Originally Posted by
pipe
1) Does every MEC keep an investment banking firm on payroll?
2) If so, why?
3) If not -- why does the UAL MEC keep one on payroll?
1) No.
2) Not usually required. But...see #3.
3) The UAL MEC used IB firms for the ESOP in the '90s, bankruptcy in the '00s, and for the merger today.
The IB firms were retained after the bankruptcy was complete because the CEO was very public with his intentions to seek a merger so the pre-merger wheels were turning for a long time prior to the official CAL announcement in 2010. (Don't forget that there were multiple discussions with DAL, USAir, and CAL between 2005 and 2010 most of which were not public at the time but the MEC and IB firms were involved.)
It should also be noted that as part of the current merger transition agreement that UAL is reimbursing ALPA for merger-related expenses including the current investment banking firm.
The use of the IB firm is two-fold:
1) Advise in regard to a potential and undetermined equity share
2) Analysis of the company's financials for contract negotiation purposes. As Morse's letter indicated a large portion of that work is now done in-house within ALPA. Previously UAL would not disclose such data directly to ALPA for various reasons.