US Airways to meet with Delta creditors

[9rj9]

NEW YORK, Nov 28 (Reuters) - US Airways Group Inc. (LCC.N: Quote, Profile, Research) will make its case for a takeover of bankrupt Delta Air Lines Inc. (DALRQ.PK: Quote, Profile, Research) during a meeting this week with Delta and its creditors, a lawyer for the creditors said on Tuesday.
The meeting could be a key factor in the success or failure of US Airways' $8.6 billion bid for its larger rival. The meeting will be the first time US Airways speaks directly to Delta creditors since making its unsolicited cash-and-stock bid on Nov. 15.
US Airways will make a presentation to the bankrupt carrier and its official committee of unsecured creditors about its offer, including how it thinks the combination could work and how it expects to resolve integration issues, Daniel Golden, a lawyer with Akin, Gump, Strauss, Hauer & Feld, which represents Delta's creditors committee, told Reuters.

The creditors' committee has not had separate discussions with US Airways so far, but is in "constant discussion" with Delta, the No. 3 U.S. airline, Golden said.
"We thought it most appropriate to have this first, to have this all hands meeting," he said.
US Airways will be looking to find enough support to force Delta to allow it to perform due diligence, a condition of the offer.
US Airways, the No. 7 U.S. carrier, has already won some backing from Delta creditors. Some Delta bondholders formed a group last week to support the bid.
But US Airways also faces obstacles.
Delta, which has been operating under bankruptcy protection since September 2005, has said it aims to remain independent and plans to file its reorganization plan next month with the aim of emerging from Chapter 11 in the first half of 2007.
Delta's pilots' union, which is on the creditors' committee, has expressed concerns about the deal.

 

[lowecur]

The courtship begins

This initial meeting will be solidly rejected by DL creditors, thus forcing US to up it's bid. Once a higher bid is received, the creditors will begin to warm and at that time you may see a competing bid from UAL. Can't blame them for trying to max out the bidding process.

If this all fails, look for UAL/US to try and strike a deal. These two and their Wall St bretheren want a deal somewhere and it's only a matter of time before consolidation begins.

imp:​

 

[grog_sit_reserv]

I don't think it will be with UAL. The main thing about all this consolidation is that the airline being acquired needs to be in bankruptcy for the plan to achieve DP's Synergies, if Delta doesn't fly, it will be NWA.

 

[SWA/FO]

and the big winner out of all this: Southwest Airlines.

 

[Noserider76]

Boeing is one of the largest unsecured creditors at about 3.7 Billion. Why would they sacrifice a 100 percent Boeing customer for one that has close ties to Airbus? DL will have to replace 136 MD-88/90's in the near future with what will almost certainly be a Boeing narrowbody. There will also have to be a 787 order soon and there are the previously announced 777LR orders. DL has said they eventually want 2 fleet types; 737 replacement and 787.

Compare this to the taken over DL which would have to keep an Airbus narrowbody fleet and would cut airframes and add aircraft to the used aircraft market. Doesn't make much sense for BA to go along.

 

[TWA Dude]

US Airways needs to replace its 737s and 767s and Parker has always stated that he's not an exclusive partner to Boeing or Airbus.

 

[apdsm]

Why would they sacrifice a 100 percent Boeing customer for one that has close ties to Airbus?

So they don't lose the $3.7B that is owed to them.

 

[xanderman]

Boeing is one of the largest unsecured creditors at about 3.7 Billion. Why would they sacrifice a 100 percent Boeing customer for one that has close ties to Airbus? DL will have to replace 136 MD-88/90's in the near future with what will almost certainly be a Boeing narrowbody. There will also have to be a 787 order soon and there are the previously announced 777LR orders. DL has said they eventually want 2 fleet types; 737 replacement and 787.

Compare this to the taken over DL which would have to keep an Airbus narrowbody fleet and would cut airframes and add aircraft to the used aircraft market. Doesn't make much sense for BA to go along.

You make it sound as if US is beholden to Airbus! They are not! Who says US would not make a big order with boeing? If you ask me Airbus really dropped the ball on the A350 and now US is scrambling to find a suitable replacement. Personally I feel US is becoming quite fond of Boeing. It will probably go something like this...

Doug Parker: "We will agree to make a purchase order to replace MD-80/90's older 737's and certain widebody subfleets with you (Boeing) if you support our bid to purchase DAL."

Just my thoughts...
Andy

 

[Noserider76]

US Airways needs to replace its 737s and 767s and Parker has always stated that he's not an exclusive partner to Boeing or Airbus.

Small potatoes compared to what DL will need. 737 repalcement at HP/US will have to be an Airbus and how many 767s are we talking? 12 or so? DL has over 100 767s and 130 757s that will need replacement along with those 136 Maddogs.

HP/US could try to convince BA they would replace MDs/737s with new 737s after the takeover but what about the 130 or so fairly new Airbus aircraft at HP/US. Not an airtight promise if you ask me. If they make that promise it would be Parker saying anything to force the deal. The new carrier would then be doomed to two totally opposite narrowbody types.

Guaranteed Boeing customer (DL) versus one that's been sleeping with Airbus for a long time (HP/US).

 

[lowecur]

and the big winner out of all this: Southwest Airlines.

