Delta lenders support US Air offer

[Whine Lover]

In Business there are no "friends". Just Businessmen.


YKW

 

[retired guy]

I`ve been through three mergers/aquisitions in my 30 year career at Delta. I`ve also witnessed several others at other airlines. In every case that I know of (except AA/TWA), the lists were combined in some form of "relative position". Of course the airline with very senior pilots (like old Us Air) wanted to go by date of hire and outfits like Cactus, with a young group of pilots wanted relative position. I have never heard of any airline senority list giving any position on the combined list to a furloughed pilot. As those guys were called back, they were put on the bottom of the list. Did they howl? Hell yes, but that`s the way it`s always been. In my experience at Delta,the first merger was with Northeast...boy, those guys could bitch, the next was Western, "The Whiners" we called them, and finally the remains of Pan Am, those boys wanted to (and did) sue everyone (Their lawyers were happy). Anyway, that`s my experience with mergers. It`s no fun for anyone.

 

[ALGFLYR]

I have never heard of any airline senority list giving any position on the combined list to a furloughed pilot. As those guys were called back, they were put on the bottom of the list. Did they howl? Hell yes, but that`s the way it`s always been.

Not true. Take a look at the Pan Am/ National Merger. The furloughees got credit for longevity and were integrated as such. The Arbitrator was Gill, who is now high in the NMB.

Also look at the Air Wisconsin/ Mississippi Valley (both ALPA) in 1985. The furloughed Air Wisconsin pilots were integrated into the new list as if they never left the property...

 

[PA-22]

Not true. Take a look at the Pan Am/ National Merger. The furloughees got credit for longevity and were integrated as such. The Arbitrator was Gill, who is now high in the NMB.

Also look at the Air Wisconsin/ Mississippi Valley (both ALPA) in 1985. The furloughed Air Wisconsin pilots were integrated into the new list as if they never left the property...

So in these cases, did they furloughed active pilots to bring furlougees back? Or when they where recalled they were just placed above the active pilots?

 

[Thebadcat1313]

When did Pan Am/National take place? I think these examples are obscure at best, and probably not applicable to today's environment.

 

[General Lee]

When did Pan Am/National take place? I think these examples are obscure at best, and probably not applicable to today's environment.

Most of the mergers that happened had one failing carrier that was beyond hope. USAir was failing and AWA was their white knight. DL and NWA are doing better, and Jim Oberstar, the new Chairman of the Transportation sub committee, said a USAir takeover was "Nonsense." Airlines are doing better, and 80% full. When carriers are doing better, there is no real reason to merge.


Bye Bye--General Lee

 

[chase]

General & other Delta insiders,

First of all Happy Thanksgiving....if you're at home, get off of here & enjoy the holiday...myself, in the pilot lounge so I have an excuse ....as for my comment & a question to one of the points you made.

You referenced that Parker is trying to drum up support for the 2nd tier group of bondholders/creditors not on the Creditor's Committee in order to attempt to build support among them in hopes of this group changing the views of other creditors, possibly even the CC.

As you stated, the CC is closer to DL management's view that a merger would be bad. My questions are this: is it possible the CC is merely siding with DL management not because they believe DL should stay independent but believes the offer is too low from USAir? After all, a bigger offer would mean more money in their pockets.

By staying with DL management, they give other possible takeover contenders the option to woo the CC directly with a higher offer, kind of good cop (lower tier creditholders) & bad cop (current CC). One should never take the first offer on the table & Parker appears to be trying to close the deal as quickly & efficiently as possible before other financiers can weigh into the fight.

I assume you would agree that the CC wouldn't exclude any offer for DL from any other airlines/banks/financiers? Every creditor has their price & in this case it could be argued the right price hasn't occurred yet for the CC to not support DL's management. Also by opposing the USAir offer it gives hope to those others out there who may wish to make an offer (with better terms & money).

Who knows what will happen but my best wishes to your fellow pilots there & at USAir who are hoping to resolve their labor issues.

