Delta and TPG look To put bid on AMR Corp
 

Delta, TPG Assessing Bids for American Airlines Parent
By GINA CHON, ANUPREETA DAS and MIKE SPECTOR

Delta Air Lines Inc. and private equity firm TPG Capital are separately assessing possible bids for American Airlines parent AMR Corp., with hopes that AMR's troubles presents another opportunity for airline consolidation, people familiar with the matter said.

AMR filed for bankruptcy court protection in late November and is in the midst of restructuring its debt and cutting labor costs after it. Any bid for AMR likely would come several months from now. AMR could use the bankruptcy process to shed a trove of obligations that a buyer might be hesitant to assume.

TPG Capital prefers to work with a strategic partner for a possible American Airlines investment, some of the people said. TPG, which has expertise in the airline industry, has approached AMR about its interest, they said.

Delta has hired Blackstone Group as its financial adviser to assess a potential AMR bid, people familiar with the matter said. Blackstone helped Delta restructure in its 2005 bankruptcy.

After its merger with Northwest Airlines in 2008, Delta became the world's largest carrier, meaning a deal with American would draw antitrust scrutiny. American is the nation's third-largest airline by traffic.

Delta has conducted an antitrust analysis on a possible tie-up with AMR and concluded that with some concessions, such a deal has a good chance of getting approval from regulators.

In a letter to employees in December, AMR's new chief executive, Tom Horton, hinted at speculation AMR might be the target of a takeover while in court protection: "And as we've seen before in this industry, there may be opportunists who wish to acquire our company," he said.

It's not certain that a deal will materialize. AMR has stressed it's focused on reorganizing and remaining independent. Also, it's not unusual for potential suitors to circle around a company in bankruptcy proceedings.

AMR is currently working on a business plan that it could brief creditors on sometime in the next three months, said a person familiar with the matter.

AMR and its various unions are also preparing for contentious labor talks that could take months to resolve.

TPG made its first investment in the airline industry in 1993 with Continental Airlines, which it helped turn around in the 1990s. TPG partner David Bonderman was chairman of Continental for a time. TPG was also a part of a consortium that tried to acquire Qantas Airways Ltd. but it didn't obtain the necessary shareholder approval for the deal in 2007.

TPG invested in America West International, which U.S. Airways Group Inc. acquired in 2005. TPG managing partner Richard Schifter was on the board of America West and was on the U.S. Airways board from 2005 to 2006.

TPG has past ties with American Airlines. In 2009, the private equity firm teamed up with AMR to possibly invest in Japan Airlines Corp. but the deal never came to fruition.

And people thought that I was crazy. It just makes too much sense.

Just a preemptive move to shake the waters.

So lets play like this actually happned. What would Delta have to give up to get approval from the DOJ? The only two markets I see a large DOJ issue with is JFK and LAX. Maybe MIA/ATL, but DAL could gain the SA stuff we need, get DFW back to create the 6 mega-hub strategy (NYC, ATL, DFW, DTW, SEA, LAX) and then cut a TON of domestic flying out of the system. Wouldn't be a good merger for anyone junior.

Exactly but they also are one of the few that have the cash to do something. They do not want all of it, they just want a few items......

Huge retirement numbers eventually. Throw 5 year fences out there, and there would be huge numbers gone after those 5 years. USair would probably go after the Ohare stuff and LAX and JFK bases. Fun to think about, and that might be all that happens.

If DFW is part of the deal I believe you are correct. SLC is gone, CVG is gone and MSP is gone. I said as much a few months ago.

It is not gloating it is trying to strategically plan on what the corporate titans are going to do with our careers and our airlines.

i think itd be very bad for the regionals, Eagle to be exact. The regional domestic stuff would be the biggest hit as the shift to bigger domestic planes over RJ's moves forward. we'll see

What about Ohare?

If it is an asset sale. The AMR assets, and name are bought. AMR holdings survives by itself and Eagle and as a result is dissolved.

As for ORD, that would go to LCC or UCAL.

Sounds like some people are reading this different than I am, possibly two different bids proposals one from TPG and one from Delta?

