Rep Duncan says if Merger gets to them, it's going to be tough to block

[Bringupthebird]

Why don't the Delta principals take the cash and start a new airline to compete against the "New Delta" with an all-new work force comprised of those who wouldn't dare work for Doug Parker. No one could compete with their cost structure. Would Moak support that??

 

[General Lee]

UA's Goodwin got cold feet and purposely re-submitted a proposal that had already been rebuffed by the DOJ in January. He did this to get the DOJ to reject the deal, allowing him to pay a lower fee to Airways' for the deal failing and avoid a big breech of contract lawsuit. The deal, like any other, could have gone through if they made the appropriate changes the DOJ requested. The political clout UA lost by backing out cost them dearly in the years to come with the ATSB, looks like they're getting some back though with the China deal. The DOJ will approve almost anything with appropriate measuers. Parker is likely trying to put the onus of splitting DAL/UsAir's routes/employees onto the government.

Give me a break. Oberstar stated he will lean on the DOJ to make sure they do what he and his committee want. Sorry, Parker will lose. What are you smoking?


Bye Bye--General Lee

 

[Cobra]

That sounds about right...

Not cynical, realistic.

Politicians are dirt bags, that's cynical.

Then again maybe not.

 

[Marko Ramius]

Some goood stuff I got up in Oregon

Give me a break. Oberstar stated he will lean on the DOJ to make sure they do what he and his committee want. Sorry, Parker will lose. What are you smoking?


Bye Bye--General Lee

Through all the haze, I can still my post clearly enough to see that I said nothing about whether Parker will win or lose. I simply said that imo, and element of his plan will be to let the DOJ do the cutting. If he is successful in turning the creditors, he would have control of DL and among other things begin negotiating with the DOJ on what it will take for them not to sue. When they balk, which they will, he will put the blame for asset sales and job losses on the gov't vs. himself. Doesn't make it right or honest, but when has that meant anything in this business?

On an unrelated note you ever notice people protest the most over stuff they really can't control?

 

[General Lee]

Through all the haze, I can still my post clearly enough to see that I said nothing about whether Parker will win or lose. I simply said that imo, and element of his plan will be to let the DOJ do the cutting. If he is successful in turning the creditors, he would have control of DL and among other things begin negotiating with the DOJ on what it will take for them not to sue. When they balk, which they will, he will put the blame for asset sales and job losses on the gov't vs. himself. Doesn't make it right or honest, but when has that meant anything in this business?

On an unrelated note you ever notice people protest the most over stuff they really can't control?

I protest what you say because you don't seem to back it up. It is your opinion, and everyone can have one. When you say the DOJ will do the cutting, can you expound on that? Why would the DOJ do any cutting? There isn't one member of Congress that likes this deal, and they won't allow any cutting. Was there any cutting in the US/UA proposed merger? They tried. They tried to give the IAD/DCA hub to the guy who ran BET, and call it DC Air. How did that go? The DOJ shot that down immediately. We on the other hand have many more areas under scrutiny, not just one area like IAD/DCA. Now the creditors on the committee, who are mostly friendly to DL's cause (5 of the 9 members), ask Gordon Bethune to look at the offers. In the WSJ article last week Bethune said he COULD see the DOJ maybe allowing this takeover, but also that not all marriages are right for each other, and that any mergers should have complementary features with route structures. USAir brings nothing to DL, like an Asian componant that everyone would want to become a truly global airline (especially if the others will merge and then offer it against us eventually).

This latest article seems to say (the last sentence) that maybe Bethune still wants consolidation, but maybe these two airlines aren't right for each other (which we all know except Parker). No other meetings are scheduled between the committee and Parker it seems. Interesting. Here is the article.


By Chris Reiter
NEW YORK, Jan 16 (Reuters) - US Airways Group Inc. (LCC.N: Quote, Profile , Research) still has a tall order to convince Delta Air Lines Inc. (DALRQ.PK: Quote, Profile , Research) creditors to accept its takeover offer, despite raising the bid by about 20 percent last week, industry veteran Gordon Bethune said on Tuesday.
Bethune, a former chief executive of Continental Airlines (CAL.N: Quote, Profile , Research), who became a key player in determining Delta's future when he was hired as a consultant by Delta's creditors' committee in December. Credited with rescuing Continental, the outspoken former executive said Delta's creditors' interests are so diverse that getting enough of them to back any proposal is "like herding cats."

Delta's creditors include planemaker Boeing Co. (BA.N: Quote, Profile , Research), pilots union Air Line Pilots Association, the city of Cincinnati and bondholders like Deutsche Bank.
"They're not all lined up on what's good for each other," Bethune said in a telephone interview.


US Airways, which has offered $10.5 billion in cash and stock for Delta, has set a Feb. 1 deadline for its bid unless it gets support from Delta's creditors to perform due diligence and postpone a Feb. 7 hearing that would start the voting process on Delta's stand-alone plan. Meanwhile, Delta management, which rejected the original bid, is pushing ahead with its plan and asked in a filing on Friday for court permission to start seeking creditor approval.

