Parker beginning to backdown

[FDJ2]

US Airways CEO will not fight for Delta


Marilyn Adams
USA TODAY
Dec. 5, 2006 06:51 PM

US Airways will give up its proposed takeover of Delta Air Lines if management there can't be persuaded of the benefits, US Airways CEO Doug Parker said Tuesday.

Parker said Tuesday he's not prepared to fight Delta's management in bankruptcy court by submitting a merger plan to the judge without the backing of Delta's management.

"We have to get to a point where are all working together on this or it's not going to happen," Parker said during a meeting with editors and reporters at USA Today. "This is all about convincing Delta's management that this plan makes sense."

At the same time, though, the Tempe-based company remains confident it will prevail.

"Because this transaction creates value that can only be created through a merger, and because the bankruptcy process is designed to elicit value, we're going to get this done," US Airways President Scott Kirby said at the Reuters Aerospace and Defense Summit in Washington.

US Airways has made an unsolicited takeover offer of $8billion-plus in cash and stock to acquire Delta, the nation's third-biggest carrier, which is in Chapter 11 bankruptcy. Delta's management has rebuffed the offer, saying it's too risky and that Delta is better off as an independent airline.

Delta declined to comment on Parker's remarks.

Delta CEO Jerry Grinstein has repeatedly voiced opposition to the merger proposal since US Airways announced it Nov. 15.

Delta and US Airways have retained big names in the public relations business to promote their respective views to Delta creditors, Wall Street analysts, airline employees and passengers, and the media.

In a memo to employees Tuesday, Grinstein said Delta "is making crucial progress toward becoming a strong, independent, stand-alone company based on a (business) plan that is clearly working."

But because Delta is in bankruptcy, its management does not have complete control over the company's fate. Its creditors have standing in bankruptcy court and must approve Delta's business plan before the airline can exit Chapter 11.

Delta executives plan to unveil the airline's stand-alone business plan by year-end so creditors can compare the two plans and choose between them.

"We're working to make sure we get a chance to show creditors and management that we have a superior plan," Parker said.

Delta CFO Ed Bastian has expressed alarm that a merger would prolong the airline's stay in bankruptcy by several months or a year because it would have to be reviewed by antitrust experts at the Department of Justice. That would increase Delta's bankruptcy costs and run the risk of a downturn in the economy or a spike in jet fuel prices, Bastian said.

Parker on Tuesday predicted a US Airways-Delta merger could close by June 30, roughly when Delta had predicted exiting bankruptcy alone.

Parker called the proposed merger schedule "aggressive," but said he believes it can be done even though US Airways is still working through last year's merger of America West and the old US Airways.

Although that deal closed 15 months ago, the new, combined US Airways is still flying with two separate reservation systems and two sets of pilots and flight attendants that are scheduled separately and work under different labor contracts.

Parker and Kirby said they would finish merging America West and the old US Airways before beginning a merger with Delta.

 

[Doug Parker]

.


Be ready - here comes the bid for NWA





.

 

[JAM-BRO]

.


Be ready - here comes the bid for NWA





.

Whatever dude!!!!!!!!!!!

 

[fam62c]

He's playing it smart, getting the creditors to back the DAL management team into a corner. They either produce a plan better than what USAirways can offer or they step out of the way. At the end of the day it's all about who can make the creditors closest to whole.

 

[tomgoodman]

More maneuvering

He's playing it smart, getting the creditors to back the DAL management team into a corner. They either produce a plan better than what USAirways can offer or they step out of the way.

Or perhaps he is preparing to step out of the way himself, as planned all along, making the incipient REAL merger offer look good by comparison. Like the car salesman says: "Better make the deal now. I just had a guy come in this morning that really wants this baby!" If Parker is not really making a hostile takeover bid, then he is up to something else. Interesting.

 

[Hpilot]

Back down? Riiiggghht. Parker isn't exactly a timid CEO. No doubt there's a method to the madness. Ohh to be a fly on the wall at Tempe HQ.

 

[General Lee]

If he knows that most of the creditors want an independent DL, then this may be the easy way out....


Bye Bye--General Lee

 

[Lampshade]

After Deltas plan of reorg falls flat Delta mgmt. will see the light and will be forced to cooperate.

 

[BLUE BAYOU]

Just like any other deal that is presented, DL management will play hard to get until some terms are put on the table or under it... Like, what's in it for us, err, like how many stock options will we get when we emerge as DLL, while our DL employees get stapled to the bottom or eliminated in the manner of TWA/AA merger...

