CAL/UAL Merger Cancelled!!!!!

[SFR]

UAL found out that I work for CAL and they are too worried that their pilots lack skill to campare against the excellence...

 

[jumppilot]

UAL found out that I work for CAL and they are too worried that their pilots lack skill to campare against the excellence...

Not quite, but getting hotter....


http://dealbook.blogs.nytimes.com/2...l-talks-snag-over-price/?partner=yahoofinance

6:17 p.m. | Updated Merger talks between United Airlines and Continental Airlines reached an impasse over the weekend over a disagreement about the price of a stock-for-stock deal, people involved in the negotiations told DealBook.

The chief executives of United and Continental, Glenn F. Tilton and Jeffery A. Smisek, respectively, spoke on Friday and Saturday about the exact ratio of shares that United planned to pay for Continental, these people said. That would affect the price United would ultimately pay for the deal.
More specifically, the two companies have not been able to reach an agreement over the value of the stock prices used to compute the exchange ratio.

One person involved in the discussions described the disagreement as a potential deal-breaker for the talks, though the companies are continuing to negotiate.

Other elements of a potential merger had already been agreed upon, including the naming of Mr. Tilton as chairman and Mr. Smisek as chief executive of the combined airline, which would keep the United name.
The Friday conversation between Mr. Tilton and Mr. Smisek was their first about a stock exchange ratio since the two airlines resumed merger talks more than a week ago.

Stock-for-stock mergers usually rely on share prices from a certain time period to determine how many shares the acquirer would issue to the target.

Both companies have agreed to an “at-market” deal. Continental has insisted on using the “unaffected share prices,” meaning the price of the stock before DealBook reported that United had restarted merger talks with US Airways. But United wants to use a later market price, possibly on the day before a merger with Continental is announced.

The difference is crucial: United’s share price has risen more than 21 percent to $22.99 since April 7, when news of the United-US Airways talks broke. Continental’s has risen just 7.4 percent, closing on Friday at $22.01.
That would mean that under Continental’s methodology, the airline would receive more United shares — meaning a higher price. More specifically, based on a 30-day volume-weighted average price using share prices before April 7, Continental stockholders would receive 1.15 United shares for each of their shares, one of these people said. On a 10-day average, Continental investors would receive about 1.1 United shares for each of their shares.

Under United’s methodology, the exchange ratio would be much lower.
The obstacle could put extra pressure on United and Mr. Tilton, who has been one of the most vocal proponents of greater consolidation within the airline industry. Another potential merger partner, US Airways, announced on Thursday that it had broken off talks with United as talks with Continental appeared to have picked up steam.

Mr. Smisek has said recently that Continental would consider a “defensive” merger, suggesting that the airline would be content to remain independent with a United-US Airways merger now unlikely. (Continental executives were taken by surprise upon learning of the United-US Airways talks, people briefed on the matter previously told DealBook.)

The two sides have approached their latest round of talks with some caution, given their previous efforts to merge. Deal talks in 2008 broke apart over Continental concerns over United’s financial health.

Several industry analysts have said that with US Airways’ exit, the chances of a United-Continental merger have dropped significantly.

– Andrew Ross Sorkin and Michael J. de la Merced

 

[Ben Franklin]

UAL found out that I work for CAL and they are too worried that their pilots lack skill to campare against the excellence...

Irony is fun.

However, the merger has been called off because uncle Gordon called and reminded Jeff that UAL is HIV-Positive...


Sincerely,

B. Franklin

 

[Pogue Mahone]

UAL found out that I work for CAL and they are too worried that their pilots lack skill to campare against the excellence...

I know...let's have a spelling contest.

 

[Quimby]

I know...let's have a spelling contest.

Tombstone quote?

 

[rumrnr78]

Tombstone quote?

That's the first thing I thought! We could have a great thread on that movie. Kilmer's finest work for sure.

Of course, the poster could be referring to the spelling of "campare"

Cheers

 

[waveflyer]

I'm your huckleberry - why that's just my game...

 

[dicko]

That's the first thing I thought! We could have a great thread on that movie. Kilmer's finest work for sure.

Of course, the poster could be referring to the spelling of "campare"

Cheers

Perhaps the tooth sucking SFR was referring to 'Campari'. An Italian liquor that she had just consumed before posting.

