Parker thinks DL plan "unrealistic"--and his isn't...

[General Lee]

CHICAGO, Dec 21 (Reuters) - The chief executive of US Airways Group (LCC.N: Quote, Profile , Research) on Thursday dismissed as "unrealistic" a plan by Delta Air Lines (DALRQ.PK: Quote, Profile , Research) to emerge from bankruptcy as a stand-alone company worth up to $12 billion.
Speaking on a conference call with reporters and analysts, Doug Parker said Delta's management also has exaggerated the potential antitrust issues that could delay or prevent government approval of US Airways' proposed merger.
Delta on Tuesday formally rejected US Airways' takeover bid, which currently amounts to $8.3 billion, and filed a plan to emerge from Chapter 11 as an independent company. Delta assigns a value of $9.4 billion to $12 billion to the carrier. "We think their valuation is way out of whack," Parker said, explaining that Delta used a valuation method that differs from US Airways' method.

"Their methodology is extremely aggressive and lacks credibility," he said. "Our proposal is superior on any methodology."
Delta, which has been in Chapter 11 since September 2005, has said repeatedly that it intends to exit bankruptcy as a stand-alone company despite the takeover proposal that US Airways says could produce $1.65 billion a year in savings for a combined carrier.
US Airways, however, has said it remains a bidder for Delta and hopes that carrier's creditors committee will persuade management to reconsider. At this stage, US Airways seeks permission to examine Delta's books.
Parker said Delta have overstated the challenges of combining the labor forces of the two airlines. He also said any antitrust concerns would be manageable because the two carriers have very few nonstop routes that overlap.
"We have done a tremendous amount of work on this," Parker said. "These antitrust issues are fully manageable."
Delta said its five-year business plan filed with a U.S. bankruptcy court on Tuesday would result in a recovery for Delta's unsecured creditors of about 63 percent to 80 percent of their allowed claims. It assumes a total claim pool of about $15 billion. Creditors holding at least two-thirds of the value of total impaired claims -- debt that will not be repaid in full -- must vote in the plan's favor for it to succeed. The bankruptcy court also needs to approve the plan.
© Reuters 2006. All Rights Reserved.


Give me a break! Sure, USAir doesn't have flights out of ATL that overlap with DL's. But, his largest hub is 220 nm away! What a joke. We fly to the exact same cities, but with hubs next to each other. And that doesn't even count the East Coast Shuttles, the BOS/LGA/DCA flying, and all of the hubs next to each other in the West--LAS/PHX/SLC. Riiiiight Doug. It sure is manageable.... How can he say this with a straight face? And the Blackstone Group is not credible? But, USAir's evaluations always are!! Wow, that is whacked.


Bye Bye--General Lee

 

[Shag McNasty]

General,

Do you really think Doug Parker reads this message board? You have no control over this situation. No matter how long or how hard you rant, it will not affect the outcome of this deal. I suggest you get some rest and enjoy the holidays.

 

[Tejas-Jet]

General,

Do you really think Doug Parker reads this message board? You have no control over this situation. No matter how long or how hard you rant, it will not affect the outcome of this deal. I suggest you get some rest and enjoy the holidays.

...or put it in a letter to Doug. It shouldn't be hard to find his address.

Tejas

 

[General Lee]

General,

Do you really think Doug Parker reads this message board? You have no control over this situation. No matter how long or how hard you rant, it will not affect the outcome of this deal. I suggest you get some rest and enjoy the holidays.

Hey, this is an opinion board, and I am expressing mine. It is called Hangar talk. I am sure Doug has heard this before, but he still wants World Domination....

Bye Bye--General Lee

 

[lowecur]

GL you left out the best part

Punch counter punch.

Parker said his company's analysis of Delta's stand-alone plan values Delta at $5.5 billion to $6.9 billion. He also said that while US Airways generally agrees with Delta's profit projections for 2007, his company believes Delta's projections beyond that are too rosy.:laugh: :laugh:

It will be interesting to see if the creditors committee agrees with his valuation method. If that's the case, there won't even be a need to up the offer.:laugh: He did say that he see's DL making $500M in 2007, but the remaining projections are out of wack.

imp:​

 

[vetrider]

I wish Doug would just leave this be and concentrate on running our own airline. This stuff is getting old.

That line about antitrust issues being managable is very disturbing. I think we all know how he would "manage" them, and we at both airlines would both lose, bigtime.

This sucks.

 

[General Lee]

Punch counter punch.