 

[lowecur]

Posturing

Typical negotiating. He's letting them know they are not the only game in town, and they need to get serious as time is short, or they will be left at the alter. DP needs to get in and see the books and do his D&D, and DL mgt is not helping. The creditors and their advisor will turn the screws on mgt shortly.

DALPA is only 1 of 9 on the creditors committee, so I don't see them as having the ability on their own to turn the other creditors. It's a show for the press, and like Bob Mann said, they will go into seclusion sometime in mid Jan to finalize the deal.

David Neeleman likes what will happen to DL either way. He doesn't see them getting out of BK operating the way they are now: If the offer for Delta, currently in Chapter 11 reorganization, is rejected and the Atlanta-based carrier emerges from federal bankruptcy protection as a stand-alone company, JetBlue would welcome the competition, Neeleman said. Delta will need a large market capitalization to survive, he added, meaning the airline will need to propose a bankruptcy-exit plan that demonstrates an ability to make money. "For quite a long time they have not been profit-motivated," Neeleman said. "It's not that much fun to compete against an airline that's not profit-motivated."

Neeleman also thinks US Airways would not want any further competition on their remaining Shuttle and would lean towards carriers that planned to use the gates/slots toward other markets. Jetblue certainly would be more than happy to accomodate them, but the DOJ may not allow that.

imp:​

 

[TWA Dude]

In the first town hall meeting Parker responded to an employee's question that he only saw a 50/50 chance of the purchase going through. He knew it would be a battle so his new revelation is simply a statement of the obvious.

 

[rf285]

Let's hope he's backing down. I need to sell my house in the ATL if by some chance this goes through (and buy one in east PA). I hope everything stays as is in the industry.

 

[slaquer5]

I hope everything stays as is in the industry.

I will second that

 

[Whine Lover]

NOTHING stays "as is."

Especially the Airline Industry.


YKW

 

[737 Pylt]

After Deltas plan of reorg falls flat Delta mgmt. will see the light and will be forced to cooperate.

Nobody knows GG. He is not as driven by money as he is ego! He is already EXTREMELY WEALTHY! He has made his millions. He is 73 years old, and now, its time for him to leave his legacy. He will fight tooth and nail to stop this. If (that's a big if) this deal goes through, he loses that legacy. If he can get DL out of BK without having to merge, he looks good for years to come and will be known as the hero of DL. Look at what kind of legacy past ceo's have left. I can think of only 1 in the past 25 years who's worth a crap. Hollis Harris!

737

 

[General Lee]

Typical negotiating. He's letting them know they are not the only game in town, and they need to get serious as time is short, or they will be left at the alter. DP needs to get in and see the books and do his D&D, and DL mgt is not helping. The creditors and their advisor will turn the screws on mgt shortly.

DALPA is only 1 of 9 on the creditors committee, so I don't see them as having the ability on their own to turn the other creditors. It's a show for the press, and like Bob Mann said, they will go into seclusion sometime in mid Jan to finalize the deal.

David Neeleman likes what will happen to DL either way. He doesn't see them getting out of BK operating the way they are now: If the offer for Delta, currently in Chapter 11 reorganization, is rejected and the Atlanta-based carrier emerges from federal bankruptcy protection as a stand-alone company, JetBlue would welcome the competition, Neeleman said. Delta will need a large market capitalization to survive, he added, meaning the airline will need to propose a bankruptcy-exit plan that demonstrates an ability to make money. "For quite a long time they have not been profit-motivated," Neeleman said. "It's not that much fun to compete against an airline that's not profit-motivated."

Neeleman also thinks US Airways would not want any further competition on their remaining Shuttle and would lean towards carriers that planned to use the gates/slots toward other markets. Jetblue certainly would be more than happy to accomodate them, but the DOJ may not allow that.

imp:​

Great spin yourself. He said he won't fight if Delta management doesn't want it, and they do not. There isn't much time you say? We have our own plan, and Oberstar thinks load factors are fine (80% full), and airlines are recovering. Good try. IF USAir and United want to merge so bad, they can try it again, but Oberstar will probably object like he did before. And since when does Neelman know again what we need? He can speculate, and thanks to USAir trying to buy us and their own stock shooting up 16% on that day (Nove 15th), we have become more valuable to potential investors anyway. We shouldn't have any problem finding that exit financing. Wall St thought we were "cheap" at $8 billion (hence the huge stock jump for USAir that day).