US Airways' bid, which was increased about 20 percent, keeps them in the game after creditors expressed concerns about the original offer, according to Bethune, who met with creditors and US Airways last week.
He said he doesn't yet have further meetings planned.
"I'm glad to see that the creditors are at least being offered more than they were in the past," said Bethune. "I know the creditors' committee is looking at that." Bethune declined to offer his own opinion of the U.S. Airways and Delta stand-alone plans and what the outcome may be. But he said he still supported industry consolidation.

"I can still be a proponent of marriage without agreeing that these two people have to get married," he said.



Bye Bye--General Lee

 

[Marko Ramius]

When you say the DOJ will do the cutting, can you expound on that? Why would the DOJ do any cutting?

Sure. Since DL is in BK, before the DOJ/Oberstar and the others get to sink their teeth into this deal it has to get past DL's creditors. That is the battle going on right now. If Parker is successful in getting the creditor committee on his side, they would submit a BK reorg. plan to the judge with a merger closing date coinciding with DL's BK exit. If Parker gets this far, the judge would likely approve the plan as there probably wouldn't be any other suitors looking to take DL in it's entirety. This would place the deal and the shape of DL's future in the hands of the DOJ/Oberstar, etc. It's a tough position because Parker basically becomes the debtor-in-possession if he gets past the creditors committee. If the DOJ decides to sue(they don't reject mergers, they sue for antitrust), they are in a bit of bind because if it actually gets to this point there likely wouldn't be any money or suitors for DL in it's entirety other than US. So an outright rejection could put DL in a position where they lose the 10bil and may face a liquidation. Doubtful the gov't would let that happen so they would basically stall Parker by saying they need additional time to review the deal just like US/UA. Then they would begin a series of leaks detailing what it will take for them not to sue upon closing(like US/UA). I think Parker knows this and plans to use this as his out to siphon off DL assets to other carriers to make it work. It's dishonest and a dirty trick, but what else is new? The big picture is that this deal gets really messy if it gets past the creditor committee which is what this Rep. Duncan knows and precisely why there are massive public statements from DL, Oberstar, DALPA, etc to head it now.

And yes this is all my opinion, and I couldn't tell you the odds of this thing getting past the creditors. I doubt the newspapers/experts know either. This is much is true though, the DOJ/Oberstar have no control of this thing until Parker gets the creditors on his side-thus the protesting to try and make sure they never have to. I know you don't believe it will get beyond the creditors, but if it does what choice does you believe it leaves the DOJ?

 

[General Lee]

Sure. Since DL is in BK, before the DOJ/Oberstar and the others get to sink their teeth into this deal it has to get past DL's creditors. That is the battle going on right now. If Parker is successful in getting the creditor committee on his side, they would submit a BK reorg. plan to the judge with a merger closing date coinciding with DL's BK exit. If Parker gets this far, the judge would likely approve the plan as there probably wouldn't be any other suitors looking to take DL in it's entirety. This would place the deal and the shape of DL's future in the hands of the DOJ/Oberstar, etc. It's a tough position because Parker basically becomes the debtor-in-possession if he gets past the creditors committee. If the DOJ decides to sue(they don't reject mergers, they sue for antitrust), they are in a bit of bind because if it actually gets to this point there likely wouldn't be any money or suitors for DL in it's entirety other than US. So an outright rejection could put DL in a position where they lose the 10bil and may face a liquidation. Doubtful the gov't would let that happen so they would basically stall Parker by saying they need additional time to review the deal just like US/UA. Then they would begin a series of leaks detailing what it will take for them not to sue upon closing(like US/UA). I think Parker knows this and plans to use this as his out to siphon off DL assets to other carriers to make it work. It's dishonest and a dirty trick, but what else is new? The big picture is that this deal gets really messy if it gets past the creditor committee which is what this Rep. Duncan knows and precisely why there are massive public statements from DL, Oberstar, DALPA, etc to head it now.

And yes this is all my opinion, and I couldn't tell you the odds of this thing getting past the creditors. I doubt the newspapers/experts know either. This is much is true though, the DOJ/Oberstar have no control of this thing until Parker gets the creditors on his side-thus the protesting to try and make sure they never have to. I know you don't believe it will get beyond the creditors, but if it does what choice does you believe it leaves the DOJ?

Well, I can see your point that the DOJ wouldn't get involved unless Parker got past the unsecured creditor committee. That makes sense. But, do you know who is on the committee? There are 9 members, and atleast 5 are supposed "friendlies." (Dalpa, Boeing, GE, Coke, and the PBGC) All of those have reasons why they would vote for a stand alone DL versus a merged DL/US. Here is an article that talks about how Parker seems to be doing with the creditors right now, and what Bethune, who was hired to compare the deals or plans, thinks about the "marriage" of USAir and DL.



By Chris Reiter
NEW YORK, Jan 16 (Reuters) - US Airways Group Inc. (LCC.N: Quote, Profile , Research) still has a tall order to convince Delta Air Lines Inc. (DALRQ.PK: Quote, Profile , Research) creditors to accept its takeover offer, despite raising the bid by about 20 percent last week, industry veteran Gordon Bethune said on Tuesday.
Bethune, a former chief executive of Continental Airlines (CAL.N: Quote, Profile , Research), who became a key player in determining Delta's future when he was hired as a consultant by Delta's creditors' committee in December. Credited with rescuing Continental, the outspoken former executive said Delta's creditors' interests are so diverse that getting enough of them to back any proposal is "like herding cats."