This is probably where the TPG/US Airways comes in with Delta being the spoiler.

SLC could still be our "mountain resort" hub to compete with DEN. Would probably lose the ER stuff (which I'm surprised hasn't already happned), but we do have alot of traffic that makes more sense to connect in SLC than it does in SEA or LAX.

ORD can generate more revenue than a CONSOLIDATED DTW, MSP, and CVG combined.

What would happen to oneWorld? That would be a very large game changer.

BA, JAL, CX, Quanta all will want a bed mate and Skyteam is the sexiest woman in the room.

Any deal must be good for the DAL pilots. It must produce growth for our pilots on the list. Period. There are many reps that feel this way.

In this type of economy, I doubt antitrust rules will be a huge hurdle for Delta to get over. Now's the time to move.

Maybe, maybe not. Good O and D but you compete with UCAL. Better traffic flow in DTW, but less O and D. MSP survives by its corporate contracts.

Not only better flow in DTW but I believe the statistic is 30,000,000 people within a 4 hour drive.

ORD obviously has some serious meltdowns a few times a year, too.

like today

I agree and DTW is a powerhouse in the making. DAL realized this as well.

There are assets of AMR that DAL would gladly gobble up. Parker will have to move now, and then they can decide how to spit assets. If this is a game of chicken, we can always drive up the price, hurt LCC, they can sell PHX to LUV, they get DFW and we go and buy ALK. Only issue is DAL really needs MIA and a DFW location for a hub. They also need a terminal in JFK, and I suspect that after B6 and LCC get what they want out of the AMR mess(their JFK terminals) we get the B6 terminal for our domestic birds.

Heck throw in an aircraft order too. It really is all on the table.

OK...so if it happens, let's go ahead and perform the inevitable speculation and bantering about seniority.

Let me go on the record and suggest a staple-job for American, ALA what they did to TWA. They are bankrupt, right? So was TWA - see, it works perfect. I'm kidding. ;) In reality, I would assume a relative seniority type of arrangement would be the likely outcome (via binding arbitration after we all beat each other up) and the end decision would be something like the DAL-NWA integration.

So...is there an American Pilot who can post up the number of pilots and ages of the AMR pilot group?

This is current Age and number of pilots on the Delta Seniority list as of October 16, 2011:

Age / Number

26 3
27 2
28 11
29 19
30 36
31 51
32 56
33 84
34 92
35 105
36 104
37 120
38 135
39 166
40 185
41 231
42 331
43 390
44 492
45 512
46 529
47 514
48 508
49 624
50 721
51 819
52 828
53 877
54 814
55 672
56 552
57 480
58 377
59 319
60 238
61 160
62 112
63 22
64 9

Why would we want the B6 terminal, unless that is where we want to put the RJs. Can't handle any widebodies, (not even sure if you could get a winglet 757 in there.) No customs, so now you are moving people around the airport in buses between 4 and 6.

Because farmer Joe driving 4 hours once a year to fly to LAS or MCO makes a ton of money for Delta. BTW... 30 million people is more than the population of MI, OH, IN combined. Maybe there a lot of people in Canada I don't know about!

I would rather have the 9 million that live with in 1:30 of ORD, that's the population of the entire state of MI!

I guess a lot depends on if it's an outright acquisition of the whole outfit, or a partial acquisition of assets, if those assets rise to fragmentation thresholds, if AMR would be in Ch7, and on and on.

Frankly I hope it's just assets. No ill will towards any AMR pilots, but I doubt and whole airline deal would go through without having to shed assets, and the assets we likely want ORD-DFW would likely be fenced AMR bases and the shedding would come out of the DAL side of the house with possible massive DAL furloughs :mad:

There are a lot of farmer Joe's with a six figure pension retired from auto jobs flying on the routes you mention.

Although, all of the seats from DTW to LAS and MCO combined are less than the amount of seats to Asia and Europe.

As I typed "I believe the statistic is..." for a reason, the actual population number might be something like 20,000,000 in a 3 hour drive. Whatever it is, it's a lot, and it's not sharing a delay-prone facility with two massive competitors and an LCC seven miles away with options to anywhere in the USA.

