CAL/UAL Merger

[Jetjockey]

"I am Inigo Mantayo, you killed my career, prepare to die"

 

[Big Slick]

Vizzini: You fell victim to one of the classic blunders! The first is never get involved in a land war in Asia. The second, only slightly less well known, is this: never go up against a Sicilian when death is on the line! Ha ha ha ha ha ha -- (he stops abrubtly and falls over, dead)



Hey wait a minute, aren't we involved in a land war in Asia right now?

 

[Occam's Razor]

Not to make the rumor any more complicated than it already is:

NWA can block any transaction involving CAL. Under the 20-year agreement signed in June, 1998, the CAL BOD must get permission from the NWA BOD to: merge, purchase another airline or certificate, be purchased by another airline, code-share, or enter into an alliance with another airline.

The price CAL paid to purchase the preferred shares David Bonderman owned was to restrict their commercial freedom until 2018.

Since the NWA pilots had contractual language to block the March, 1998 transaction that bought Bonderman's majority preferred-stock interest in CAL (which gave him control of CAL, even though he only owned about 15% of the Common stock), they negotiated 4 Letters of Agreement that:

1. Set a maximum relative size of CAL airlines (in terms of blockhours). NWA has to remain at least 107% the size of CAL. It's about 120% now.
2. Restricted CAL owned or operated RJ's.
3. Defined and restricted some operations to prevent erosion of NWA Pacific flying.
4. Gave NWA pilots some goodies.

I don't know how much the blocking ability is worth, but any suitor to CAL would need to pay it.

 

[inthepool]

"there is a shortage of perfect breasts in this world. It would be a shame to ruin yours."

 

[imadumbpilot]

1. Set a maximum relative size of CAL airlines (in terms of blockhours). NWA has to remain at least 107% the size of CAL. It's about 120% now.
2. Restricted CAL owned or operated RJ's.
3. Defined and restricted some operations to prevent erosion of NWA Pacific flying.

Not sure about #3, but 1 and 2 were a part of the NWA pilots Scope clause, not the preferred stock deal, or right to block a transaction.

 

[Correcting]

All bets are off once you enter bankruptcy and the creditors start having their say.

 

[geshields]

Not to make the rumor any more complicated than it already is:

NWA can block any transaction involving CAL. Under the 20-year agreement signed in June, 1998, the CAL BOD must get permission from the NWA BOD to: merge, purchase another airline or certificate, be purchased by another airline, code-share, or enter into an alliance with another airline.

The price CAL paid to purchase the preferred shares David Bonderman owned was to restrict their commercial freedom until 2018.

Since the NWA pilots had contractual language to block the March, 1998 transaction that bought Bonderman's majority preferred-stock interest in CAL (which gave him control of CAL, even though he only owned about 15% of the Common stock), they negotiated 4 Letters of Agreement that:

1. Set a maximum relative size of CAL airlines (in terms of blockhours). NWA has to remain at least 107% the size of CAL. It's about 120% now.
2. Restricted CAL owned or operated RJ's.
3. Defined and restricted some operations to prevent erosion of NWA Pacific flying.
4. Gave NWA pilots some goodies.

I don't know how much the blocking ability is worth, but any suitor to CAL would need to pay it.

Only thing NWA can block right now is someone buying CAL. All other points are no longer valid. We purchased the rights to all others and NWA only has the "golden" share now which they can use to block another airline from aquiring us....

 

[densoo]

It is a real possibility. Kellner has said in his employee meetings that only the large will survive this period and you can either merge or you can grow--he has chosen the latter as indicated by the constantly adding routes and hiring essentially as many as the training facility will allow. He ends with "we hope it works."

 

[bearcat]

I just checked and my ridiculous rumor currency hasn't expired yet.

 

[pkober]

I had heard from a CO jumpseater that this was not going to happen.

A rumor from a line pilot, that's a reliable source.

Everyone know's we are merging with Aeroflot and opening a pilot base in Siberia. My Uncle Larry told me so.

CLAMBAKE