They will have to fork out lots of cash for the 737s and shuttle routes along with buying the gates at LGA, BOS, and DCA. 10 or 15 gates may also be offered up at PHL if US decides to head to JFK for consolidated international hub. The once cash rich WN, could find itself light in the pockets by a billion or more. PRASM will certainly grow, but the question is where will WN's CASM end up, and will they be able to sustain profit margins in the double digit area as consolidation will bring out monsterous profits and an ability to compete head to head with the LCCs and each other.

If UAL and US decide to merge, this will probably be less advantageous to WN.

imp:​

 

[xanderman]

HP/US could try to convince BA they would replace MDs/737s with new 737s after the takeover but what about the 130 or so fairly new Airbus aircraft at HP/US.

Crap! I guess my plans to buy a Honda are now thrown out the window because I currently own a Ford. Is this your logic for this debate? C'mon man! Just because somebody owns airbus doesn't mean that they will never be a boeing customer in the future...

Andy

 

[lowecur]

I don't think it will be with UAL. The main thing about all this consolidation is that the airline being acquired needs to be in bankruptcy for the plan to achieve DP's Synergies, if Delta doesn't fly, it will be NWA.

BK certainly helps getting rid of duplicate terminal leases and feeder contracts, but the overlap between the two is minimal. It's doable and probably just a tad behind US/DL on the synergy level.

imp:​

 

[Noserider76]

Crap! I guess my plans to buy a Honda are now thrown out the window because I currently own a Ford. Is this your logic for this debate? C'mon man! Just because somebody owns airbus doesn't mean that they will never be a boeing customer in the future...

Andy

If you think changing a fleet of airplanes is like you changing your car brand you need a better arguement, man! Your talking Billions in sims, maintenance, parts, and training just to start. DL is a guaranteed giant BA customer. The combined DL/HP/US is an unknown. BA stands to lose a lot if this deal goes through, what do they stand to gain? Very little.

BA and DALPA are going to play a huge role in the fate of this. It doesn't look like a win for either one.

I'm curious why HP/US employees would support this. It would mean being dragged into bankruptcy the 3rd time for US employees and second for older HP employees. Not a great place to be. Also, if I lived in CLT, PHL, or PIT and liked it, I would be pretty worried. "Synergy" is corporate speak for job cuts.

 

[TWA Dude]

737 repalcement at HP/US will have to be an Airbus...

No, it won't, and you can't provide any proof that it would. Parker has said numerous times that he will play Boeing and Airbus off each other and take the better deal. Only pre-AWA USAirways was an exclusive Airbus buyer. Even if the Delta buyout doesn't go through I would expect USAirways to announce a Boeing order (with or without an additional Airbus order) in the near future.

 

[TWA Dude]

I'm curious why HP/US employees would support this.

I don't think many do. Most are probably just indifferent like I am. I really don't see any benefit to me (and after all, that's what it's all about).

 

[lowecur]

I don't think many do. Most are probably just indifferent like I am. I really don't see any benefit to me (and after all, that's what it's all about).

It's all speculation at this point, but DP will lay out his proforma statements and I'm sure they will show huge profits if this merger goes through. The status quo isn't bad for either airline except for the fact that eventually contracts will expire and each airline will be forced to pay through the nose to avoid costly job actions. You have to ask yourself if you'd rather try and negotiate a new contract when a single carrier makes $500M, or would you rather negotiate if consolidated carriers made upwards of $2B?

I think it's a no-brainer.

imp:​

 

[k9nole]

Who says it will be one airline buying Delta?
It's called negotiations.
USAirways throw out a $$$ number if they get all of Delta then so be it. Then sell off assets.
If Delta's creditors rejects the deal, Parker sweetens the pot buy either money from within or from another airline's credit that will join the mix.
If Delta's creditors name a ballpark price, Parker and his bankers call United, Continental, American,Southwest or whomever and part out Delta and make the deal work.

Or USAirways put in an ante for Delta, Continental, American or whomever puts in a bigger ante for Delta then USAirway and United go for merger part III????

The wild card in all of this is American.
We will see how this all works out by this time next year.

 

[TWA Dude]

I think it's a no-brainer.

Ah, but then you haven't lived through two airline mergers as an employee. Q.O.L. is about more than just money.

 

[lowecur]

the lawyer for the creditors speaks out

US Airways Group Inc. will pitch its $8.6 billion unsolicited offer for Delta Air Lines Inc. in a meeting this week with Delta and the committee representing the unsecured creditors in Delta's bankruptcy case, a lawyer for the committee said Tuesday.

The lawyer, Daniel Golden, said in a telephone interview that the committee's advisers will be present at the meeting in New York, along with US Airways officials and Delta senior executives.

"We have great respect for Delta's management," Golden said. "We think they've done a very good job in Chapter 11. But at the end of the day we're going to make a determination about what works best for the estate and the unsecured creditors."


Golden said the creditors will weigh the pros and cons of the offer against any other offers that may come in and the merits of Delta's standalone plan. "We have a job to do, which is to maximize recoveries for unsecured creditors," Golden said. He declined to say if any other airline has made an offer to buy Delta.

Hey GL, somebody better straighten this guy out. It sounds to me like he's not giving DALPA any respect as a creditor.

imp:​