 

[General Lee]

General & other Delta insiders,

First of all Happy Thanksgiving....if you're at home, get off of here & enjoy the holiday...myself, in the pilot lounge so I have an excuse ....as for my comment & a question to one of the points you made.

You referenced that Parker is trying to drum up support for the 2nd tier group of bondholders/creditors not on the Creditor's Committee in order to attempt to build support among them in hopes of this group changing the views of other creditors, possibly even the CC.

As you stated, the CC is closer to DL management's view that a merger would be bad. My questions are this: is it possible the CC is merely siding with DL management not because they believe DL should stay independent but believes the offer is too low from USAir? After all, a bigger offer would mean more money in their pockets.

By staying with DL management, they give other possible takeover contenders the option to woo the CC directly with a higher offer, kind of good cop (lower tier creditholders) & bad cop (current CC). One should never take the first offer on the table & Parker appears to be trying to close the deal as quickly & efficiently as possible before other financiers can weigh into the fight.

I assume you would agree that the CC wouldn't exclude any offer for DL from any other airlines/banks/financiers? Every creditor has their price & in this case it could be argued the right price hasn't occurred yet for the CC to not support DL's management. Also by opposing the USAir offer it gives hope to those others out there who may wish to make an offer (with better terms & money).

Who knows what will happen but my best wishes to your fellow pilots there & at USAir who are hoping to resolve their labor issues.

Chase,

Could be. You are right that the CC would want the best price if they collectively wanted a merge to occur. There could be differences on the CC, with some wanting long term viability for Delta (and thus more A/C orders--Boeing and Pratt, ATL as a headquarter (Coke), etc). Others, like the 30% bondholders, want the best deal so they can cash out. Dalpa is the single largest unsecured creditor (about 15%), and I can tell you what we DON'T want---a merger with USAir, especially since they can't get their own act together. We have a large chunk, and with Boeing's, Pratts, Fidelities' (they are our exclusive 401K provider for 46,000 employees), and Coke's shares--we probably have more than 50%. Throw that in with Oberstar's objections --"Nonsense" to CNBC the day it was announced, and it doesn't sound likely. Parker might really want it to happen, and GK might also want to get some gates and slots, but that won't make a bad deal happen. Too much overlap, employee integration problems, and no fleet commonality whatsoever. That doesn't sound good, does it? Have a good turkey day.


Bye Bye--General Lee

 

[xanderman]

aren't we getting ahead of ourselves here?

Guys! The CC has NOT even seen the proposal yet. There has been no meeeting between Dougie and the CC. How can you say they are siding with the current DAL management? The bondholders deal is to yes, drum up some support but it has nothing to do with desperation on US's part. Ober-whatever is a politician and is the only ONE who has come out against this deal (that I know of). Fine. But he has NOT seen the inside details of this proposal. I think we are all getting a little ahead of ourselves. Give it some time to see what details emerge in the coming weeks.

I am not for this but Doogie has a way of getting this crap done. I'll leave it at that.

Andy

 

[General Lee]

Guys! The CC has NOT even seen the proposal yet. There has been no meeeting between Dougie and the CC. How can you say they are siding with the current DAL management? The bondholders deal is to yes, drum up some support but it has nothing to do with desperation on US's part. Ober-whatever is a politician and is the only ONE who has come out against this deal (that I know of). Fine. But he has NOT seen the inside details of this proposal. I think we are all getting a little ahead of ourselves. Give it some time to see what details emerge in the coming weeks.

I am not for this but Doogie has a way of getting this crap done. I'll leave it at that.

Andy

Andy,

After Parker made the inital offer to Grinstein(2 months ago), he (Grinstein) took that offer to the same creditor committee, and they decided then it was not a good direction for the company. Will they say that again? I don't know, but our CFO meets with them next week. We have exclusive rights to see and offer our plan to the CC first, through Feb 15th I believe.

We also have our own Doogies---Jim Whitehurst (our COO) and a guy with the last name Hauenstein.(incharge of revenue management) They both are just as smart, but don't have the title of CEO, yet.


