLP, said the request signals the government is closely reviewing route overlaps and other competitive aspects.
"It's not unusual, particularly when you are talking about carriers that big," Faberman said.
In anticipation of government approval, Delta and Northwest executives have begun planning integration of the companies. Wall Street has been cool to the deal and is looking for signs the merger will result in significant cost savings. Sustained fuel price spikes this year have eaten up profits and pummeled shares at big U.S. airlines, which are expected to post losses again this quarter.
On Tuesday, Delta's president and chief financial officer, Ed Bastian, said at the company's shareholder meeting in New York that Delta was committed to the merger even with fuel prices at record highs.
On Tuesday, global crude oil prices fell more than $3, lifting shares of major carriers. Delta closed up 4 percent at $6.10, while Northwest rose 5 percent to $7.07, both on the New York Stock Exchange.
But the International Association of Machinists (IAM), which represents thousands of Northwest ground workers, urged shareholders on Tuesday to oppose the merger, concerned about long-term debt and liquidity.
"To date, Delta and Northwest have failed to provide shareholders with a convincing argument that consolidation would increase shareholder value," said IAM President Thomas Buffenbarger.
Kent Landers, a Delta spokesman, said the combined company is taking on no new debt and would have expected liquidity of roughly $7 billion from cash, revolving credit and other sources. Both companies also restructured in bankruptcy from 2005-07, sharply reducing costs, he said.
Landers said the new Delta would have a solid balance sheet. "The airline with the strongest financial footing wins," Landers said of the race among large U.S. carriers to cut costs and boost revenue to stave off losses. (Reporting by John Crawley; editing by Andre Grenon, Richard Chang)
© Thomson Reuters 2008 All rights reserved
I think we have 12 routes that have overlap, and they are between our respective hubs. Not much at all, and doubtfull we will have to give up any slots or gates in LGA or DCA, since we do not compete on ANY routes from those airports. Maybe a gate or two in ATL......
Bye Bye--General Lee
Tue Jun 3, 2008 6:51pm EDT
By John Crawley
WASHINGTON, June 3 (Reuters) - Antitrust officials at the U.S. Justice Department have asked Delta Air Lines Inc (DAL.N: Quote, Profile, Research) and Northwest Airlines Corp (NWA.N: Quote, Profile, Research) for more information on their merger proposal, the carriers said on Tuesday.
The government request was made recently and was expected. It is the first formal indication that the investigation of Delta's friendly bid to buy Northwest is moving forward on a timetable largely anticipated by legal and aviation experts.
The Justice Department, which must determine if the deal would impede competition and hurt consumers, confirmed its review but had no additional comment.
Delta submitted the proposal to antitrust enforcers and shareholders in April. The filing was timed to ensure antitrust review before the Bush administration leaves office in January. The administration is considered business friendly.
Northwest and Delta confirmed the notice. Northwest had no additional comment. But Delta said in a statement it is "committed to working cooperatively" with the Justice Department and "remains confident of a successful close" of the deal.
Edward Faberman, an aviation attorney with Wiley Rein LLP, said the request signals the government is closely reviewing route overlaps and other competitive aspects.
"It's not unusual, particularly when you are talking about carriers that big," Faberman said.
In anticipation of government approval, Delta and Northwest executives have begun planning integration of the companies. Wall Street has been cool to the deal and is looking for signs the merger will result in significant cost savings. Sustained fuel price spikes this year have eaten up profits and pummeled shares at big U.S. airlines, which are expected to post losses again this quarter.
On Tuesday, Delta's president and chief financial officer, Ed Bastian, said at the company's shareholder meeting in New York that Delta was committed to the merger even with fuel prices at record highs.
On Tuesday, global crude oil prices fell more than $3, lifting shares of major carriers. Delta closed up 4 percent at $6.10, while Northwest rose 5 percent to $7.07, both on the New York Stock Exchange.
But the International Association of Machinists (IAM), which represents thousands of Northwest ground workers, urged shareholders on Tuesday to oppose the merger, concerned about long-term debt and liquidity.
"To date, Delta and Northwest have failed to provide shareholders with a convincing argument that consolidation would increase shareholder value," said IAM President Thomas Buffenbarger.
Kent Landers, a Delta spokesman, said the combined company is taking on no new debt and would have expected liquidity of roughly $7 billion from cash, revolving credit and other sources. Both companies also restructured in bankruptcy from 2005-07, sharply reducing costs, he said.
Landers said the new Delta would have a solid balance sheet. "The airline with the strongest financial footing wins," Landers said of the race among large U.S. carriers to cut costs and boost revenue to stave off losses. (Reporting by John Crawley; editing by Andre Grenon, Richard Chang)
© Thomson Reuters 2008 All rights reserved
I think we have 12 routes that have overlap, and they are between our respective hubs. Not much at all, and doubtfull we will have to give up any slots or gates in LGA or DCA, since we do not compete on ANY routes from those airports. Maybe a gate or two in ATL......
Bye Bye--General Lee
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Couldnt you have just said that you agreed? :nuts:
