US lancia la proposta per la fusione con DL
- Autore Discussione always_airbus
- Data d'inizio
Citazione:Messaggio inserito da always_airbus
Diventerebbe, di fatto, la compagnia più GIGANTESCA del mondo....[]
Mamma mia...altro che AF_KLM[:22][:136][:136][:22]
US Airways è un vettore nato dalla fusione tra US Airways e American West.
In passato, prima dell'11 Settembre il progetto di fusione dell'allora US Air con United fu bocciato dall'antitrust Americano.
In passato, prima dell'11 Settembre il progetto di fusione dell'allora US Air con United fu bocciato dall'antitrust Americano.
US Airways è più piccola di Delta ma insieme penso diventerebbero la 1a compagnia mondiale (attualmente DL è la terza dopo AA e UA)
A mio avviso sarebbe sbagliato permettere questa fusione, per alcuni semplici motivi:
- hubs di JFK e PHL troppo vicini;
- flotte completamente diverse;
- entrambe volano sugli stessi scali in Europa;
Insomma, si andrebbero a pestare un po' i piedi da sole!
- hubs di JFK e PHL troppo vicini;
- flotte completamente diverse;
- entrambe volano sugli stessi scali in Europa;
Insomma, si andrebbero a pestare un po' i piedi da sole!
A livello legale però le motivazioni che hai portato non hanno valore, anche se come osservazioni, soprattutto il punto 1 e 3, sono più che condivisibili. Per il punto 2 invece credo che le flotte siano così vaste da non creare alcun tipo di problema di gestione.
Si beh queste tre motivazioni non impedirebbero l'eventuale fusione... Staremo a vedere!
PS: non ditelo all'ADUSBEF [:303]
PS: non ditelo all'ADUSBEF [:303]
Flotte attuali:
DL (Mainline, sono escluse le divisioni regionali di proprietà (Comair) e in franchising):
71 Boeing 737-800
121 Boeing 757-200
4 Boeing 767-200
82 Boeing 767-300
21 Boeing 767-400
8 Boeing 777-200
17 McDonnell Douglas MD-82
99 McDonnell Douglas MD-88
16 McDonnell Douglas MD-90
DL (Mainline, sono escluse le divisioni regionali di proprietà (Comair) e in franchising):
71 Boeing 737-800
121 Boeing 757-200
4 Boeing 767-200
82 Boeing 767-300
21 Boeing 767-400
8 Boeing 777-200
17 McDonnell Douglas MD-82
99 McDonnell Douglas MD-88
16 McDonnell Douglas MD-90
US (Mainline, sono escluse le divisioni regionali di proprietà e in franchising):
90 Airbus A319
48 Airbus A320
28 Airbus A321
37 Boeing 737-300
40 Boeing 737-400
9 Airbus A330-300
39 Boeing 757-200
10 Boeing 767-200
90 Airbus A319
48 Airbus A320
28 Airbus A321
37 Boeing 737-300
40 Boeing 737-400
9 Airbus A330-300
39 Boeing 757-200
10 Boeing 767-200
Non c'è bisogno di chiedere conferme sulla verità, ormai la notizia circola su tutte le agenzie di stampa:
By Michael Flaherty and Paritosh Bansal
NEW YORK (Reuters) - US Airways Group Inc. proposed an $8 billion takeover of bankrupt Delta Air Lines Inc. on Wednesday in a bid to streamline costs and capitalize on a sector showing signs of recovery.
The deal, which US Air said would create the No. 1 trans-Atlantic carrier, is the latest move by US Air Chief Executive Doug Parker, who orchestrated the May 2005 takeover of then-bankrupt US Air by financially healthier America West.
Delta, the No. 3 U.S. airline, intends to emerge from bankruptcy as a stand-alone carrier, a spokeswoman said Wednesday.
"Maybe US Airways did a preemptive strike here," Calyon Securities Ray Neidl said. "The big concern is government regulators, if they give the green light. And if they do, it will probably set off a series of potential M&A activity in the industry."
Delta creditors would receive $4 billion in cash and 78.5 million shares of US Air stock with an aggregate value of around $4 billion based on Tuesday's closing stock price.
"This appears to be sort of like a hostile takeover," CreditSights analyst Roger King said. Delta CEO "(Gerald) Grinstein has made it clear that he doesn't want to merge. But US Airways is appealing directly to the creditors."
Industry leaders such as UAL Corp. Chief Executive Glenn Tilton and Parker have been outspoken proponents of consolidation, and both have approached Delta in the past about a merger.
