Did OM's respite cause current Board Takeover
03-13-2016, 01:09 PM
#32
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There are several ways to fight greenmailers, and these guys don't have enough money to successfully greenmail United. With the latest disclosure of UAL stock holdings, I'm guessing that Altimeter Capital is approaching 40% of its assets in United stock. That's very risky on Gerstner's part.
IF UAL's board wanted to get nasty - and blow up Altimeter Holdings - all they need to do is cancel planned buybacks and do a new stock issuance, effectively watering down the value of the stock. If they do it in a 'normal' poison pill strategy, the company would allow all existing shareholders except Altimeter and PAR to buy shares at a discount. For instance, United could offer all current shareholders the option to buy one new share for each existing share that they have at a price of, say, $30/share. This would drive down the value of United stock and would likely cause Altimeter Capital to close its doors.
And there are plenty of other defensive strategies that can be used, although I suspect that the board won't need to resort to such measures.
I read an interesting article last night that said that Altimeter Capital first got upset with UAL's BOD when John Rainey, the former CFO, left United for Paypal in August. My personal opinion is that having Rainey leave was a good thing - he ticked off a LOT of loyal United customers when he called them 'overentitled elites'. That was total jacka$$ery on Rainey's part and he should have been fired for that comment. United Angers Frequent Fliers By Calling Some `Over-Entitled? - The Middle Seat Terminal - WSJ
There are a ton of moving parts here and I don't think you can point to a single event that caused the hedgies to try this. It's a distraction, but when the dust settles, this may end up strengthening United by changing a few BOD members with ones that are better fits.
IF UAL's board wanted to get nasty - and blow up Altimeter Holdings - all they need to do is cancel planned buybacks and do a new stock issuance, effectively watering down the value of the stock. If they do it in a 'normal' poison pill strategy, the company would allow all existing shareholders except Altimeter and PAR to buy shares at a discount. For instance, United could offer all current shareholders the option to buy one new share for each existing share that they have at a price of, say, $30/share. This would drive down the value of United stock and would likely cause Altimeter Capital to close its doors.
And there are plenty of other defensive strategies that can be used, although I suspect that the board won't need to resort to such measures.
I read an interesting article last night that said that Altimeter Capital first got upset with UAL's BOD when John Rainey, the former CFO, left United for Paypal in August. My personal opinion is that having Rainey leave was a good thing - he ticked off a LOT of loyal United customers when he called them 'overentitled elites'. That was total jacka$$ery on Rainey's part and he should have been fired for that comment. United Angers Frequent Fliers By Calling Some `Over-Entitled? - The Middle Seat Terminal - WSJ
There are a ton of moving parts here and I don't think you can point to a single event that caused the hedgies to try this. It's a distraction, but when the dust settles, this may end up strengthening United by changing a few BOD members with ones that are better fits.
Need to go back and look but I think it was Lorenzo that put TWA in play. Ichan looked like the savior but ended making the TWA employees pay for his investment and enventual demise.
03-13-2016, 01:14 PM
#33
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You know it's not about OM being better than FLIBS. It's about OM, his condition and weak board that's prompted takeover/greenmail attempt.
As a LUAL guy, I have less respect for FLIBS than GT and I have no respect for GT.
As a LUAL guy, I have less respect for FLIBS than GT and I have no respect for GT.
03-13-2016, 02:20 PM
#34
Stuck Mic
Joined APC: Dec 2013
Posts: 1,059
But when there is a large amount of the profits going to the employees, the investors see that as a cut to their bottom line. And now they conceived the idea to take over the board and reverse OMs plans. I really hope they don't succeed.
03-13-2016, 02:49 PM
#35
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Hope you're right but once you put a company in play others start to circle. How much damage will enventually be done trying to protect the status quo. Airlines have been making money inspite of themselves and have been known to be cash cows in good times. The only question is will somebody else show up and up the ante.
Need to go back and look but I think it was Lorenzo that put TWA in play. Ichan looked like the savior but ended making the TWA employees pay for his investment and enventual demise.
Need to go back and look but I think it was Lorenzo that put TWA in play. Ichan looked like the savior but ended making the TWA employees pay for his investment and enventual demise.
At 5%, additional requirements kick in and one has to file additional paperwork with the SEC.
Your point on others joining Altimeter and PAR is a concern, but prokxy battles cost money and I'm not sure that other investors are interested in flushing money down the toilet in the hope that they can extract a payday from United.
I think you're correct about Lorenzo/Icahn/TWA, but IIRC, TWA was in poor financial shape at the time. United's a big cash cow right now; fortunately, they've been pouring money into equipment and stock buybacks.