Parker said his company's analysis of Delta's stand-alone plan values Delta at $5.5 billion to $6.9 billion. He also said that while US Airways generally agrees with Delta's profit projections for 2007, his company believes Delta's projections beyond that are too rosy.:laugh: :laugh:

It will be interesting to see if the creditors committee agrees with his valuation method. If that's the case, there won't even be a need to up the offer.:laugh: He did say that he see's DL making $500M in 2007, but the remaining projections are out of wack.

imp:​

Of course Parker would say that. Even Wall St. saw the offer for $8 billion as LOW, since USAir's stock shot up 16% the day they made the offer. They thought it was a steal at $8 billion. But Parker think's his valuation team is better.....OK then. Our bonds and claim sales are around 60-80 cents on the dollar, and the claim pool is $15 billion. That sounds like our valuation is closer. But Parker knows better........ And the Blackstone Group is a well known firm on Wall St. We shall see, but Parker is becoming desperate, and he can't even see the overlap a merger would cause, and the combined $23 billion in extra debt.


Bye Bye--General Lee

 

[lowecur]

Of course Parker would say that.

Bye Bye--General Lee

I personally believe the truth lies in between the bidder and proposed seller. That would put the valuation right in the neighborhood of what DP is offering. If that's the case, the creditors committee will side with DL to force DP to make a higher offer. I can now see him coming back with another proposal of $2B more.

Ahh, the fun of negotiations.

imp:​

 

[General Lee]

I personally believe the truth lies in between the bidder and proposed seller. That would put the valuation right in the neighborhood of what DP is offering. If that's the case, the creditors committee will side with DL to force DP to make a higher offer. I can now see him coming back with another proposal of $2B more.

Ahh, the fun of negotiations.

imp:​

Thank gawd you think the same way as DP......That and $1 will buy you a small Starbuck's coffee.(I guess that would be a "tall.") Anyway, the Blackstone group is handling this, and the bonds are selling between 60 and 80 cents on the dollar, and that determines the value. Wall St. is doing the valuation for us. And, if he wants to add more debt to the pile, great.... The DOJ will shoot it down anyway, along with Oberstar giving the thumbs down. But hey, Parker says all of that overlap is manageable.... Riiight.


Bye Bye--General Lee

 

[JT8D]

but he still wants World Domination....

Bye Bye--General Lee

Well... I think DP is pretty far from "World domination" at the moment.

All he has accomplished thus far is to associate one major airline that (pick a reason) could not turn a profit over the years...even in good times ("east")... with another national airline that couldn't find it's ass cheeks with both hands and a flashlight since its inception ("west")... by giving them the same name. All the hoopla is because the stocks are up. There is very little evidence that this experiment will be successfull.

I was always taught that "two wrongs don't make a right".

We shall see come March when both groups get a good looksee at each other.

...Get some popcorn.

 

[xanderman]

....

I had an opportunity to hear some of the remarks that Parker was making on this conference call. Frankly he beat the sh!t out DALS plan. Plain and simple. Now thats not to say Parker is entirely correct either. Just the statements made and the confidence with which they were laid out.

Two big points that seemed to offer emense credibility to Parker and his team were:

1. DALs analysts used a different type of "methodology" to determine DALs valuation. What you have as a result is a DAL value of 9.4 to 12.0 billion. And of course we all know that US has offered 8.3 billion. The problem lies in how you come up with the two respective values. DAL was/is using forward looking statements about a POTENTIAL value once they have exited bankrutcy. No big deal just different than the US bid. US is commonly quoted as making an offer that is 4.0 billion cash and 78.5 million shares of it's stock. Well the price of that stock will flucuate and thereby change the price of the bid. US has NOT used forward looking statements in their bid. So to be truely fair one must also put some value on the future of the US bid. E.g. what POTENTIAL does this combines carrier have...? This was not included in the value of the US plan.

2. The antitrust issues that were brought up by DAL were echoed by the analysts participating in the conference call. Every question was answered by Parkers antitrust counsel who apparently worked for the DOJ on these types of issues for some time. He in fact did have an answer for every single question brought up by DAL and the analysts. Lots of mumbo-jumbo I personally do not fully understand. Safice it to say he also was certain this deal would not face antitrust issues. Scrutiny yes, but not denial...

So for what it's worth, doug had his sh!t together with this call. I know GL, it goes without saying that you think Parker is wrong but I have to say I am really worried now. Time will tell...

Andy

P.S. Hey JT8D when our a$$ gets as big as yours then yes we will be able to find it... Have a nice day

 

[ironspud]

The interesting part is in determining who has to do "due diligence" and who does not. The BOD has to put the fiduciary interests of the "owners" first, the CC only have to take care of themselves.

