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USAir offers to buy Delta?

Old 11-15-2006, 02:47 AM
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Default USAir offers to buy Delta?

Just saw this on CNN.

"News Alert>> US Airways makes offer to buy Delta Air Lines for $8 billion in cash and stock once Delta emerges from bankruptcy."

That's all the information that was posted. Anyone?
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Old 11-15-2006, 02:51 AM
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From Bloomberg.com:

US Airways Offers $8 Billion in Cash and Shares for Delta Air

By Brendan Walsh

Nov. 15 (Bloomberg) -- US Airways Group Inc. said today it has proposed merging with Delta Air Lines Inc., which is currently operating under bankruptcy protection.

Delta's creditors would receive $4 billion in cash and 78.5 million shares of US Airways, which would be worth about $4 billion based on the stock's closing price yesterday, US Airways said in a statement distributed by PR Newswire.

To contact the reporter on this story: Brendan Walsh in New York at [email protected]
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Old 11-15-2006, 04:04 AM
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There are a lot of "ifs" and "maybes" until this is a done deal. I hope this does't spark a wave of mergers. This will lead to less pilot jobs at the majors. USA+DAL and CAL+UAL and NWA+AAL = lots of furloughs. I'm a 2005 hire, so I'll be gone.
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Old 11-15-2006, 04:42 AM
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It also means a lot better and more secure profession with better pay and QOL for you pax guys.
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Old 11-15-2006, 04:44 AM
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The news in ATL is reporting that Delta has said they're not interested in the offer and US Air is offering $1.25 on the dollar for Delta stock. Hostile takeover?
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Old 11-15-2006, 05:12 AM
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WOuldn't it be a good thing? I remember reading where delta was tryingt o get more atlantic routes once. If USA took over wouldn't they basically keep the same routes but restructure. Seems like it would be better because of the larger pilot base unions ect would be more powerful. One less companies to worry about during a strike taking advantage of the pilots again.
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Old 11-15-2006, 05:23 AM
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Originally Posted by John Pennekamp View Post
The news in ATL is reporting that Delta has said they're not interested in the offer and US Air is offering $1.25 on the dollar for Delta stock. Hostile takeover?
Grimstein repeatedly stated no mergers. He says Delta will emerge as a stand-alone airline.
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Old 11-15-2006, 05:26 AM
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Originally Posted by Southerncowboyz View Post
Grimstein repeatedly stated no mergers. He says Delta will emerge as a stand-alone airline.
He can say whatever he wants, but if the price is right, it'll be a done deal.
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Old 11-15-2006, 05:27 AM
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I had heard today on FOX News that a hostile takeover of DAL was possible by US Airways. Now, given I heard this on the media would this be a possible or do you think its typical media speculation.
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Old 11-15-2006, 05:33 AM
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Default Ahh, found out where the hostile takeover came from.

U.S. Airways makes $8 billion bid for Delta
Merger would create top trans-Atlantic carrier; Delta hasn't yet agreed
PrintE-mailDisable live quotesRSSDigg itDel.icio.usRelated Blog Posts & ArticlesBy Aude Lagorce, MarketWatch
Last Update: 8:07 AM ET Nov 15, 2006



LONDON (MarketWatch) -- U.S. Airways Group on Wednesday said it has made an $8 billion cash-and-stock offer for bankrupt Delta Air Lines in a move that would create the No. 1 trans-Atlantic carrier, and could spark further industry consolidation.
Under the proposal, which would take effect upon Delta's (DALRQ : Delta Air Lines, Inc.
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9:04am 11/15/2006

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DALRQ1.47, +0.05, +3.5%) emergence from bankruptcy, Delta creditors would receive $4 billion in cash and 78.5 million shares of U.S. Airways' stock, with an aggregate value of approximately $4 billion.
The offer represents a 25% premium to the trading price of Delta's pre-petition unsecured claims as of Tuesday. U.S. Airways (LCC : US Airways Group Inc.
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Last: 50.93-0.60-1.16%

8:13am 11/15/2006

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LCC50.93, -0.60, -1.2%) shares closed down 1.2% at $50.93 on Tuesday.
"It may be the first signs of the regeneration of the U.S. airline industry," said Doug McVitie of Arran Aerospace, based in France. "It will also have a knock-on effect on the likes of JetBlue and Southwest, and trigger some more consolidation."
U.S. Airways CEO Doug Parker said in a letter to Delta chief Gerald Grinstein that the airline decided to launch a hostile bid after Grinstein declined a meeting. A copy of that letter was released along with news of the bid. "...the benefits of a merger of U.S. Airways and Delta are so compelling to both of our companies' stakeholders, we believe it is important to inform them about our proposal," Parker said in the letter.
Delta officials weren't immediately available for comment.
Under the deal, which U.S. Airways said would create at least $1.65 billion in annual synergies, the two carriers would form a new airline operating under Delta's name.
The "New" Delta would be the No. 1 airline across the Atlantic and the second-largest airline to the Caribbean, said U.S. Airways. It would fly to more than 350 destinations across five continents.
"In the U.S., the combination would create a leading competitor in the Eastern U.S. and an enhanced position in the Western U.S," said U.S. Airways (LCC : US Airways Group Inc.
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LCC50.93, -0.60, -1.2%) .
Competitors would include low-cost carriers such as JetBlue Airways (JBLU : jetblue awys corp com
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JBLU14.09, +0.17, +1.2%) and Southwest Airlines Co. (LUV : Southwest Airlines Co.
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8:15am 11/15/2006

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LUV15.24, -0.21, -1.4%) and traditional carriers such as AMR Corp.'s (AMR : AMR Corporation
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4:15am 11/15/2006

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AMR30.68, +0.10, +0.3%) American Airlines.
U.S. Airways expects $1.65 billion in annual synergies to be phased in over two years. That total includes $935 million in network synergies, which would come from the optimization of the airlines' networks and result in a 10% reduction in capacity.
Deal could face turbulence
One aviation expert said the merger could present some problems.
"It's a very tentative proposal," said Keith McMullan of London-based consultancy Aviation Economics.
"There are some complementarities in the networks, but unless some significant cost-cutting takes place I don't think the merger would have much chance of success. Delta still has a lot of union costs and legacy issues," McMullan added.
Another U.K. aviation consultant, Peter Hearne of Aeroex, questioned the financial sturdiness of a potential deal. Hearne said he believes Delta is the more mature and the better-managed of the two carriers.
"I'm surprised they [U.S. Airways] got the money," Hearne said. "Their financials have been unsteady over the years. They have also overextended themselves in the past and then had to cut back."
Consumers said to benefit
U.S. Airways emphasized that the deal would likely result in lower prices for travelers.
"Consumers will have the advantages of a larger, full-service airline with the cost structure of a low-fare carrier, and the communities we serve, as well as those Delta serves, will have access to a wider range of network options," Parker said.
Since its merger with America West, U.S. Airways said it has lowered fares in nearly 350 markets, with discounts ranging from 10% to 75%.
The downturn in airfares and high fuel prices sent Delta into bankruptcy in September 2005.
Aude Lagorce is a reporter for MarketWatch in London.
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