It's like Firsttimeflyer said; this is all about the $$$. I dug through and posted both hedge funds' quarterly filings to show what they've been up to over the last five years with UAL.
03-13-2016, 02:53 PM
#36
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You're naive to think this is about anything other than cold hard $$$. It doesn't matter if OM had a heart attack or not, he has said from the beginning he wants to run the airline with happy employees which will give the best performance and the best customer service which will bring customers back and bring in new customers, all leading to more $$.
But when there is a large amount of the profits going to the employees, the investors see that as a cut to their bottom line. And now they conceived the idea to take over the board and reverse OMs plans. I really hope they don't succeed.
But when there is a large amount of the profits going to the employees, the investors see that as a cut to their bottom line. And now they conceived the idea to take over the board and reverse OMs plans. I really hope they don't succeed.
03-13-2016, 03:30 PM
#37
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The company's not in play. It's one guy in a small hedge fund that drug his old employer into this. In fact, I read somewhere that PAR will not buy 5% of UAL's stock. IIRC, they stopped buying at ~4.00%.
At 5%, additional requirements kick in and one has to file additional paperwork with the SEC.
Your point on others joining Altimeter and PAR is a concern, but prokxy battles cost money and I'm not sure that other investors are interested in flushing money down the toilet in the hope that they can extract a payday from United.
I think you're correct about Lorenzo/Icahn/TWA, but IIRC, TWA was in poor financial shape at the time. United's a big cash cow right now; fortunately, they've been pouring money into equipment and stock buybacks.
It's like Firsttimeflyer said; this is all about the $$$. I dug through and posted both hedge funds' quarterly filings to show what they've been up to over the last five years with UAL.
At 5%, additional requirements kick in and one has to file additional paperwork with the SEC.
Your point on others joining Altimeter and PAR is a concern, but prokxy battles cost money and I'm not sure that other investors are interested in flushing money down the toilet in the hope that they can extract a payday from United.
I think you're correct about Lorenzo/Icahn/TWA, but IIRC, TWA was in poor financial shape at the time. United's a big cash cow right now; fortunately, they've been pouring money into equipment and stock buybacks.
It's like Firsttimeflyer said; this is all about the $$$. I dug through and posted both hedge funds' quarterly filings to show what they've been up to over the last five years with UAL.
03-13-2016, 04:29 PM
#39
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Joined APC: Nov 2010
Posts: 3,071
I went back and watched David Faber's interview of GB.
Bethune: I'm helping the interest of the shareholders
From GB's "I don't know" after five seconds to "I need time to digest this" we all agree this smells. Par and Altimeter's argument fails if Munoz proves successful. Their time to act is now. To that extent, is this about perceived weakness or the fact that Munoz and Meyer signaled their desire to lead the company in a direction against the wishes of Par and Altimeter? Did the events of the last six months crack the door for shareholder activism?
Bethune: I'm helping the interest of the shareholders
From GB's "I don't know" after five seconds to "I need time to digest this" we all agree this smells. Par and Altimeter's argument fails if Munoz proves successful. Their time to act is now. To that extent, is this about perceived weakness or the fact that Munoz and Meyer signaled their desire to lead the company in a direction against the wishes of Par and Altimeter? Did the events of the last six months crack the door for shareholder activism?
03-13-2016, 07:02 PM
#40
Stuck Mic
Joined APC: Dec 2013
Posts: 1,059
Everything I've written says it's about the money but the big question is why United and not Delta or American and why now. I know you need a hero or someone you can point to and call him the savior but you need to be realistic. OM sat on the board rubber stamping everything from GB to JS which has not necessarily been pro-employee. In the scheme he's only given lip service and nothing of substance. If anything, I'd bet that neither OM or the board considered the outsider move and it was their responsibility.
It could be as simple as Par and Altimeter want more than what the shareholders are currently getting. Maybe we have the greediest investors? It would appear we have the most generous management given our current pay rates (even though we all know we deserve more, have lost more, etc)
I don't know if Altimeter and Par have stock in DAL or AA but it's possible maybe those airlines' investers are happy with the $$ they are receiving and happy to see DAL not get a contract and AA to see no profit sharing and lesser work rules in their contract.
But to go on and on about OMs heart attack like the man wanted it to happen or faked it is frivolous drivel. And do you have some sort of inside knowledge the rest of us are missing on how he voted while on the board? Even SCOTUS has dissenters, it might possibly be he was one of them, the difference is we don't get to see the outcomes of the votes afaik. He is our CEO, like it or not. You can work with him in what so far seems like good goals for all of us or you can keep your current mindset and be a burden.
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