The CC would be fools to turn this deal (and very probably an enhanced version of same soon to come) down.

This is great entertainment...and will only get better when our favorite "wet behind the ears" gener....uh...co-pilot... gets stapled.

Beer's cold. Popcorns steamin".

 

[GOTAFLY]

I agree with xanderman. Park made some good points, anyone interested should listen to the conference call.

 

[lowecur]

Bethune set to consult with DL creditors committee

This is interesting. The Chairman of Aloha, plus I heard he owns stock in UAL and CAL. One way to get the ball rolling on the UAL/CAL merger and stick a few more bucks in his pocket (not that he needs it).

imp:​

http://us.ft.com/ftgateway/superpage.ft?news_id=fto122120061852329044&referrer_id=yahoofinance

 

[Otto77]

Parker is like the kid that doesnt get what he wants for Christmas and whines about it. Its getting to be old news.

 

[Heavy Set]

The interesting part is in determining who has to do "due diligence" and who does not. The BOD has to put the fiduciary interests of the "owners" first, the CC only have to take care of themselves.

The CC would be fools to turn this deal (and very probably an enhanced version of same soon to come) down.

This is great entertainment...and will only get better when our favorite "wet behind the ears" gener....uh...co-pilot... gets stapled.

Beer's cold. Popcorns steamin".

Don't you fly for Southern Air Transport? Are you trying to get on with anyone else? You should. Those 20 day trips are eating away at your brain.

 

[Heavy Set]

Andy,

I have no fight in this merger, but even I know it looks like the two route maps are on top of each other. Also, as GL continues to say, the hubs appear mighty close to each other. It just doesn't look right. And, I also agree with GL that many in the government might not approve of job losses. I don't see it happening, but I have been wrong before.

 

[xanderman]

yes but...

Andy,

I have no fight in this merger, but even I know it looks like the two route maps are on top of each other. Also, as GL continues to say, the hubs appear mighty close to each other. It just doesn't look right. And, I also agree with GL that many in the government might not approve of job losses. I don't see it happening, but I have been wrong before.

Hubs close to each other does not constitute antitrust issues. The way the antitrust counsel made it sound (if I even understand this correctly) there is very little overlap (overlap that does not already have a sufficient amount of LCC competition). Yes I agree they are going to push their side while DAL pushes theirs. As far as job losses, well that remains to be seen. As much as it pains me to sound like a Parker cheerleader I have to admit that there has been no line employee job losses here at the new US. So really the arguement that DAL has right now in that regard is pure speculation. Yes, again, I agree, how can you have a 10% capacity reduction and not furlough? Good question! But I will tell you this. Parker pulled it off with the new US and that was a 15% reduction. No furloughs only recalls.

Andy

 

[lowecur]

Some recent quotes from Bethune

If this guy is the new consultant for the creditors committee...it's a done deal. Bethune from today's Business Week:

• You really want to be the guy who sold Delta?" says Gordon Bethune, the retired chairman and CEO of Continental Airlines Still, he gives the deal "60-40" odds of happening because Delta's creditor committees will determine what's likely to return the most financial value. "They do math real well. And the judge is likely to go along with the mathematics," Bethune says.

• Bethune, who helped lead Continental's resurgence until his retirement two years ago, calls consolidation "inevitable" because overall finances are shaky and the cyclical industry can't weather prolonged downturns. In a recent interview with BusinessWeek.com, he said many people—especially politicians—must stop viewing airlines as a public utility and more as a business that's allowed the same tools other industries use. He sees a day when the country has a trio of large carriers like Detroit's Big Three and a slew of smaller discounters. His rationale? "If it worked the old way, those guys wouldn't be in bankruptcy!" Bethune said

• "There's a lot of ways to get from Miami to Seattle. There are 10 ways to do it. Now there'll be nine ways," Bethune says. "You can always say, 'There's less competition,' but then you get to the question, 'How much is enough?'"

http://www.businessweek.com/print/bwdaily/dnflash/content/dec2006/db20061222_729370.htm

 

[michael707767]

If this guy is the new consultant for the creditors committee...it's a done deal.

I see this as a positive. There are still hard feelings between Bethune and Bonderman (the man behind the money Parker is playing with). Further, I think the creditors committee is bringing in Bethune with the idea that he endorse the stand alone plan and then stay on as the CEO to replace GG. One of the biggest uncertainties with Delta is who will lead them in the future. While I think Whitehurst is the man for the job, he is still be bit young and the investment community would probably like a bigger name who has more experiance. Bethune could come in for a few years then retire.

