Delta Merger Talks to Begin
01-10-2008, 09:46 AM
#1
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Position: 757/767
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Delta Merger Talks to Begin
Here we go
http://biz.yahoo.com/rb/080110/delta...west.html?.v=2
Sounds like everyone wants to be in bed with Delta. Fins to the left, fins to the right.
I added the text below to save time.
Reuters
Delta wants merger talks with UAL, Northwest: report
Thursday January 10, 4:03 pm ET
NEW YORK (Reuters) - Delta Air Lines Inc (NYSE
AL - News) plans on Friday to ask its board for permission to begin formal merger talks with both Northwest Airlines Corp (NYSE:NWA - News) and United Airlines parent UAL Corp (NasdaqGS:UAUA - News), the Wall Street Journal reported on Thursday.
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Citing people familiar with the matter, the Wall Street Journal said on its Web site that Delta would aim to ultimately choose between the two carriers.
Delta, which emerged from bankruptcy last spring after rebuffing a hostile takeover offer by US Airways Group Inc (NYSE:LCC - News), set up a special board committee months ago to help it review its strategic options, including mergers.
Betsy Talton, spokeswoman for Delta, said the No. 3 U.S. carrier was not providing updates on the special committee's work while it is in progress.
In November, Delta moved quickly to deny media reports that it was in merger talks with UAL.
Jean Medina, a spokeswoman for UAL, which has been a vocal proponent of airline mergers, said, "Our position on the need for consolidation generally in the industry is well known, and we don't comment on rumors or speculation."
Northwest was not immediately available from comment.
Airline shares, already soaring on renewed merger speculation ahead of the report, continued to rally.
In late afternoon trading, Delta shares rose 20 percent to $16.18, Northwest surged 37 percent to $16.49, and UAL climbed 23 percent to $32.00.
LARGEST CARRIER
A deal between Delta and either airline would likely create the world's largest carrier, overtaking AMR Corp's (NYSE:AMR - News) American Airlines. An acquisition of either airline by Delta would be worth at least $3.5 billion, based on current market values.
According to a study conducted a few months ago for hedge fund Pardus Capital Management, which was lobbying for a deal, a Delta-United merger would generate synergies of $585 million and combine Delta's transatlantic presence and strength in the New York market with United's Asia routes and its position on the U.S. West Coast.
The study estimated that a combination with Northwest would net the combined carrier $1.5 billion in savings by combining smaller hubs, but it would not expand the network to the same extent as a Delta-United deal.
The modest recovery in the U.S. airline industry has begun to flag amid soaring fuel prices and a sagging U.S. economy. Most major U.S. airlines are expected to post losses for the fourth quarter of 2007 after profits earlier in the year.
Mergers are seen as a way to stabilize the volatile and fragmented industry by allowing carriers to cut costs, reduce capacity, and raise fares.
Some industry insiders suggest any proposed deal between major carriers would stand a better chance of clearing U.S. antitrust review under the Bush administration, which has approved two big airline mergers, rather than a Justice Department potentially controlled by Democrats beginning in 2009.
For a deal to succeed, Delta also would have to win over employees, especially its unionized pilots, who helped block US Airways' effort. For analysis, see (ID:nN10169813).
"Consolidation may indeed be at our door," Lee Moak, chairman of the Delta pilots' union, said in a letter to members on Wednesday.
"Any attempt at consolidation will fail without the active involvement and support of the pilots from the earliest formative stages of the effort," said Moak.
In September, Delta agreed to protect the seniority rights of its employees in the event of a merger.
(Reporting by Chris Reiter; Additional reporting by Kyle Peterson in Chicago and John Crawley in Washington; Editing by Brian Moss)
http://biz.yahoo.com/rb/080110/delta...west.html?.v=2
Sounds like everyone wants to be in bed with Delta. Fins to the left, fins to the right.
I added the text below to save time.
Reuters
Delta wants merger talks with UAL, Northwest: report
Thursday January 10, 4:03 pm ET
NEW YORK (Reuters) - Delta Air Lines Inc (NYSE
AL - News) plans on Friday to ask its board for permission to begin formal merger talks with both Northwest Airlines Corp (NYSE:NWA - News) and United Airlines parent UAL Corp (NasdaqGS:UAUA - News), the Wall Street Journal reported on Thursday.ADVERTISEMENT
Citing people familiar with the matter, the Wall Street Journal said on its Web site that Delta would aim to ultimately choose between the two carriers.
Delta, which emerged from bankruptcy last spring after rebuffing a hostile takeover offer by US Airways Group Inc (NYSE:LCC - News), set up a special board committee months ago to help it review its strategic options, including mergers.
Betsy Talton, spokeswoman for Delta, said the No. 3 U.S. carrier was not providing updates on the special committee's work while it is in progress.
In November, Delta moved quickly to deny media reports that it was in merger talks with UAL.
Jean Medina, a spokeswoman for UAL, which has been a vocal proponent of airline mergers, said, "Our position on the need for consolidation generally in the industry is well known, and we don't comment on rumors or speculation."
Northwest was not immediately available from comment.
Airline shares, already soaring on renewed merger speculation ahead of the report, continued to rally.