Bye Bye--General Lee

 

[General Lee]

Nobody knows GG. He is not as driven by money as he is ego! He is already EXTREMELY WEALTHY! He has made his millions. He is 73 years old, and now, its time for him to leave his legacy. He will fight tooth and nail to stop this. If (that's a big if) this deal goes through, he loses that legacy. If he can get DL out of BK without having to merge, he looks good for years to come and will be known as the hero of DL. Look at what kind of legacy past ceo's have left. I can think of only 1 in the past 25 years who's worth a crap. Hollis Harris!

737

Very true.

Bye Bye--General Lee

 

[Lars!]

For a good read on Delta CEOs read "Airline Without a Pilot" by Harry Nolan

http://www.amazon.com/Airline-Without-Pilot-Leadership-Bankruptcy/dp/0977207609

In fact it is a pretty good book on airline leadership if only CEOs cared about that sort of thing.

 

[lowecur]

Great spin yourself. He said he won't fight if Delta management doesn't want it, and they do not. There isn't much time you say? We have our own plan, and Oberstar thinks load factors are fine (80% full), and airlines are recovering. Good try. IF USAir and United want to merge so bad, they can try it again, but Oberstar will probably object like he did before. And since when does Neelman know again what we need? He can speculate, and thanks to USAir trying to buy us and their own stock shooting up 16% on that day (Nove 15th), we have become more valuable to potential investors anyway. We shouldn't have any problem finding that exit financing. Wall St thought we were "cheap" at $8 billion (hence the huge stock jump for USAir that day).


Bye Bye--General Lee

I thought Oberstar was a GPS system in GM cars.

You seem to think that chairing a committe is the end all. True it's a "call the shots" position, but Mr. Oberstar was on the committee as a minority and his opinion was valued and listened to even back when he went against the US Airways/UAL proposed merger. So don't believe that no one else on the committee has a say so in this matter.

In any case, it is not the committee's that decide whether or not mergers go through. Both the Senate and House will have hearing on any merger if it gets that far, and then they will make recommendations to the DOJ. The DOJ will then take a position whether they will sue to block the merger. They are usually adjoined by Attorney Generals from State's that want to block the merger. There will always be Attorney Generals in the various states that feel it will financially hurt them or the public if the merger is allowed to go through. Usually a few Attorney General law suites will not stop a merger as they need an overwhelming majority to be successful.

So stop subscribing to the opinion that Oberstar is in the catbird seat. He is not!

imp: ​

 

[General Lee]

I thought Oberstar was a GPS system in GM cars.

You seem to think that chairing a committe is the end all. True it's a "call the shots" position, but Mr. Oberstar was on the committee as a minority and his opinion was valued and listened to even back when he went against the US Airways/UAL proposed merger. So don't believe that no one else on the committee has a say so in this matter.

In any case, it is not the committee's that decide whether or not mergers go through. Both the Senate and House will have hearing on any merger if it gets that far, and then they will make recommendations to the DOJ. The DOJ will then take a position whether they will sue to block the merger. They are usually adjoined by Attorney Generals from State's that want to block the merger. There will always be Attorney Generals in the various states that feel it will financially hurt them or the public if the merger is allowed to go through. Usually a few Attorney General law suites will not stop a merger as they need an overwhelming majority to be successful.

So stop subscribing to the opinion that Oberstar is in the catbird seat. He is not!

imp: ​

I know that, but as FDJ2 stated, can you give me an example of the DOJ allowing a merger when the Transportation Sub Committee denounced it first? I don't think so. Oberstar has the ability to decide who speaks, and also speak as much as he wants. He is against mergers as a whole because they take away choice for consumers, and he said one larger merger would cause more, which again will limit service in small towns (towns JB and SW would never fly to), and that is key.

Anyway, this US/DL merger may be moot anyway, since Parker sounds like he is ready to give up, and Grinstein is still steaming ahead with his "stand alone" mantra.