Bye Bye--General Lee

 

[linecheck]

Andy,

After Parker made the inital offer to Grinstein(2 months ago), he (Grinstein) took that offer to the same creditor committee, and they decided then it was not a good direction for the company. Will they say that again? I don't know, but our CFO meets with them next week. We have exclusive rights to see and offer our plan to the CC first, through Feb 15th I believe.

We also have our own Doogies---Jim Whitehurst (our COO) and a guy with the last name Hauenstein.(incharge of revenue management) They both are just as smart, but don't have the title of CEO, yet.


Bye Bye--General Lee

General,

Correct me if I'm wrong here, but I don't think Parker made a physical offer to DAL 2 months ago. He simply expressed a desire, but no dollar amounts were exchanged.. That's at least the story circulating around the west side.

With regard to creditors, the webcasts have indicated that a "significant" Boeing or Airbus order could be announced pending the outcome of this deal. My take is that it will be Boeing and here's why: Last I checked, Boeing is a creditor to DAL. What better way to get a creditor on your side lobbying Washington on your behalf, than to pay them back the money owed from DAL's ch11 AND place a large order for their aircraft..

The same could be said for Coke, which supplies all their products on LCC.

Just my 2 cents.

 

[General Lee]

General,

Correct me if I'm wrong here, but I don't think Parker made a physical offer to DAL 2 months ago. He simply expressed a desire, but no dollar amounts were exchanged.. That's at least the story circulating around the west side.

With regard to creditors, the webcasts have indicated that a "significant" Boeing or Airbus order could be announced pending the outcome of this deal. My take is that it will be Boeing and here's why: Last I checked, Boeing is a creditor to DAL. What better way to get a creditor on your side lobbying Washington on your behalf, than to pay them back the money owed from DAL's ch11 AND place a large order for their aircraft..

The same could be said for Coke, which supplies all their products on LCC.

Just my 2 cents.

Everyone knew there would be a dollar amount assigned. Sure, that is what happens in any takeover. The reality is that the CC decided, at that time, that it wasn't the direction Delta should go. Delta has been expecting takeover bids. This is nothing new, and we pay enough money to our own BK attornies etc to know what could or might happen. Nevertheless, what was surprising was the way Parker tried to do it, around management who already rebuffed them, and directly to a CC friendly to DL. The way Wall St reacted, shooting LCC's stock UP 16% in one day, was good for DL. It brought up our own worth, in the eyes of Wall St. Our own exit financiers now KNOW they have "worth" in our company.

As far as any orders, you may be hearing about our own from Boeing very soon. Did you think we would NOT assuage Boeing while in BK? We know very well who to "stroke." And to top it off, the DOJ and Oberstar will shoot it down anyway.

Bye Bye--General Lee

 

[linecheck]

Everyone knew there would be a dollar amount assigned. Sure, that is what happens in any takeover. The reality is that the CC decided, at that time, that it wasn't the direction Delta should go. Delta has been expecting takeover bids. This is nothing new, and we pay enough money to our own BK attornies etc to know what could or might happen. Nevertheless, what was surprising was the way Parker tried to do it, around management who already rebuffed them, and directly to a CC friendly to DL. The way Wall St reacted, shooting LCC's stock UP 16% in one day, was good for DL. It brought up our own worth, in the eyes of Wall St. Our own exit financiers now KNOW they have "worth" in our company.

As far as any orders, you may be hearing about our own from Boeing very soon. Did you think we would NOT assuage Boeing while in BK? We know very well who to "stroke." And to top it off, the DOJ and Oberstar will shoot it down anyway.

Bye Bye--General Lee

Fair enough, I guess time will tell.

 

[General Lee]

From the WSJ article yesterday

In conference calls yesteday with Deutsche Bank AG and Leman Brothers, bondholders were urged to band together to pressure Delta--which is under BK court protection--to fully consider the hostile bid from USAirways. The effort by both banks, which are Delta creditors, is aimed at creating a second group of crediotrs with some say in the airline's restructuring. Currently, the resturcturing ultimately must be approved by the official committee of unsecured creditors, which is dominated by much larger creditors."

