ASA and Comair to merge

[flaps30]

just heard a rumor that the MECs of Comair and ASA have proposed a merger with the support of Delta MEC. Anyone have more info.

 

[General Lee]

I think our Delta MEC would approve that, it would cut away a lot of inefficiency. But, I am not on the MEC, so I don't really know. But, it sounds plausible.

Bye Bye--General Lee

 

[exeagle]

December 8, 2003


Fellow ASA and Comair pilots:

In recent months, our respective management teams have been looking at
ways to cut costs. Some of us have been asked to consider concessions
while others have been encouraged to extend their contract by an
additional two years. Despite our profitability as independent
carriers, we recognize that the Delta organization continues to suffer
financial difficulties and struggles to find ways to make all of its
components profitable again. However, our two collective bargaining
agreements are extremely competitive by today's industry standards, and
we believe that Delta management needs to look at a larger issue that
would reduce our organization's expenditures and make us a more
streamlined operation. We believe that the ASA and Comair pilot groups
should be merged and that our two airlines should be consolidated.

This proposal is not something we take lightly, nor is it a
consideration we developed overnight. The two pilot groups have been
discussing this issue since the year 2000, when Comair joined ASA as a
wholly-owned subsidiary of Delta Air Lines, Inc. The Comair and ASA
operations complement one another because they feed the Delta mainline
operation from the organization's largest hubs. They also cover
point-to-point flying in surrounding markets, with limited overlap. In
addition, the two airlines continue to grow, leading us to believe that
there is plenty of flying to sustain both pilot groups, as they
ultimately would become one.

In becoming a single carrier, ASA and Comair could realize economies of
scale while eliminating some of its redundancies in its two
infrastructures. Numerous ground and management positions could be
consolidated and a portion of the cost savings from this action could
help fund new scheduling and operational automation, making the newly
merged airline even more efficient.

Consolidating our two pilot groups will also limit Delta's future
whipsawing efforts and provide us with a stronger voice with management.

This is not an emotional plea, but a logical business decision that the
Delta organization must consider if it is sincere in its desire to limit
costs.

Last week, the Comair and ASA MECs met in Atlanta with ALPA
representatives from its Representation, Legal, Economic and Financial
Analysis, and Communications Departments to consider this proposal,
discuss how a merger could be implemented, and pass a resolution setting
this plan in motion. Comair and ASA MEC Chairmen, Captains J.C. Lawson
and Bob Arnold, then consulted with Delta MEC Chairman, Capt. John
Malone, who indicated support for our position. Capt. Malone also
stated he intends to bring the consolidation issue to the attention of
the Delta MEC at the next opportunity.

This morning, pilot representatives presented this proposal to both ASA
and Comair managements. The outcome of these meetings remains to be
seen, but we are hopeful that Delta management will seriously consider
this proposal and be open to exploring how it could benefit our
organization as a whole.

We are part of a Union because we recognize that we are stronger when we
stand united together. In the same way, we are stronger as a single
pilot group and a single company. Combining our resources will make us
a formidable presence at both the bargaining table and within the
industry as a whole.

Fraternally,


The Comair MEC
The ASA MEC

 

[RJFlyer]

I think our Delta MEC would approve that...

Shouldn't it be "approve of that..."? It may be semantics, but it has an entirely different meaning.

 

[FlyComAirJets]

Sometimes, rumors are true.

 

[Palerider957]

Merger!

Man, that would be great. I think the ASA/Comair pilot groups would work very well together--we do already. If I'm not mistaken all of the DOH senirorty list work has already been done.

If we could merge, then (attempt) to contain flying to DAL/DCI.....could be good times.

 

[vc10]

If anything, the sale of one or more of ASA or Comair (separately) is likely.

Leo has resigned, meaning there's less pride at stake over whether the original purchase of Comair was a good thing or not (ASA had to be taken over, because it was a mess). In retrospect, purchasing Comair was one of the dumber moves of Delta.

 

[Palerider957]

VC10


ROFLMAO!!!!

Yeah, lets sell off the only part of DAL that is making money. Then DAL could take that quick cash and buy a TON of heavy iron, triple pilot pay, and drive the airline into the dirt---further into the dirt.

Get REAL......

 

[vc10]

OK, so why did Continental sell off ExpressJet and Northwest sell off Pinnacle?

And the fact of the matter is that any major can make any of its wholly-owned regionals look as profitable (or unprofitable) as it wants, simply by changing the internal transfer pricing between them. So the profitability of a wholly-owned is a strange concept to start with.