Delta's creditors include planemaker Boeing Co. (BA.N: Quote, Profile , Research), pilots union Air Line Pilots Association, the city of Cincinnati and bondholders like Deutsche Bank.
"They're not all lined up on what's good for each other," Bethune said in a telephone interview.


US Airways, which has offered $10.5 billion in cash and stock for Delta, has set a Feb. 1 deadline for its bid unless it gets support from Delta's creditors to perform due diligence and postpone a Feb. 7 hearing that would start the voting process on Delta's stand-alone plan. Meanwhile, Delta management, which rejected the original bid, is pushing ahead with its plan and asked in a filing on Friday for court permission to start seeking creditor approval.

US Airways' bid, which was increased about 20 percent, keeps them in the game after creditors expressed concerns about the original offer, according to Bethune, who met with creditors and US Airways last week.
He said he doesn't yet have further meetings planned.
"I'm glad to see that the creditors are at least being offered more than they were in the past," said Bethune. "I know the creditors' committee is looking at that." Bethune declined to offer his own opinion of the U.S. Airways and Delta stand-alone plans and what the outcome may be. But he said he still supported industry consolidation.

"I can still be a proponent of marriage without agreeing that these two people have to get married," he said.

Cont...

 

[General Lee]

Next you said the DOJ doesn't reject mergers, but rather sues for anit-trust reasons. FDJ2 responded to you with this article:


Justice Department Rejects Proposed US Airways, United Airlines Merger.

From: Knight Ridder/Tribune Business News | Date: July 28, 2001

http://www.highbeam.com/Aspx/GetPubL...usine ss+News

The Charlotte Observer, N.C. Knight Ridder/Tribune Business News
Jul. 28--The US Airways deal is dead.
The Justice Department strongly rejected United Airlines' planned $12.3 billion takeover of US Airways Friday, saying it would have reduced competition, raised fares and harmed airline passengers.
"While mergers can further competition, this one does not," said Attorney General John Ashcroft. "If this acquisition were allowed to proceed, millions of consumers would have little choice but to pay higher fares and accept lower quality air service."



Are we both wrong? Maybe the article is wrong? Was John Asjcroft wrong? Why wouldn't this DOJ come up with the same conclusions this time around, especially since there is a lot more overlap than the one area (IAD/DCA) UA and US got turned down for?


Bye Bye--General Lee

 

[Marko Ramius]

Was there any cutting in the US/UA proposed merger? They tried. They tried to give the IAD/DCA hub to the guy who ran BET, and call it DC Air. How did that go? The DOJ shot that down immediately. We on the other hand have many more areas under scrutiny, not just one area like IAD/DCA.

The above is one of the reasons my opinion is that Parker plans to use the DOJ review process to force a fire sale that he can't admit to the creditors/employees before he gets the former to sign on the dotted line. UA/US weren't in BK when they announced their proposed merger. That meant Goodwin had all the time in the world to negotiate with Justice. If he hadn't gotten cold feet when the economy turned he could have even extended the merger agreement beyond the drop dead date to give themselves more time to come up with something acceptable to Justice(basically put the DC Air assets on the free market). Instead he filed a plan he knew would force a lawsuit from DOJ, to get out of the deal with Wolf for less cash. There will be no such luxury in a US/DL merger scenario. Intertwining this with BK puts this thing on an accelerated timetable. Nobody is going to loan Parker 10b to have DL sit around in BK and not produce returns on their investments. He knows this and would likely make the cuts(asset sales) the government requests to get the DOJ to agree not to sue within no more than 6mos of a deal. It's all up to the creditors to make this moot, if they hold to their word good, if they Saban out........

 

[General Lee]

The above is one of the reasons my opinion is that Parker plans to use the DOJ review process to force a fire sale that he can't admit to the creditors/employees before he gets the former to sign on the dotted line. UA/US weren't in BK when they announced their proposed merger. That meant Goodwin had all the time in the world to negotiate with Justice. If he hadn't gotten cold feet when the economy turned he could have even extended the merger agreement beyond the drop dead date to give themselves more time to come up with something acceptable to Justice(basically put the DC Air assets on the free market). Instead he filed a plan he knew would force a lawsuit from DOJ, to get out of the deal with Wolf for less cash. There will be no such luxury in a US/DL merger scenario. Intertwining this with BK puts this thing on an accelerated timetable. Nobody is going to loan Parker 10b to have DL sit around in BK and not produce returns on their investments. He knows this and would likely make the cuts(asset sales) the government requests to get the DOJ to agree not to sue within no more than 6mos of a deal. It's all up to the creditors to make this moot, if they hold to their word good, if they Saban out........

That is not what John Ashcroft said in the above article I posted. He claimed victory for the consumer. I don't see anything about Goodwin getting cold feet. I think he was smacked by Oberstar too, with his manifesto on why mergers shouldn't happen. He is now the chairman, and just recently said he think he could nudge the DOJ into PREVENTING this merger attempt.