All I'm saying is, with DTW being nearly a monopoly, it's worth keeping. DTW is an outstation for all other carriers flying in except for Spirit, but SWA at MDW is a lot larger than the Spirit operation at DTW. And United at ORD.

WOW, now US Airways is looking into AMR. Just saw it on the feed on CNBC Closing Bell

LOL, that's actually pretty funny!

I'll put $100 that DAL doesn't make any transaction to purchase AMR with exception of maybe a few routes or slots.

Maybe, but all the media buzz about it makes it sound like a complete buyout.

Its a leak, and DAL could but the whole deal, but they would sell assets. They would be forced to. I am sure they much prefer assets.

Depends, they are in CH11, expectations are different. Speculation at best right now. If they go ahead with a transaction, the details are very important.

ACl,

Not to pick on you but the track record of Delta's senior management team and DALPA with respect to the DAL-NWA merger hasn't produced growth for our pilots. (It's been a boon for the likes of the (too numerous to mention) DCI carriers, along with AF/KLM, ALK, etc.)

The major benefit to an acquisition of AMR would be industry consolidation and the removal of seats from the market. That same removal means fewer pilot jobs. If DAL-NWA resulted in fewer mainline pilot jobs (it has) I don't see a merger with AMR resulting in synergistic pilot job growth.

Please tell me how I'm wrong...

AMR has a similar 50% retirement point as DL. I would imagine it would be steeper after that point since no one has been hired in 10 years.

This is absolutely hilarious !

Some of you yahoo's already got AA sliced and diced and are already calculating your next bids and advancement schedules.

God, I love airline pilots. Complete idiots, but a blast to watch and listen too.

With half the chumps in the epaulette clown suits falling for it hook, line and sinker.

Eagle you sound scared, backed into a corner so to speak. Need a hug?


J/K :)

Not sure where you got that. You'd have to be living under a rock not to see that AMR is in play, from multipile angles and numerous scenarios. Most of the DL speculation centers around how many of our own will have to eat a furlough over this, regardless of what happens to AA or AE. Also, if you've read any of the posts, you'd see plenty of talk about the potential slicing and dicing of the DL network is a top concern.

One thing is for certain: if there is an AA fragmentation it won't be because of Delta. It will be happening anyway and DL may or may not play a part in it. Odds are that other airlines will as well, regardless of how much AA survives in tact and/or fully merges.

Also, AE will be shrunk dramatically unless AA survives as a stand alone with very little asset sales...AND...if the AA pilots gut their own scope. But if they are willing to do that to the extent necessary to preserve AE (replacing 50 seaters with 100/100+seaters) they would be just as willing to bargain away other portions of their scope to facilitate a more favorable fragmentation even if that ends up happening.

Other than maybe a very few, very senior, pilots living in ORD, MIA and DFW, no one at Delta is salivating over this because for every scenario that would cause positive movement for the DL list, there is one that causes significant stagnation and several that will cause massive career changing furloughs.

Other than running up the price for a competitor in a bidding war or getting a very few assets here or there in a full (unlikely) or partial (more likely) or very partial (most likely) fragmentation, a full on merger with AA will be absolutely horriffic for DL pilots.

This breaking news is a great diversion from the underboob scandal that has plagued this thread for the last 3 days, but you say this with such confidence, as if this is a done deal. We read the article for the first time within the last 4 hours - how do you know it must produce growth for our pilots on the list. Period. ?

I've heard about good deals for us time and time again, but at the end of the day, I'm not any better off (financially) than I was 10 years ago. I'm not any better off (seniority wise) than I was 5 years ago. In fact, I'm worse off.

Many reps feel this way? I hope you're correct. I really hope that all of them feel this way.

And I've already figured out that I would be senior to you! Ratio via category and class would put a 2007 Delta hire right up there with the early 90 hires at AA!! :)

FWIW, I really think this would be a horrible deal for every pilot involved. I'm almost sure I would be on the street and the massive retirements we are looking at at both airlines would just offset the reduction in flying resulting in more stagnation for everyone. I'm hoping AA pulls out of this as a stand alone carrier and we all move on, not looking that way at this point however.