 

[Mr.B]

Deals done....Glenns just pressing for the undercoating

 

[Yuppyguppy]

Either it happens or it doesn't relax all....I'm gonna say it will happen. Time will tell soon enough

 

[Shrek]

Either it happens or it doesn't relax all....I'm gonna say it will happen. Time will tell soon enough

Agreed - if they are talking about which stock price to use - I think the will we or won't we has already been answered............

Time will tell.....

 

[whymeworry?]

Minor bump in the road of negotiations. The deal is still on. Announcement within 2 weeks.

But I wish it were true that the deal was dead. A merger will be bad for both pilot groups.

CAL has strong scope, weak rules. UAL has average work rules, pathetic scope. If we merge, I would imagine a minimum of 500-1000 more furloughs (probably come from both sides) IF (and that's a big IF) CAL mgmt gets it's way on scope. They have been trying to get us to cave for the past 10 yrs.
UAL and DAL hasn't helped our cause to hold firm on scope. If mgmt succeeds in whipsawing both groups, we could very well see the scope barrier being brought down in line with UAL... which will suck.

On the other hand, if both MECs agree to stand firm against mgmt, and CAL adopts UAL work rules while UAL adopts CAL scope, we will see recalls.

 

[AA717driver]

Either it happens or it doesn't relax all....I'm gonna say it will happen. Time will tell soon enough

Tilton wants it bad enough he can taste it. He just hasn't whored UAL shareholders out cheap enough yet.

Good thing the UAL employees got the ESOP wiped out or you'd REALLY be on pins and needles.

Good luck.

TC

 

[tomgoodman]

Salesmanship

Shareholders on both sides always grumble that they didn't get "enough" in a stock swap. Therefore, a good fight over the exchange price must be staged to mollify them, lest they disapprove the deal.

 

[Jetjockey]

The way I read it is they are just arguing over price. It would seem that Jeff is the driver seat. It reminds me of being at a car dealership. Glenn is the salesman. Jeff is the customer who can walk away from the deal because his car is just fine the way it is.

Glenn :"Jeff, what do I have to do put you in this combined airline today????"

Jeff : "well, I think the price is a little to high"


Glenn knows he can't let this one slip away. It's closing time on Friday night, with the monthly quota ending soon. Tick tock.

 

[Ex737Driver]

Minor bump in the road of negotiations. The deal is still on. Announcement within 2 weeks.

But I wish it were true that the deal was dead. A merger will be bad for both pilot groups.

CAL has strong scope, weak rules. UAL has average work rules, pathetic scope. If we merge, I would imagine a minimum of 500-1000 more furloughs (probably come from both sides) IF (and that's a big IF) CAL mgmt gets it's way on scope. They have been trying to get us to cave for the past 10 yrs.
UAL and DAL hasn't helped our cause to hold firm on scope. If mgmt succeeds in whipsawing both groups, we could very well see the scope barrier being brought down in line with UAL... which will suck.

On the other hand, if both MECs agree to stand firm against mgmt, and CAL adopts UAL work rules while UAL adopts CAL scope, we will see recalls.

You say average work rules but I have yet to see how CAL and UAL stack up when it comes to crewing their respective fleets when you apply both contracts. Simple math shows that CAL utilizes around 13-14 pilots per aircraft, not taking into consideration 3 or 4 man crews, training dept, CP's, etc. UAL utilizes between 17-18 pilots per aircraft. I didn't count the furloughs in this. Granted this is a very simple way to look at it but with this alone, CAL would need to bring in somewhere around 1300 pilots. Between the two companies there are about 1500 or so pilots on furlough. Remove the ones not coming back and you have a scenario where a merged company has no furloughed pilots.

Now throw in the wild card; getting the CAL pilots a new contract that we want since we can put the kibosh on the JV deal and getting UAL to buy off on that same contract while merging the two airlines. Can both Tilton and Smiseck allow this to become the train wreck that is USAir or will they follow the DAL example?

 

[fokker pilot]

Maybe the UAL pilots saw how the CAL guys were going to "Air Wisconsin" them, and told their buddy Tilton to call it off !

 

[Jetjockey]

Merger can't happen..............SFR said it was canceled.