Oberstar (chairman of the transportations sub committee) said that by publicly exposing the potential dangers of airline consolidation, his committee may be able to "throw cold water" on merger mania. "We can nudge the Justice Department to take the action they must" to prevent a loss in competition, he said.
Oberstar also said opposition to consolidation is bipartisan. "I’ve heard from members on both sides of the aisle" as worries have grown about the impact on jobs and service, he said. "I haven’t heard anyone come forward and say this is a really good deal."



Bye Bye--General Lee

 

[UALjan15]

General, you are offering about as much insight and thought as a parrot. You obviously read everything you can get your mouse on, and continue to post and repost the same articles and sound bites again and again. You also seem to believe anything in print, as long as it supports your position. Things are not always as they seem, and rarely does the printed story contain the entire story. At least Marko is adding some original thought and analysis to the conversation--it would be nice to see the same from you. I know this may slow down your efforts to get to the magic 10,000 post milestone, but I'll vote for quality over quantity any day.

 

[General Lee]

General, you are offering about as much insight and thought as a parrot. You obviously read everything you can get your mouse on, and continue to post and repost the same articles and sound bites again and again. You also seem to believe anything in print, as long as it supports your position. Things are not always as they seem, and rarely does the printed story contain the entire story. At least Marko is adding some original thought and analysis to the conversation--it would be nice to see the same from you. I know this may slow down your efforts to get to the magic 10,000 post milestone, but I'll vote for quality over quantity any day.

Quality? Like your post here? Riight. I back up my statements with articles. You and Marko back it up with wild statements that only you and Goodwin would know is true or not. Good luck with that. Parrot my arse. If you can find ANYTHING that supports Marko and anything you have to say, do it. We can't debate anything differently on here because it is a written forum. You can't debate like you are in person. You need to show me proof, or it is just your opinion, and you know what they say about that....... I make a point and then have analysts or guys like Oberstar back it up, with actual quotes they have made to the press. If you think they are lying or not being quoted correctly, write the paper. You really haven't brought anything to the table here, and keep voting for "quality" vs "Quantity"---even though I am right and consistantly prove it and back it up. Something you have yet to show. Can you PROVE anything I have printed (articles) is wrong? They must be lying. Bethune was misquoted in the above article..... Dougie is the only one telling the truth, like he did in his wonderful USAToday mess up. Wow, that really was a blunder. Front page news, and the next day Kirby says he didn't mean what he said.....Wow.

And, it looks like you are an AWA bus newbie. No wonder you don't like what I say. You don't like any of the recent press, do you? I hope you get back to UAL soon.... I hear there are 50 737 FO slots open in ORD currently, and 50 Bus FO slots open in IAD.


Bye Bye--General Lee

 

[xanderman]

...

Quality? Like your post here? Riight. I back up my statements with articles. You and Marko back it up with wild statements that only you and Goodwin would know is true or not. Good luck with that. Parrot my arse. If you can find ANYTHING that supports Marko and anything you have to say, do it. We can't debate anything differently on here because it is a written forum. You can't debate like you are in person. You need to show me proof, or it is just your opinion, and you know what they say about that....... I make a point and then have analysts or guys like Oberstar back it up, with actual quotes they have made to the press. If you think they are lying or not being quoted correctly, write the paper. You really haven't brought anything to the table here, and keep voting for "quality" vs "Quantity"---even though I am right and consistantly prove it and back it up. Something you have yet to show. Can you PROVE anything I have printed (articles) is wrong? They must be lying. Bethune was misquoted in the above article..... Dougie is the only one telling the truth, like he did in his wonderful USAToday mess up. Wow, that really was a blunder. Front page news, and the next day Kirby says he didn't mean what he said.....Wow.

And, it looks like you are an AWA bus newbie. No wonder you don't like what I say. You don't like any of the recent press, do you? I hope you get back to UAL soon.... I hear there are 50 737 FO slots open in ORD currently, and 50 Bus FO slots open in IAD.


Bye Bye--General Lee

I think what UAL was trying to say is you consistently "back up" your opinions using the same old statements from the article you speak so highly of. In the end it is just YOUR opinion painted in a favorable light! We all read these and every other article that is coming out about this deal. Our livelyhood could be at stake here. So we have different opinions! Who cares. You seem like you are searching for that feeling of "I-told-you-so." The kid who is always right! No matter what. In the end I do believe you will ultimately be right in your assumption. But let some guys on here have their own opinions too. Don't insult them it just makes you look like an a$$. Not to mention it does not bode well for the DL pilot image...

Andy

 

[UALjan15]

General, I never said you weren't backing up your points with articles and quotes. Hundreds of times per day I think! Same articles, same quotes, over and over, as if we didn't read them the first time. My POINT is that you're not taking the time to think about what is going on BEHIND the story like Marko was obviously doing. Granted, that is an exercise in speculation, but isn't that some of the fun of wasting our time here on this board?

I guess after 2 years I should take off the "newbie" tagline. That's plenty of time to experience the woes of this airline and think about whether I want to re-experience the same old woes over at United. And no, I'm not for the merger. I just want the possiblility of it to hang around long enough for us to get our contract expedited, but I think I'm dreamin.'