A bigger issue for Delta selling ASA or Comair is that it would have to endow them with some growth to make them interesting to investors. And ASA and Comair are high cost regionals, so increasing the amount of flying there isn't necessarily something Delta wants to do.

In the end, it might be more profitable for Delta to liquidate ASA or Comair (or both) and simply lease out the RJs to a third party. Hmmm, Wexford is buying Midway right now as a CRJ platform...

 

[Ace757]

What would ASA and Comair be called if they merged?

Would a merger just mean one company taking the assets of the other?

 

[jarhead]

ace757

How about "Delta Connection", and get rid of the contract carriers

 

[FL000]

What would ASA and Comair be called if they merged?

Atlantic Southeast-Jackson Airlines

 

[jarhead]

Ace757 asks "Would a merger just mean one company taking the assets of the other?"

All the "assets" are now totally owned by Delta Airlines.....100%

What it would do, is eliminate duplicate management structures (ya don't need TWO presidents, CFO's etc. The "assets" would all still belong totally to DAL No change there.

 

[rjcap]

OK, so why did Continental sell off ExpressJet and Northwest sell off Pinnacle?

Correct me if I'm wrong but Continental took Express Jet public but maintains at least 51% of the shares/ownership. Continental still has effective control of Express Jet but merely sold a minority interest to the public. From what I read the capitol raised was not significant.

 

[jarhead]

NWA owns all of Pinnacle. That's how NWA was able to put up Pinnacle stock to fund the Mainline pilots retirement obligations, i.e., they own the stock, therefore can do with it as they wish.

 

[FlyComAirJets]

Part of the deal to spin off CoEx included a half billion dollar note intended to fund Continental's pension plans. I believe it was a part of the initial 10k report.

As Delta is forced to confront its underfunded plans, it is not unreasonable to expect them to adopt a similar scheme.

Seeing as they have already invested several billion dollars in this company, it is difficult to imagine they would just liquidate Comair although one should never underestimate the stupidity of management. I don't think they can afford it.

 

[sleepy]

OK, so why did Continental sell off ExpressJet and Northwest sell off Pinnacle?

And the fact of the matter is that any major can make any of its wholly-owned regionals look as profitable (or unprofitable) as it wants, simply by changing the internal transfer pricing between them. So the profitability of a wholly-owned is a strange concept to start with.

A bigger issue for Delta selling ASA or Comair is that it would have to endow them with some growth to make them interesting to investors. And ASA and Comair are high cost regionals, so increasing the amount of flying there isn't necessarily something Delta wants to do.

In the end, it might be more profitable for Delta to liquidate ASA or Comair (or both) and simply lease out the RJs to a third party. Hmmm, Wexford is buying Midway right now as a CRJ platform...

Actually, ASA and Comair have the lowest CASM of any DCI carriers. That includes Skywest and ACA. It would make more sense to put aircraft with us, because we are the most efficient carriers in the portofolio.

 

[jarhead]

.....or to declare bancruptcy. That's what's usually done when liabilities exceed assests in publically held companies.

 

[General Lee]

Jarhead,

To just file for Chap 11 would allow every stcokholder to sue every board memeber for rendering their stock worthless. That will not happen. Delta still has over $2.7 billion in cash on hand, and many assets (like ASA/Comair, planes, terminals, they could still mortgage). The pension problem is shrinking as the stockmarket rises, and the debt problem will be helped by paycuts that are forthcoming. A lot of the problems are due in 2005, and the selling of the 11 738 aircraft just cut $500 million out of the projected Capital Expenditures due that year alone. Believe it or not, the management here (even with the CEO shift) actually sees what is happening and they are forwardly planning this out. And, in the mean time the economy is improving, which helps loads....

Bye Bye--General Lee

 

[jarhead]

General Lee

Yes, bancruptcy can not be entertained in a capricous way, as the board has a fiduciary responsiblity to the shareholders. That agreed to, going chapter 11, (or even chapter 7), does not necessarily render the stock "worthless". I believe in most cases, the event is meant to "cut the lossses" to the shareholders, through reorganization, (or in the case of Chapter 7, to liquidate the assets to pay off the debts owed to creditors at x cents on the dollar). Certainly not a desirable situation in any case, but when one buys stock in a company, they share in the profits, or they incur the costs of the "risk" they took when buying the stock. The annual shareholders meeting, is the place that directors can be appointed or fired, depending on the "mood" of the shareholders. There is no guarantee when one buys a share of stock in a publicly owned company, that it will be a good investment..