Bye Bye--General Lee

 

[FlyBoeingJets]

US Airways says committed to proposed takeover of Delta Air

Wed Dec 6, 2006 1:39pm ET

Dec 6 (Reuters) - US Airways Group Inc. (LCC.N: Quote, Profile , Research) said it was fully committed to its proposed acquisition of bankrupt Delta Air Lines Inc. (DALRQ.PK: Quote, Profile , Research).
On Nov. 15, US Airways proposed a deal to acquire Delta, but met resistance from Delta management who said the company is focused on emerging from Chapter 11 as a stand-alone airline. (Reporting by Ankur Relia in Bangalore

 

[lowecur]

I know that, but as FDJ2 stated, can you give me an example of the DOJ allowing a merger when the Transportation Sub Committee denounced it first? I don't think so. Oberstar has the ability to decide who speaks, and also speak as much as he wants. He is against mergers as a whole because they take away choice for consumers, and he said one larger merger would cause more, which again will limit service in small towns (towns JB and SW would never fly to), and that is key.

Anyway, this US/DL merger may be moot anyway, since Parker sounds like he is ready to give up, and Grinstein is still steaming ahead with his "stand alone" mantra.


Bye Bye--General Lee

The House and Senate will both chair hearings and a parade of pros and cons will be funneled in to lobby their opinions. After those are overwith, the FAA will probably be asked to testify as to how this might help the system. I think there is no doubt that the FAA could help shift the opinion one way or the other. If there is enough dissension among committee members, Oberstar is not going to be able to offer a yeah or neah in his final report to the DOJ. He will be forced to only outline the facts as the committee has heard them and then let the DOJ make the final decision.

imp:​

 

[michael707767]

US Airways says committed to proposed takeover of Delta Air

now why would USAir say this? Were they not committed when they made the proposal? Seems to me they are sensing the wind is changing and they are trying to keep this from losing traction.

 

[lowecur]

now why would USAir say this? Were they not committed when they made the proposal? Seems to me they are sensing the wind is changing and they are trying to keep this from losing traction.

I think DP opened his mouth and inserted his foot yesterday when stating he wants DL mgts approval. I have a feeling someone from Wall St Banking told him to send a retraction or clarification. That's a caveat the bankers could really care less about. The original plan to bypass mgt if necessary is still the way to go.

imp:

 

[General Lee]

I think DP opened his mouth and inserted his foot yesterday when stating he wants DL mgts approval. I have a feeling someone from Wall St Banking told him to send a retraction or clarification. That's a caveat the bankers could really care less about. The original plan to bypass mgt if necessary is still the way to go.

imp:

A friend in Phoenix says it is all over the front page of their paper. Oooops. America West/USAir employees must be really confused...... Grinstein, on the otherhand, hasn't waivered a bit.


Bye Bye--General Lee

 

[General Lee]

The House and Senate will both chair hearings and a parade of pros and cons will be funneled in to lobby their opinions. After those are overwith, the FAA will probably be asked to testify as to how this might help the system. I think there is no doubt that the FAA could help shift the opinion one way or the other. If there is enough dissension among committee members, Oberstar is not going to be able to offer a yeah or neah in his final report to the DOJ. He will be forced to only outline the facts as the committee has heard them and then let the DOJ make the final decision.

imp:​

Have there been any Congressmen or Senators that have been openly IN FAVOR of this merger or hostile takeover? Only some JP Morgan analysts, and Parker. We have plenty of Georgia Congressmen and both Senators not in favor, and the Chairman of the Transportation Sub Committee seems not too keen on the deal. Hmmmm. And, Oberstar will chair the committee any way he wants.


Even Ray Neidl is stating the hype for the merger is starting to wane....

Bye Bye--General Lee

 

[Lampshade]

How scared are you General? lol

 

[General Lee]

How scared are you General? lol

Not scared at all, just don't like it one bit.


Bye Bye--General Lee

 

[Noserider76]

Looks like Parker and the boys didn't look into the DL pilot contract too well before they came up with this plan.

 

[FDJ2]

Oberstar is not going to be able to offer a yeah or neah in his final report to the DOJ. He will be forced to only outline the facts as the committee has heard them and then let the DOJ make the final decision.

imp:​

This merger proposal probably won't get to the point of a DOJ review, but for the sake of argument.

Oberstar and his committee can bring up objections and concerns which the DOJ must respond to, to their satisfaction.

Lowecur, you know a lot, could you give us an example of an airline merger that recieved DOJ approval but was opposed by the Chairman of the House Transportation and Infrastructure Committee?

If that's too tough, how about just a merger that had outstanding "concerns" by the Committee which were not addressed to the committees satisfaction by the DOJ?

Thanks in advance.