 

[General Lee]

I think what UAL was trying to say is you consistently "back up" your opinions using the same old statements from the article you speak so highly of. In the end it is just YOUR opinion painted in a favorable light! We all read these and every other article that is coming out about this deal. Our livelyhood could be at stake here. So we have different opinions! Who cares. You seem like you are searching for that feeling of "I-told-you-so." The kid who is always right! No matter what. In the end I do believe you will ultimately be right in your assumption. But let some guys on here have their own opinions too. Don't insult them it just makes you look like an a$$. Not to mention it does not bode well for the DL pilot image...

Andy

Andy,

I don't change anything written in those articles. I usually just post them and see what happens, like the article with quotes from Bethune. Lowecur printed the article in this thread, but labeled it wrong. Most of this article stated the Congressmen from Knoxville did NOT want this merger to happen, and gave his reasons why. He then stated if we agreed to merge, maybe it would be tough to stop. Lowecur neglected to mention anything in the title or hardly anything in his first post that this guy really really opposed this takeover. That is a slant.

I do use certain quotes sometimes to back up my points, that is true. But, if anyone would like to counter me, the rest of the articles are easy to find. But, no one does it. No one seems to want to use the search engine on this site and try to add something to counter me. So, it seems to me that I have proved my point. Instead of slamming me constantly, why don't you debate me with written articles that could support your ideas. That is my point.

I may be a bit harsh with some people, but usually that is because they have made some outlandish remark that could never be supported. Then they say "trust me". Gimme a break. If they put IMO, then I will know it is their opinion. If they offer something as fact, they need to back it up.


Bye Bye--General Lee

 

[xanderman]

Instead of slamming me constantly, why don't you debate me with written articles that could support your ideas. That is my point.

I guess it's because I don't feel the need to debate you. I have an opinion. But unlike you I do not necessarily feel compelled to provide articles as "back up." Honestly I think we share the same idea on the outcome...

Andy

 

[General Lee]

General, I never said you weren't backing up your points with articles and quotes. Hundreds of times per day I think! Same articles, same quotes, over and over, as if we didn't read them the first time. My POINT is that you're not taking the time to think about what is going on BEHIND the story like Marko was obviously doing. Granted, that is an exercise in speculation, but isn't that some of the fun of wasting our time here on this board?

I guess after 2 years I should take off the "newbie" tagline. That's plenty of time to experience the woes of this airline and think about whether I want to re-experience the same old woes over at United. And no, I'm not for the merger. I just want the possiblility of it to hang around long enough for us to get our contract expedited, but I think I'm dreamin.'

Sure, Marko brought up a good idea, but could not back it up. He could have dreamed that sequence and we would not have known any better. I am more into articles that have actual quotes. You see, you and I are just pilots, and probably don't know everything going on. But, articles with quotes from guys like Oberstar and Bethune actually mean something. I may post them a lot, but that is because they probably know what is going on more than you and I. It really is that simple. If I post an article that was printed 3 years ago, I post the date. If people say something that I can disprove with a quote from an article that is credible, I will use it, probably more than once if people still haven't understood a concept. They are free to debate me with any quote they can bring up to, hopefully in a genuine article.

As far as your contract, I hope you get a good one. (we do NOT want to be included in your contract talks, as you have probably figured out by now)


Bye Bye--General Lee

 

[General Lee]

I guess it's because I don't feel the need to debate you. I have an opinion. But unlike you I do not necessarily feel compelled to provide articles as "back up." Honestly I think we share the same idea on the outcome...

Andy

Good. But, if you bring up something I think is incorrect, I will point it out. You are free to do the same with me, just please give me something more than "trust me."

Bye Bye--General Lee

 

[UALjan15]

....articles with quotes from guys like Oberstar and Bethune actually mean something. I may post them a lot, but that is because they probably know what is going on more than you and I.

It's between the lines where you'll find the best stuff. It just takes more effort to uncover it. Politicians and CEOs rarely say what they really mean to the media--they say what they want people to hear. I can appreciate your desire to have the truth laid out for you in neat, conforming articles and interviews. I'm just aware that the world doesn't work that way.

Speaking of what CEOs say to the media, I did a quick search of USA Today for the Doug Parker quote you brought up earlier, but I didn't find anything (the one that Kirby tried to retract). Do you have a link?

 

[lowecur]

Isn't DALPA the only member of the creditors committee to publically state they are against the merger? When this committee gathers aren't reps from DALPA present so that they get a feel how the committee is leaning? Why is Lee Moak in Washington talking to legislators if DL has so many friends on the creditors committee that it will never make it that far? He says he is taking nothing for granted.

imp:

​

http://www.accessnorthga.com/news/ap_newfullstory.asp?ID=86082

 

[Marko Ramius]

General,

I stand by my statement, DOJ process does not outright approve or reject mergers in the manner that you believe they do. They do a review process which can be extended multiple times if they decide too if they decide additional information is required. In layman's terms, if they don't like components of a merger proposal they can extend the review period essentially indefinitely. Unlike the UsAirways/Delta deal, I think you would agree that most companies entering into merger agreements actively want their deal to go through-like UAL/UsAirways at the outset in May of 2000. As such, those companies tend to work behind the scenes with Justice during the review period to come up with solutions to things Justice may have issues with. It makes sense to work with Justice, because they may not like their deal anymore if Justice elects to sue and force changes down the line after closure. The key point though is that nothing precludes the companies from closing a merger deal anyway-they just have to suffer the potential consequences of not working with Justice.

