Past V1

I should have gotten into the plane painting business...with all the new mergers getting ready to occur...could have racked up a few nickels to pay off my debt.

Southerncowboyz

As I forestated, these are different times. I just want to see how this is going to play out and what other unholy unions it might spawn ...

j

Jetjok

This should be an interesting time at both airlines. I'm sure the Delta guys are starting to sweat. I would be if I were them. I remember when US Air bought Piedmont. What a shame, as Piedmont was a fantastic airline. Hopefully it'll not happen the same way this time. Good luck to both pilot groups. If it does happen, since both are ALPA carriers, and usually there's a merger provision in ALPA's contracts, it should be a relatively easy (ha) merger of the two seniority lists. Again, good luck guys.

MaydayMark

Years ago when PanAm was in bankruptcy, they proposed to buy NWA. The combined airlines had only 8 overlapping routes. PanAm was the largest carrier across the Atlantic and Carribean. NWA was huge in the Pacific. Everybody laughed and we all know it didn't happened. What I found most interesting at the time was the fact that PanAm (in bankruptcy!) was required to pay millions of $$ just for the commitment of funding from the big money guys. How can a bankrupt airline (PanAM then, USAirways now) possibly justify such a huge expense for just the promise of funding????

Velocipede

I believe you are correct, grasshopper.

FlyingHigh

Originally Posted by vagabond
....UPSFO, you have a delightful sense of humor. I like you!

Yes! I could not agree more! Many of us on this forum enjoy and appreciate UPSFO4LIFE a great deal! In fact, he should email me right away at [email protected]. Seriously, I would like to extend a personal "thank you" and a special invitation to UPSFO4LIFE. Please email me ASAP! As long as your first name does not start with the letter "J," you've got yourself an interesting new friend here. How about shooting me an email, dude?

SKYKN6

Has the next round of "Mergermania" begun? What other deals are lurking out there? Who will be left without a partner when the music stops? Soooo many questions. Breaking news when it happens at APC forums!

Southerncowboyz

What's wrong the letter J?

Roll Inverted and Pull

I don`t wish this merger on anyone. During my career at Delta I experienced three mergers (of sorts)...With Northeast(not a merger, but an aquisition), with Western (that`s how we got Grinstein...woopieee!)(Boy could they whine), and with the remains of Pan Am(lawsuits galore!). Back in the mid 50`s Delta merged with Chicago and Southern, I missed that one, but the "old guys" were still *****ing about that one when I hired on in the mid 60`s.I hope this one doesn`t "fly", but we are living in interesting times....and what about Comair?....

Ottopilot

I copied and pasted this:

Why would anybody want to buy a bankrupt airline? Well, there are lots of good reasons, as USAirways CEO Doug Parker is well aware. Parker used to run America West Airlines until it merged with USAirways, which was in bankruptcy at the time. The new USAirways has since become one of the most profitable in the industry.

Now Parker wants to work the same magic with Delta Air Lines, which has been in bankruptcy since 2005. The $8 billion cash-and-stock bid would create one of the world's biggest carriers, with 350 destinations. The merged route structure would pair USAirways' strengths in the Northeast and Southwest with Delta's transcontinental and international routes, a complementary outcome that regulators would probably approve. And there's big money behind the deal: Citigroup has offered to provide $7.2 billion in financing.

Then there is bankruptcy, which provides advantages that wouldn't exist in a conventional deal. In a letter to Delta CEO Gerald Grinstein, Parker repeatedly referred to lessons learned from the U.S. Airways-America West deal, which was set in motion while Airways was deep in bankruptcy and finalized the day it came out. Parker stressed the need to exploit bankruptcy provisions: "Unless we act quickly to pursue a combination through the actions that can be taken during Delta's bankruptcy process, our respective stakeholders will not be able to realize what we believe are substantial economic benefits from such a combination."

Here are some economic benefits Parker is talking about:

Bankruptcy makes it easier to rejigger company assets. Parker says a USAirways-Delta hookup could result in $935 million in annual savings through "network rationalization synergies." That would mean cutting back on unprofitable routes and repositioning aircraft to make the systemwide fleet as efficient as possible. Solvent carriers have a hard time killing routes or returning unneeded jets to lessors. But bankruptcy provides legal cover for renegotiating contracts and other commitments. The combined airline could maximize use of the newest, most efficient jets in the overall fleet, for instance, and get rid of older, gas-guzzling planes or those that are the wrong size. Parker pointed out that analysis prior to the America West merger identified $250 million in possible network synergies. In 2006, he says, actual savings have been closer to $425 million.

It's also easier to combine back-office operations. Parker sees an additional $710 million in annual savings from consolidating information systems, airport and maintenance facilities, and vendor networks. Again, bankruptcy makes it easier to renegotiate vendor and supplier contracts.

Creditors stand to gain. Parker says his offer "fully values Delta" and would offer the airline's creditors a better deal than they would get if the carrier emerged from bankruptcy on its own. Unless Grinstein can come up with a better offer for creditors, they may insist on a deal.

There's one small problem with the deal: So far, Grinstein and some of his Delta supporters aren't interested. Until now, Grinstein has spurned merger talks with USAirways, insisting that the airline's own analysis shows it will be stronger coming out of bankruptcy as a stand-alone airline. Now he needs to make a very public and compelling case for why that is so.

If the deal does happen, more may follow. Even after years of downsizing, many analysts still believe the big network carriers have too much capacity, a major barrier to sustained airline-industry profitability. And with several airlines beginning to recover their health, investors may be more willing to finance deals. United Airlines CEO Glenn Tilton has been particularly vocal about the need for his airline to expand its footprint and has hired Goldman Sachs to explore merger or acquisition possibilities. Other airlines have less cash but might be forced to scramble for partners if the USAirways offer sets off a consolidation wave.