In late afternoon trading, Delta shares rose 20 percent to $16.18, Northwest surged 37 percent to $16.49, and UAL climbed 23 percent to $32.00.
LARGEST CARRIER
A deal between Delta and either airline would likely create the world's largest carrier, overtaking AMR Corp's (NYSE:AMR - News) American Airlines. An acquisition of either airline by Delta would be worth at least $3.5 billion, based on current market values.
According to a study conducted a few months ago for hedge fund Pardus Capital Management, which was lobbying for a deal, a Delta-United merger would generate synergies of $585 million and combine Delta's transatlantic presence and strength in the New York market with United's Asia routes and its position on the U.S. West Coast.
The study estimated that a combination with Northwest would net the combined carrier $1.5 billion in savings by combining smaller hubs, but it would not expand the network to the same extent as a Delta-United deal.
The modest recovery in the U.S. airline industry has begun to flag amid soaring fuel prices and a sagging U.S. economy. Most major U.S. airlines are expected to post losses for the fourth quarter of 2007 after profits earlier in the year.
Mergers are seen as a way to stabilize the volatile and fragmented industry by allowing carriers to cut costs, reduce capacity, and raise fares.
Some industry insiders suggest any proposed deal between major carriers would stand a better chance of clearing U.S. antitrust review under the Bush administration, which has approved two big airline mergers, rather than a Justice Department potentially controlled by Democrats beginning in 2009.
For a deal to succeed, Delta also would have to win over employees, especially its unionized pilots, who helped block US Airways' effort. For analysis, see (ID:nN10169813).
"Consolidation may indeed be at our door," Lee Moak, chairman of the Delta pilots' union, said in a letter to members on Wednesday.
"Any attempt at consolidation will fail without the active involvement and support of the pilots from the earliest formative stages of the effort," said Moak.
In September, Delta agreed to protect the seniority rights of its employees in the event of a merger.
(Reporting by Chris Reiter; Additional reporting by Kyle Peterson in Chicago and John Crawley in Washington; Editing by Brian Moss)
Last edited by Deez340; 01-10-2008 at 02:20 PM.
01-10-2008, 10:10 AM
#2
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I have a friend fairly high up in DAL management and he says there has been a lot of chatter about NWA in recent weeks. He wouldn't confirm anything though. I don't think he knew anything concrete anyway but the level of NWA speculation seems to be well warranted given the news above.
01-10-2008, 01:41 PM
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Posts: 18,563
I can second the whole NWA thing. There have been a lot of closed door meetings that have been doing on for months. We will have to wait and see how much of this has already been agreed to. I think that the whole UAL thing is a fake to make NWA/DAL look that much better, and thus give it a better chance of going through.
Just my .02
Just my .02
01-10-2008, 02:37 PM
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Here's the thing. There are still many regional guys interviweing and taking jobs at DL, UA and NW, when they know these airlines are involved in merger talks. That shows you how desperate these people are to get the hell out of the regional world. This industry is all *********d up.
01-10-2008, 05:23 PM
#8
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Originally Posted by UCLAbruins
Here's the thing. There are still many regional guys interviweing and taking jobs at DL, UA and NW, when they know these airlines are involved in merger talks. That shows you how desperate these people are to get the hell out of the regional world. This industry is all *********d up.
This was just put out today, AND there is no confirmation of merger talks.
BTW, remember the UAL and USAir talks. Everyone was jumping around, and what happened?...
Then USAir and DAL...
There are others NOT in the "regional" world, looking.
01-10-2008, 06:02 PM
#9
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Short Bus - hope you are correct. The description in the Wall Street Journal article today was almost the opposite of the dynamics that were explained to us internally. The way I understand it, the board wants a deal and DL Management is trying to reach a conclusion as to whether a deal makes any sense and if it does, what works best for Delta.
Last edited by Bucking Bar; 01-10-2008 at 06:14 PM.
01-10-2008, 06:18 PM
#10
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Posts: 1,887
Originally Posted by Bucking Bar
Short Bus - hope you are correct. The description in the Wall Street Journal article today was almost the opposite of the dynamics that were explained to us internally. The way I understand it, the board wants a deal and DL Management is trying to reach a conclusion as to whether a deal makes any sense and if it does, what works best for Delta.
I'm surprised at those on the board who think it shows a "bad attitude" to develop a contingency plan should a NWA / DL merger take place. This kind of merger has a million possible permutations and no one is going to be too concerned about how it effects new hires.
A plan B certainly results in a lot less drama than a furlough, or displacement, does. Seems better to be in control of one's destiny.
I'm surprised at those on the board who think it shows a "bad attitude" to develop a contingency plan should a NWA / DL merger take place. This kind of merger has a million possible permutations and no one is going to be too concerned about how it effects new hires.
A plan B certainly results in a lot less drama than a furlough, or displacement, does. Seems better to be in control of one's destiny.
Anyway, back to the issue. IMO, I believe any new hire at NWA NOW would flush down to the Compass/Mesaba level. -9 flying would reduce, as the MD DAL would take over. So if you're at DAL, and through class already, you are good. I don't see how the merge would affect you. Even if it does, can you go back to the initial offers, hold you DAL/NWA number, and go back later if it looks good.?
I understand your stress, and I am not even at one of those (yet).
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