UA/UsAir's attempt to allay Justice's concerns was DC Air as you mentioned. First they attempted to prop it up with slots, gates, a ready-made certificate (originally it was to be Paradise Island's but in the end it would likely have been a UsAir Express carrier like PSA) and old 737-200's and wet-leased United crews. This was supposed to give it a legitimate chance of making it as a startup. Justice balked at the coziness of the relationship to UAL which lead to the DcAir agreement you referred to. UA was to sell UsAir's fleet of F-100's and RR powered 757's to AA who would then operate the F-100's for DcAir in the same manner as UA originally proposed. It wasn't written anywhere, but most people assumed that TW's P&W powered 757's would have ended up in UA's hands eventually. If you had been following the deal closely(obviously you weren't) you would known this proposal was among the many things UA got hammered for by the experts for between 2000-9/11. AA was being given accolades left and right for pulling of a reactionary deal with TWA for far less money and complications because of the BK aspect(sound familiar?) and getting the prime overlap assets out of the UA/US deal. Combine that with unused TW slots & gates, overseas route authorities, STL reliever hub, and money left over to go after another carrier like AS if need be, the experts reasoned AA was the clear winner for far less cash up front.

By May of 2001 however(shareholder's meeting timeframe), Goodwin had largely abandonded his interest in the deal that was to be his legacy just 12 mos. earlier. The faltering economy and rapid decline in the yield on the UsAir system as well as their own markets in CA, made taking on essentially all of UsAir at 60 bones a share too expensive. AMR value UsAir at @ $48 a share max, and UA ALPA valued it at @ $50 a share max. That's part of the reason he tried to move some of the excess assets and employees to AA as part of DcAir version II. By May he knew not only that it wasn't worth, but that his job at UA period was clearly on the line. In May 2001, the DOJ guy (Hewitt?) said that UA/UsAir hadn't provided any additional information since the Jan 2001 DcAir modification they didn't like, despite UA's public proclimation otherwise. The merger teams were sent home indefinitely in May 2001 and Goodwin started trying to find a way out. Wolf wouldn't agree and threatened a lawsuit, so Goodwin did the best he could: agree to close to satisfy the merger agreement but close with a merger plan that he knew DOJ hadn't been interested in for six months. The result was predictable: DOJ and several states announced that they intended to sue getting UA out of the deal for less money.

Since nothing is true to you without a million articles, here we go:

This talks about how UA really wasn't interested anymore and was going through the motions to avoid a lawsuit.
http://money.cnn.com/2001/07/12/deals/ual/index.htm

More of the same, including the Ashcroft quote you used, but with the added element that the DOJ process to stop mergers is a lawsuit not a simple yes or no (along with the states) to get the deal blocked.
http://money.cnn.com/2001/07/27/deals/united_usair/index.htm

http://www.usdoj.gov/atr/public/speeches/217987.htm
some relevant highlights:
"The government antitrust role is to maintain competitive markets by seeking to block anticompetitive mergers in court, and otherwise to stay out of the way."

"Competitive problems like these convinced us that this merger would substantially lessen competition in numerous markets. DOJ announced it would sue to block this transaction, and United and USAir abandoned the deal."

http://transcripts.cnn.com/TRANSCRIPTS/0005/24/bp.00.html
A whole bunch of discussion on the UA/UsAir merger considering many of the issues, but also aludes to the fact that you can get a deal through, if you are willing to make the necessary modifications to keep Justice from suing.

"VAN SUSTEREN: Steve, if you're a betting man, is it going to go through or not?
BERK: I going to bet that it does go through.
VAN SUSTEREN: Why?
BERK: I think that what they are going to be able to do is modify it some. I think that one point that you sort of implied is: there's got to be barriers to entry in certain markets and I think that if the barriers of entry are low enough to allow new competition to come into various markets, I think the Justice Department is going to let this go through. But I do think they're going to let it go through only with significant sort of spinning off, whether it be D.C. or Boston routes or other routes. But I think it's going to go through."

So there you have it. None of the diatribe above says anything about your creditor committee which is the key right now. I personally don't have an opinion on which way they will lean, which is why my comments to you have primarily referenced what could happen should a deal and subsequent reorg. plan gets past the creditors. This isn't rocket science, and everyone from Parker, Grinstein, Oberstar, the creditors and the DOJ know this. That is why they are loudly protesting hoping to shutdown and creditor support for this thing-a smart and appropriate thing to do. This thing in a mess if it gets past the creditors because if does it means that there is either no capital or worse yet no belief in an independent Delta. That puts the DOJ in a tough position because DAL could wither on the vine if Parker gets control and they sue. Like I said before, I think Parker privately expects them to sue and is willing to accept divestitures to get them to settle the lawsuit. You didn't answer my question btw, in the event that Parker gets past the creditors what do you think Justice will do and what effect do you see that having on DL?