"The outcome of the meetings wasn't immediately clear, and it remains to be seen how much leverage a splinter group could have in the takeover fight and it's strategy for exerting influence. The bondholders being pitched to combine forces represent 30% of the total $16 billion-18 billion claim that will eventually serve as the basis for dolling out equity in post BK Delta."

"The varied interests of individual creditors are likely to be a significant factor. Boeing Co., for example, is a long standing seller of aircraft to Delta, while USAirways is leaning towards Airbus. Other committee members include U.S. Bancorp, the PBGC, Coca Cola, and Fidelity." (also DALPA)

"The creation of an ad hoc creditor group in large BK cases isn't unusual, but some executives and employee groups have critisized such investors for their short term interests, rather than looking out for the longer range good of employees and companies trying to restructure."

"Delta CFO Ed Bastain said in an interview Friday that Delta believes it's plan to emerge as a stand alone company will prove superior to USAirways' offer, especially in light of the "transaction risks" inherent in a merger plan. A Delta spokewomen yesterday said Mr Bastian's comments still stood."


Those were things left out of the other blurbs. Buy a copy of today's WSJ and see for yourself. Again, you can find the article on page A3 under "Some Delta Bondholders Try to Form Splinter Group."

Bye Bye--General Lee

 

[FDJ2]

Two possible deals.

LCC borrows $8B, of that $8B, LCC uses $4B to refinance their own debt, the remaining $4B is used to purchase DAL sometime in 2008. An additional $4B is put up as stock in the new enterprise to pay off the difference again sometime in 2008.

The new corporation may emerge sometime in 2008 if the DOJ approves of the deal, and that is a big if, with 10% less capacity but $8B in additional debt.

Or.

Next option, DAL emerges as a competive stand alone airline, with low debt and an extimated market value of between $10B-$12B with an estimated cash balance of $4B. DAL borrows $4B in exit financing. DAL pays the creditors with cash in early 2007 and $4B in stock. The investors own a share of a company with relatively low debt, low costs and increasing revenues and no regulatory hang-ups.

 

[MELVIS]

The that that bothers me here is pilots crapping on other pilots. Are we really that stupid? GL and others here act like AWA or US pilots are all for this but, you know what? We have no control. The seniority integration is going on as scheduled; arbitration starts in about a week I think, the joint contract, well; we are not happy as you've seen. There were several Delta pilots in attendance at our last picket; we very much appreciate the support. I have upmost respect for all Delta pilots as I do for all AirLine pilots. Are we (US&AWA) some form of lower life because we did not apply to DAL? We are all airline pilots that fly our aircraft from place to place according to our SOP's and FAR's. Our union, ALPA has a policy in place that sets the rules for merger integration. We can bitch on weboard's all we want, but we don't control the price of tea in China. What we can do is be professional when dealing with each other and provide a united front to those that would take advantage of us for their own profit. If this deal were to go through, I look forward to flying with the pilots of DAL, just as I do AAA.

 

[michael707767]

act like AWA or US pilots are all for this but, you know what? We have no control.

I disagree with you. If the pilots of AWA/US and Delta come out publically and say we don't want this merger and we will fight it to the end, it won't happen. Parker is not stupid. He is going after Delta because he thinks he can get it cheap and easy. He knows forcing two employee groups to merge when they really don't want it will result in an airline with piss poor customer service for the next twenty years. Do you think the people loaning him the money don't understand this also? Believe me he didn't sell this to his financiers by telling them all the employees would be pissed off.

 

[tomgoodman]

Predictions

The creditors will shift their support to a better merger offer when it materializes---and it will. My opinion? DAL/CAL. That's been an on-and-off plan for years, and almost happened once or twice. Several integration problems to be worked out, but probably no worse than DAL/WAL. I'll also predict AMR/NWA and UAL/US Air. Lots of assets will have to be sold/traded here and there to satisfy the feds, and some will be picked up by SWA etc.
We might end up with a semi-rational air transportation system, at least for a while.