 

[9rj9]

lay off the crackpipe

no way he comes out off retirement. I think delta will be unable to fend off USair, too much money wants it to happen.

 

[xanderman]

...

I see this as a positive. There are still hard feelings between Bethune and Bonderman (the man behind the money Parker is playing with). Further, I think the creditors committee is bringing in Bethune with the idea that he endorse the stand alone plan and then stay on as the CEO to replace GG. One of the biggest uncertainties with Delta is who will lead them in the future. While I think Whitehurst is the man for the job, he is still be bit young and the investment community would probably like a bigger name who has more experiance. Bethune could come in for a few years then retire.

Could you provide some proof that Bonderman is in play with Parker? As an AWA/US employee I know, or at least thought I knew, that Bonderman/TPG had sold all of their interest in AWA just before the AWA/US meger was comsummated...

To my knowledge TPG has nothing to do with this. The money being fronted in this deal is from Citigroup.

Andy

 

[Champ42272]

May I suggest another angle on this debate.

First, a combined DAL and US Air (East/West) merger makes the new company the 400lb gorilla on the block. As the largest airline in the world, being number 1 has it's advantages, economically and politically. The new CEO would have a much louder voice in the halls of Congress and much more clout on Wall St.

Second, if consolidation of the airline industry is inevitable, I have no problem with that. That just means that LABOR will also be consolidated and hopefully also have a much more powerful voice. The era of divide and conquer labor, and labor unions, may actually be nearing an end. When you only have 3 or 4 carriers and all of them are ALPA, this could give labor some leverage in the future.

Any yes, even though I work for a small freight company in Memphis, TN, my wife is a Delta pilot (her fifth bankrupt airline since Pan Am), I have a dog in this fight.

Finally, I believe, that who ever ponies up the most amount of cash at the finish line will win this fight. Remember, it's all about the MONEY.

Just my opinion, I could be wrong.

Champ 42272

 

[EdTeachLives!]

Xanderman:

Correct on TPG and Bonderman. He is not at this time invested in LCC. He was back when I had a P#. However, this now makes an interesting triangle. Gerry, Dave and Doug. Gerry and Dave have quite a history as can be seen on Google. Bottom line....David is not involved...yet. Maybe not at all. We'll see.

However, as it was basically communicated by Gerry this week, the one with the most cash and/or the best fit wins.

Is the best fit LCC? If it happens they will be the "400lb Ape" for about a week. Then as we all know....UAL,CAL, AMR & NWAC all pair up. Then what. Well, what it will be is the weakest airline in the mix. I don't need to get into how it all plays out, we all know. The Pacific rim is where its at and DAL and LCC are not there.

The clear winner in a new Delta is LUV and the resulting legacy combos. And of course the bankers who collect their massive fees, those who short the stock or simlply buy puts, and the executives in College Park and Tempe.


Ed

 

[On Your Six]

Parker is in over his head. Perhaps he should focus on the mess on his plate right now - how about integrating USAirways and AWA first. He reminds me of a fat kid at a ballpark wolfing down hotdogs...

 

[Heavy Set]

May I suggest another angle on this debate.

First, a combined DAL and US Air (East/West) merger makes the new company the 400lb gorilla on the block. As the largest airline in the world, being number 1 has it's advantages, economically and politically. The new CEO would have a much louder voice in the halls of Congress and much more clout on Wall St.

Second, if consolidation of the airline industry is inevitable, I have no problem with that. That just means that LABOR will also be consolidated and hopefully also have a much more powerful voice. The era of divide and conquer labor, and labor unions, may actually be nearing an end. When you only have 3 or 4 carriers and all of them are ALPA, this could give labor some leverage in the future.

Any yes, even though I work for a small freight company in Memphis, TN, my wife is a Delta pilot (her fifth bankrupt airline since Pan Am), I have a dog in this fight.

Finally, I believe, that who ever ponies up the most amount of cash at the finish line will win this fight. Remember, it's all about the MONEY.

Just my opinion, I could be wrong.

Champ 42272

I thought the government via the DOJ could stop this. They stopped the UAL and US merger attempt. The routes or overlap between those two were mainly between two different airports, DCA and Dulles. Just because USAir doesn´t fly directly out of Atlanta, doesn´t mean there isn´t overlap in the area. Again, anyone can see it if you look at the route maps, and Bethune and the DOJ should see it too.