 

[General Lee]

Marko,

Thanks for the quotes. That is what I hope for when debating an issue, something concrete. Of course, the article I posted from the Charlotte Observer said something totally different, and never mentioned the Goodwin stuff. John Ashcroft proclaimed victory for the consumers, and I believe the same will happen with our case. First of all, I don't think our creditor committee will let it get that far, and the latest Bethune article I posted relayed that sense. Bethune said many creditors are not focused on the same thing, and that he wouldn't necessarily propose marriage for two airlines he didn't think should get married. (he is advising the committee as you know) Then, we have Oberstar and Sen Drogan (from ND I believe), who is calling for Senate hearings. Could both Congressman Oberstar and Sen Drogan derail this process? Maybe. Could they lean on the DOJ or whoever they need to to stop this from happening? I bet they could. Even Obserstar stated (and yes, I could post that same quote I always paste again...) he doesn't know anyone who is in favor of it on Capital Hill.

As far as divesting assets to try to appease Congressmen, I would think job loss may be more important to Congressmen, and that would sway any vote. This takeover is nothing like the merger between AWA and US, since that one had virtually no job loss, no overlap, and two parties wanting to merge. That one was easy, but this current one is not.


"Competitive problems like these convinced us that this merger would substantially lessen competition in numerous markets. DOJ announced it would sue to block this transaction, and United and USAir abandoned the deal.

The above quote shows the Gov't can go after and try to stop any merger, and most of the time I would bet the judge listens to them. That is what I mean when I say the Gov't can stop mergers, or the DOJ can stop them. But as you have shown, it takes a court hearing or suit.


In a sepeate article:


Of all the U.S. carriers, US Airways has the most overlap with Delta, and the situation is particularly acute in the Southeast, Bell said. "You look at the traffic flows over those two hubs, it is almost an identical overlay," he says. "There are only a handful of routes available on [Charlotte] and not [Atlanta] . The concentration could make the federal government say 'Charlotte has to go.'" (USAir being their home town airline---that would go over great, especially with all of those employees living there)


Again, Bethune has changed his tone a bit with these two airlines, while not changing his stance on consolidation in general. I see him possibly taking the helm of the new DL, one combined with DL and NWA, and maybe a smaller third party too.


Thanks for the United recap. I think in the end it will first be shot down by the creditor committee, and if that doesn't happen, it will be shot down by the DOJ. As a last option, NWA will come in and offer the same amount, and we all know that would have a better chance of passing the muster with the Gov't, and adding value to a forced merger. The USAirways offer has very little chance of coming to fruition, IMO. (and others)


Bye Bye--General Lee

 

[Marko Ramius]

I agree that the overlap issues are huge and undeniable as you've clearly outlined. If DL weren't in bankruptcy, UsAirways' hostile attempt would be laughable. Oddly enough, if Parker gets past the creditors, job and service loss may be what gets the government to go along. For the creditors to change course and give Parker the backing he wants, they would have to no longer believe in DL's reorg. plan and/or believe that there isn't a better offer(NW?) out there to give them the return they want. I don't see any other logical reason(s) for them to change their minds.

The problem is if they do. I don't know DOJ's record, but I bet most actual lawsuits end up in settlement or abandonment. DL is bankrupt, which usually triggers the failing carrier doctrine but this is a weird case because DL management and the gov't don't want the deal-right now. For us to be talking about this past Feb. 1, we'd have to assume Parker changed some minds on the creditors committee. That would mean he is essentially in control and we'd likely see a rash of current DL executives 'explore new opportunities' and being replaced by people who will go along with Parker's program(like when WN sent their guy over to run ATA). Grinstein would likely stay, but would now have the job of leading the transition-iow DL management's opposition will likely evaporate if Parker convinces the creditor's committee.

That leaves the government. They could stonewall, but getting to this point means that the creditors don't believe there is any other viable option-basically no better merger option(NWA or UAL) or other independent capital. The market would basically be saying we are only interested in parts not the whole-remember when the judge in AMR/TWA tried to see if other airlines would offer more for TWA and there were only offers for parts forcing him to approve the AA plan? Stonewalling or suing could end up costing jobs and service because DL doesn't have enough money to run itself long term and no one is offering it. In that case, it might make more sense to find ways to continue to provide as much service and jobs as possible by splitting up the overlapping parts and employees to other carriers in a fragmentation. I think that is what Duncan is getting at when he says it would be hard to block. The operation would be a success but the patient would die on the operating table. I don't know that there is a mechanism that Oberstar or Dorgan could use to block the creditors from approving this deal which is why they are squawking so loudly now. They are trying to poison the well to keep the creditors behind DL management or to find a more acceptable deal.