 

[General Lee]

The creditors will shift their support to a better merger offer when it materializes---and it will. My opinion? DAL/CAL. That's been an on-and-off plan for years, and almost happened once or twice. Several integration problems to be worked out, but probably no worse than DAL/WAL. I'll also predict AMR/NWA and UAL/US Air. Lots of assets will have to be sold/traded here and there to satisfy the feds, and some will be picked up by SWA etc.
We might end up with a semi-rational air transportation system, at least for a while.

Tom,

I actually agree with most of what you say, except I have a problem with CAL. I do think the fleets are very close, but the problem is NYC. They have a huge EWR hub, and we have the NY Shuttle and a large JFK base. That could be ruled as a monopoly (just like UAL/US and the DC debacle), and one would have to give something up. With our flood of INTL expansion from JFK, and CALs dominence in EWR, it would be interesting to see what could happen. I think NWA and DL could be allowed to merge, since there really is no overlap at all. I see UAL/CAL, DL/NWA, AMR on its own, and USAir also on its own. Parker wants to be a player, but he could have chosed NWA with almost the same fleet and no overlap, but he did not. He may still try for them.


Bye Bye--General Lee

 

[puddlejumper101]

I disagree with you. If the pilots of AWA/US and Delta come out publically and say we don't want this merger and we will fight it to the end, it won't happen. Parker is not stupid. He is going after Delta because he thinks he can get it cheap and easy. He knows forcing two employee groups to merge when they really don't want it will result in an airline with piss poor customer service for the next twenty years. Do you think the people loaning him the money don't understand this also? Believe me he didn't sell this to his financiers by telling them all the employees would be pissed off.

To a lot of people DAL already has piss poor customer service...I don't think a single CEO...especially Parker really cares about that. To many people...especially non-pilots, the AWA/US has actually gone pretty well. I don't think AWA/US pilots wanted to merge either...but he did it anyways. Since when does creditors, CEOs, and the guys making decisions really care about what the union wants or doesn't want. They will worry about that later...once it's done.

 

[michael707767]

Since when does creditors, CEOs, and the guys making decisions really care about what the union wants or doesn't want. They will worry about that later...once it's done.

Bethune worried enough about what the unions thought that he stopped a merger with Delta in the late 90s. Having said that, Parker is no Bethune and probably doesn't give a rats ass about what's best for USAir or Delta employees.

 

[ALGFLYR]

When did Pan Am/National take place? I think these examples are obscure at best, and probably not applicable to today's environment.

Take a look the the Atlas/Polar seniority integration. This just finished the integration arbitration. The Polar furloughees were placed on the combined list by date of hire. The Polar pilots were represented by none other that Dan Katz... US Airways pilots lawyer....

 

[TWA Dude]

The Polar furloughees were placed on the combined list by date of hire.

That's interesting, but can you (or anybody) offer any information about whether that puts them ahead of or behind lots of Atlas guys?

 

[AA717driver]

The that that bothers me here is pilots crapping on other pilots. Are we really that stupid?

ALPA pilots have been crapping on each other for decades. "My airline is better than your airline" has been the mantra for a long time.

Are we (US&AWA) some form of lower life because we did not apply to DAL?

To many at DAL, AA, UAL, USAir the answer is a resounding YES!.

We are all airline pilots that fly our aircraft from place to place according to our SOP's and FAR's. Our union, ALPA has a policy in place that sets the rules for merger integration. We can bitch on weboard's all we want, but we don't control the price of tea in China. What we can do is be professional when dealing with each other and provide a united front to those that would take advantage of us for their own profit. If this deal were to go through, I look forward to flying with the pilots of DAL, just as I do AAA.

You clearly haven't been in this business long enough to have experienced that when a Legacy pilot group was riding high, they didn't hesitate to look down their noses at the likes of AWA people, among others. You never got "if you COULD have gotten on at Delta, why would you be working at AWA?" Or when they pass on a van ride to the layover because your crew was on board already. Hummm, must have picked up a case of leprosy on the last leg.

AWA is the bastard stepchild in this deal and you'll do well to not forget that for an instant. Good luck to all my AWA friends. TC