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Delta Studies Comair Sale While Merger Review Goes On (Update3)
By Susanna Ray
Enlarge Image/Details
Jan. 7 (Bloomberg) -- Delta Air Lines Inc., the third- biggest U.S. carrier, said no decision is imminent on the possible sale of its Comair regional unit while a board committee reviews merger alternatives.
A tie-up with a rival and a Comair sale are among the most significant choices facing Chief Executive Officer Richard Anderson, who took over on Sept. 1. Delta had left Comair's fate to be resolved after leaving bankruptcy last year.
``We continue to evaluate options to sell Comair, but no decision has been made,'' spokeswoman Betsy Talton said in an interview yesterday. She said she didn't have an update on whether Atlanta-based Delta would settle Comair's future this quarter, as Anderson projected in October.
``They're being prudent in saying we'll let the dust settle before we make any big decisions,'' said Stuart Klaskin of KKC Aviation Consulting in Coral Gables, Florida. ``I would not necessarily see it through the prism of them prepping for one transaction or another.''
Delta announced the creation of the board panel on Nov. 14, a day after hedge fund Pardus Capital Management LP wrote to the company to urge a merger with UAL Corp.'s United Airlines. Pardus, which owns shares in both carriers, said combining would save money to counter surging jet-fuel prices.
The Financial Times reported yesterday on its Web site that Delta was delaying a decision on Comair while it explored hooking up with United or another competitor.
Delta wants the board committee and its advisers, Merrill Lynch & Co. and Greenhill & Co., to finish their work before it will hire JPMorgan Chase & Co. to act on options already discussed with that bank for Comair, the Financial Times said, citing unidentified people familiar with the plan. Talton declined to comment on the panel's progress or its consultants.
Regarding Comair, ``no decision is imminent,'' Talton said.
Hostile Bid
Under former CEO Gerald Grinstein, Delta fought off a takeover bid a year ago by US Airways Group Inc. Grinstein later said he envisioned a post-bankruptcy Delta as ``an acquirer,'' and Anderson said in October a merger ``could make sense.''
Mergers would allow airlines to trim capacity, raise fares and slash expenses, providing a boost to shares. The Bloomberg U.S. Airlines Index fell 36 percent in 2007 as jet fuel for immediate delivery in New York Harbor jumped 53 percent.
Delta rose 2 cents to $13.39 at 4:19 p.m. in New York Stock Exchange composite trading. The shares fell 35 percent in 2007.
Delta bought Comair in 1999 for $1.8 billion to ferry fliers to the parent airline's hub airports. During 19 months in bankruptcy, Delta cut expenses by unloading some smaller planes and shifting some Comair flights to lower-cost carriers.
Delta sold its other regional unit, ASA Holdings Inc., to SkyWest Inc. for $425 million in August 2005, a month before filing for bankruptcy.
AMR Corp.'s American Airlines, the world's biggest carrier, plans to divest its American Eagle commuter unit this year. Chicago-based United is the second-largest airline.
To contact the reporter on this story: Susanna Ray in Chicago at [email protected]
By Susanna Ray
Enlarge Image/Details
Jan. 7 (Bloomberg) -- Delta Air Lines Inc., the third- biggest U.S. carrier, said no decision is imminent on the possible sale of its Comair regional unit while a board committee reviews merger alternatives.
A tie-up with a rival and a Comair sale are among the most significant choices facing Chief Executive Officer Richard Anderson, who took over on Sept. 1. Delta had left Comair's fate to be resolved after leaving bankruptcy last year.
``We continue to evaluate options to sell Comair, but no decision has been made,'' spokeswoman Betsy Talton said in an interview yesterday. She said she didn't have an update on whether Atlanta-based Delta would settle Comair's future this quarter, as Anderson projected in October.
``They're being prudent in saying we'll let the dust settle before we make any big decisions,'' said Stuart Klaskin of KKC Aviation Consulting in Coral Gables, Florida. ``I would not necessarily see it through the prism of them prepping for one transaction or another.''
Delta announced the creation of the board panel on Nov. 14, a day after hedge fund Pardus Capital Management LP wrote to the company to urge a merger with UAL Corp.'s United Airlines. Pardus, which owns shares in both carriers, said combining would save money to counter surging jet-fuel prices.
The Financial Times reported yesterday on its Web site that Delta was delaying a decision on Comair while it explored hooking up with United or another competitor.
Delta wants the board committee and its advisers, Merrill Lynch & Co. and Greenhill & Co., to finish their work before it will hire JPMorgan Chase & Co. to act on options already discussed with that bank for Comair, the Financial Times said, citing unidentified people familiar with the plan. Talton declined to comment on the panel's progress or its consultants.
Regarding Comair, ``no decision is imminent,'' Talton said.
Hostile Bid
Under former CEO Gerald Grinstein, Delta fought off a takeover bid a year ago by US Airways Group Inc. Grinstein later said he envisioned a post-bankruptcy Delta as ``an acquirer,'' and Anderson said in October a merger ``could make sense.''
Mergers would allow airlines to trim capacity, raise fares and slash expenses, providing a boost to shares. The Bloomberg U.S. Airlines Index fell 36 percent in 2007 as jet fuel for immediate delivery in New York Harbor jumped 53 percent.
Delta rose 2 cents to $13.39 at 4:19 p.m. in New York Stock Exchange composite trading. The shares fell 35 percent in 2007.
Delta bought Comair in 1999 for $1.8 billion to ferry fliers to the parent airline's hub airports. During 19 months in bankruptcy, Delta cut expenses by unloading some smaller planes and shifting some Comair flights to lower-cost carriers.
Delta sold its other regional unit, ASA Holdings Inc., to SkyWest Inc. for $425 million in August 2005, a month before filing for bankruptcy.
AMR Corp.'s American Airlines, the world's biggest carrier, plans to divest its American Eagle commuter unit this year. Chicago-based United is the second-largest airline.
To contact the reporter on this story: Susanna Ray in Chicago at [email protected]