If Parker gets creditor approval he can't lose in his mind b/c: he either gets what he wants and divests the overlapping assets to other airlines through the BK process or he paralyzes DL by going round and round with the government before walking away from the deal leaving behind a carrier that has been significantly weakened by a year or more of being run with the intention of merger vs. independence and one missing 10bil important financing dollars. Ugly, but not unprecedented unfortunately. Judging by history, they would likely go to a new plan involving a smaller DL while secretly hoping to merge with someone. Something in between Eastern and PanAm at the end and UsAirways between their bankruptcies. Bottom line Parker is a SOB, he's up to more than he admits publicly imo, and it's best to stop him right here. DL has already gotten the cash savings, he needs the BK process because it represents his sole leverage with the government.

 

[FDJ2]

DL is bankrupt, which usually triggers the failing carrier doctrine

You make some very good points and you have obviously researched the topic, However, I would not be too quick to site the failing carrier doctrine.

http://www.usdoj.gov/atr/public/speeches/217987.htm

Bankruptcy
If bankruptcy is a factor in our merger analysis, obviously it is because one of the merging parties is in or near bankruptcy. This is relevant because, if a firm is failing, then on balance it may be better to allow even an anticompetitive merger than to watch the failing firm's assets leave the market and be unavailable to any competitor. In such a situation, we will allow an otherwise anticompetitive merger to go forward without challenge only if the following conditions are met: the failing firm will be unable to pay its bills in the near future, the failing firm could not successfully reorganize in bankruptcy, the firm has tried to sell itself to someone else, in a combination that will not lessen competition as much, and without the acquisition the firm's assets will exit the market.

Considering the fact that DAL is ahead of its court approved reorganization plan, has filed a plan of reorganization after a relatively short BK process, is ready to emerge from bankruptcy with one of the best balance sheets in the industry, has plenty of unrestricted cash on hand, will in all likelihood have very little difficulty raising exit financing, has one of the lowest cost structures of any large network airline, has seen dramatic revenue improvement and has a relatively healthy operating margin which seems to get better each quarter, I don't see the failing carrier doctrine as compelling.

 

[General Lee]

Marko,

I found another article about the DOJ and the acceptance of the USAir/AWA merger. Interesting read, and interesting how they say they approved or "killed" previous mergers.


"Justice Dept. Approves US Airways Merger
No Antitrust Issues Seen in Agreement With America West

By Michael Barbaro and Keith L. Alexander
Washington Post Staff Writers
Friday, June 24, 2005; Page D01

The Justice Department yesterday cleared the proposed merger of US Airways Group Inc. and America West Holdings Corp., finding that any overlap between the carrier's routes would not hurt competition in the hyper-competitive budget airline industry.

The ruling removes a key hurdle before the merger, which would create the nation's largest discount airline, with service throughout the United States and overseas. The same government agency killed US Airways' previous merger attempt, with United Airlines in 2001, forcing the Arlington-based airline to pare down costs in a last-ditch effort to survive on its own"



Why are these people getting it wrong? I guess they don't know that they can only sue to stop a merger....


Xanderman? How do you respond to this article? Do they have it wrong? The Washington Post.



Bye Bye--General Lee

 

[AA717driver]

Do you believe EVERYTHING you read in the Washington Post? Or any other paper for that matter? I know they are particularly accurate on aviation matters... TC

P.S.--Good posts, Marko!

 

[TWA Dude]

The same government agency killed US Airways' previous merger attempt, with United Airlines in 2001, forcing the Arlington-based airline to pare down costs in a last-ditch effort to survive on its own"

Why are these people getting it wrong? I guess they don't know that they can only sue to stop a merger....

It's semantics. the DOJ can impose such huge hurdles (divestitures) before approving that the merging parties just give up. Then the DOJ can claim they "killed" it but in reality they just set a price that was too high.

(I'm repeating myself, but...) Parker has already stated the Delta Shuttle would go. What he's not stating is that considerably more would have to go to satisfy the DOJ. That's why he hired consultants ahead of time to advise him whether it was possible. I guarantee he already has some ideas.

I've never been of the opinion that this merger will occur but I'm quite sure that it can occur -- if the parties are willing to pay the price.

 

[FDJ2]

It's semantics. the DOJ can impose such huge hurdles (divestitures) before approving that the merging parties just give up.

The end result is the same. The DOJ can also sue the merged entity if it feels anti trust issues have not been adequately dealt with.

(I'm repeating myself, but...) Parker has already stated the Delta Shuttle would go. What he's not stating is that considerably more would have to go to satisfy the DOJ.

I hear he also is talking of dropping quite a bit of CLT flying.

I've never been of the opinion that this merger will occur but I'm quite sure that it can occur -- if the parties are willing to pay the price.

DAL isn't willing to pay the price and wants nothing to do with this deal, so it really is whether or not Parker is willing to pony up over $10B in cash and stock, take on the largest debt load in the idustry, which all but guarantees another trip to the court house, in order to eliminate the competition, and whether the DAL BOD, creditors committee, DOJ, and yes Congress go along with that plan. Than he has to deal with contractual issues which are already a part of a court approved reorganization plan and would prevent him from implementing his planned merger.

 

[TWA Dude]

FDJ2: who are you trying to convince?

 

[General Lee]

FDJ2: who are you trying to convince?

So, someone who actually has answers that make sense bothers you. Doug really has brain washed everyone there in PHX. Wow.


Bye Bye--General Lee