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Consolidation won't happen until carriers emerge from BK

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lowecur

Well-known member
Joined
Sep 14, 2003
Posts
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Now why is that? Could it be that current mgt for DL and NWA stand to get between 5-8% of the newly issued stock? Yeah, I think so. If any mergers were done prior, then I doubt if there would be any guarantees to these overpaid windbags. Analcyst Cordle thinks so:


Vaughn Cordle, chief financial analyst for the AirlineForecasts consulting firm, said Wednesday that Northwest and Delta executives have strong personal financial motives for ensuring that their airlines remain independent in the short term.

When the two airlines exit bankruptcy, Cordle said, key executives are likely to get substantial equity in the restructured companies. "If history is any guide, management should be able to secure between 5 and 8 percent of the ownership of Northwest," Cordle said.

Steenland said Tuesday that Northwest intends to award its executives stock in the new Northwest. "A piece of any management compensation structure is having an equity ownership in the company. That is true with every single company that I can think of," he said, but he declined to quantify the stock allocation.

Mark Tatge at Forbes thinks the DL will be back in play once they emerge from BK. This sentiment also stinks of the 5-8% stock in the new DL for Grinchstein, Bastian, and Whitehurst. Just think the stock will be issued for present value, then add to that the usual run-up in price on a perspective merger, and you have a very rich mgt team emerge. It will be interesting to see if these two have worked a back-door deal to merge once their current mgt teams lavish themselves with cash:


Airlines

Delta's Still In Play

Mark Tatge 02.01.07, 6:00 AM ET


CHICAGO -

US Airways Group CEO Doug Parker dropped his hostile $9.8 billion bid to buy Delta Air Lines Wednesday. The problem is, Parker was a little ahead of his time. Delta's creditors wouldn't cooperate.

But you heard it here first: Delta will be bought or merged with another airline once it emerges from bankruptcy, fueling the fires of industry consolidation.
Why? Delta simply can't make it on its own, despite assertions by Delta's CEO Gerald Grinstein that the carrier is better off a standalone.

Even with the lower cost structure that bankruptcy will afford the airline, the carrier's route structure is much too parochial. Parker knows this, which is why he went after the airline. Remember Parker is the guy who did something everybody said couldn’t be done--he smooshed together America West and US Airways.

The name of the game in the airline industry is scale, getting clout nationally and internationally.

Without scale, there won't be enough passenger growth to support five or six large airlines. Right now, everyone is playing a costly market share game. That's not good for profits.

:pimp:​
 
Now why is that? Could it be that current mgt for DL and NWA stand to get between 5-8% of the newly issued stock? Yeah, I think so. If any mergers were done prior, then I doubt if there would be any guarantees to these overpaid windbags. Analcyst Cordle thinks so:


Vaughn Cordle, chief financial analyst for the AirlineForecasts consulting firm, said Wednesday that Northwest and Delta executives have strong personal financial motives for ensuring that their airlines remain independent in the short term.

When the two airlines exit bankruptcy, Cordle said, key executives are likely to get substantial equity in the restructured companies. "If history is any guide, management should be able to secure between 5 and 8 percent of the ownership of Northwest," Cordle said.

Steenland said Tuesday that Northwest intends to award its executives stock in the new Northwest. "A piece of any management compensation structure is having an equity ownership in the company. That is true with every single company that I can think of," he said, but he declined to quantify the stock allocation.

Mark Tatge at Forbes thinks the DL will be back in play once they emerge from BK. This sentiment also stinks of the 5-8% stock in the new DL for Grinchstein, Bastian, and Whitehurst. Just think the stock will be issued for present value, then add to that the usual run-up in price on a perspective merger, and you have a very rich mgt team emerge. It will be interesting to see if these two have worked a back-door deal to merge once their current mgt teams lavish themselves with cash:


Airlines

Delta's Still In Play

Mark Tatge 02.01.07, 6:00 AM ET


CHICAGO -

US Airways Group CEO Doug Parker dropped his hostile $9.8 billion bid to buy Delta Air Lines Wednesday. The problem is, Parker was a little ahead of his time. Delta's creditors wouldn't cooperate.

But you heard it here first: Delta will be bought or merged with another airline once it emerges from bankruptcy, fueling the fires of industry consolidation.
Why? Delta simply can't make it on its own, despite assertions by Delta's CEO Gerald Grinstein that the carrier is better off a standalone.

Even with the lower cost structure that bankruptcy will afford the airline, the carrier's route structure is much too parochial. Parker knows this, which is why he went after the airline. Remember Parker is the guy who did something everybody said couldn’t be done--he smooshed together America West and US Airways.

The name of the game in the airline industry is scale, getting clout nationally and internationally.

Without scale, there won't be enough passenger growth to support five or six large airlines. Right now, everyone is playing a costly market share game. That's not good for profits.


:pimp:​

Thanks for the insight, Mark Tatge(??who??). But, there are hints that this could happen, with the creditors demanding a board that isn't against mergers, no poison pill being allowed, Grinstein stating he might have to merge if others merge, etc. I think we all know or knew it could happen, just as long as it made sense. Large job losses will not work, especially with Congress. A merger that makes sense will be a good thing, not one that makes us weaker.


Bye Bye--General Lee
 
Thanks for the insight, Mark Tatge(??who??). But, there are hints that this could happen, with the creditors demanding a board that isn't against mergers, no poison pill being allowed, Grinstein stating he might have to merge if others merge, etc. I think we all know or knew it could happen, just as long as it made sense. Large job losses will not work, especially with Congress. A merger that makes sense will be a good thing, not one that makes us weaker.


Bye Bye--General Lee
General:
I have to correct you.....You mean with a "democratic" controlled congress!

737
 

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