US Air said its proposal represented a 25 percent premium over the current trading price of Delta's prepetition unsecured claims as of November 14, and a 40 percent premium over the average trading price for Delta unsecured claims over the last 30 days.
While Delta stock is considered of little value, creditor claims have monetary value and can be traded by investors.
US Air believes that the combination will generate at least $1.65 billion in annual synergies.
Parker proposed becoming the CEO of a merged airline, with no decision yet on a location for headquarters. The Delta name would be kept, as its name recognition is better than US Airways, Parker said.
"We need to start working with Delta to do due diligence," Parker said in an interview, adding that he has not yet heard from the company. "What we believe will happen is that creditors see the value of this proposal."
US Airways has obtained $7.2 billion in committed financing for the deal from Citigroup.
"The fact that they are willing to accumulate more debt, and they are in the same industry, is a sign that they feel they can generate enough capital to cover the expense of taking it on," said Peter Dunay, investment strategist at Leeb Capital Management.
In terms of route structure, Delta and United would be a better fit than US Air and Delta, CreditSights analyst Roger King said.
"This is the right time but the wrong airline," CreditSights' King said. "I think merger synergies are much better with United."
By Michael Flaherty and Paritosh Bansal
NEW YORK (Reuters) - US Airways Group Inc. proposed an $8 billion takeover of bankrupt Delta Air Lines Inc. on Wednesday in a bid to streamline costs and capitalize on a sector showing signs of recovery.
The deal, which US Air said would create the No. 1 trans-Atlantic carrier, is the latest move by US Air Chief Executive Doug Parker, who orchestrated the May 2005 takeover of then-bankrupt US Air by financially healthier America West.
Delta, the No. 3 U.S. airline, intends to emerge from bankruptcy as a stand-alone carrier, a spokeswoman said Wednesday.
"Maybe US Airways did a preemptive strike here," Calyon Securities Ray Neidl said. "The big concern is government regulators, if they give the green light. And if they do, it will probably set off a series of potential M&A activity in the industry."
Delta creditors would receive $4 billion in cash and 78.5 million shares of US Air stock with an aggregate value of around $4 billion based on Tuesday's closing stock price.
"This appears to be sort of like a hostile takeover," CreditSights analyst Roger King said. Delta CEO "(Gerald) Grinstein has made it clear that he doesn't want to merge. But US Airways is appealing directly to the creditors."
Industry leaders such as UAL Corp. Chief Executive Glenn Tilton and Parker have been outspoken proponents of consolidation, and both have approached Delta in the past about a merger.
US Air said its proposal represented a 25 percent premium over the current trading price of Delta's prepetition unsecured claims as of November 14, and a 40 percent premium over the average trading price for Delta unsecured claims over the last 30 days.
While Delta stock is considered of little value, creditor claims have monetary value and can be traded by investors.
US Air believes that the combination will generate at least $1.65 billion in annual synergies.
Parker proposed becoming the CEO of a merged airline, with no decision yet on a location for headquarters. The Delta name would be kept, as its name recognition is better than US Airways, Parker said.
"We need to start working with Delta to do due diligence," Parker said in an interview, adding that he has not yet heard from the company. "What we believe will happen is that creditors see the value of this proposal."
US Airways has obtained $7.2 billion in committed financing for the deal from Citigroup.
"The fact that they are willing to accumulate more debt, and they are in the same industry, is a sign that they feel they can generate enough capital to cover the expense of taking it on," said Peter Dunay, investment strategist at Leeb Capital Management.
In terms of route structure, Delta and United would be a better fit than US Air and Delta, CreditSights analyst Roger King said.
"This is the right time but the wrong airline," CreditSights' King said. "I think merger synergies are much better with United."
è la seconda volta che sento questa notizia quest'anno. in tutta sincerità non so fino a che punto potranno fondersi... a mio avviso si rimarrebbe in st
Ok-sorry guys but I was busy most of the day and just getting to this.
We received a memo from Gerry this morning (CEO), referring to this proposal. Delta is not considering at this time a possible merge. We have re-organized (as you all know), we are still in bankruptcy, and we are counting on coming out of it by mid2007. Our intention is to operate solo. However, the fact that we are still in court, and the pressure of the stockholders (which are the ones who will be part of that group to make a decision that it's going to make more sense to them, as far as money goes), will have a big say on the final outcome.
The majority of the Delta people, and you have to trust me on this, does not want this to happen. I will be in touch as soon as the information becomes available to me. Sorry for writing in English. a
We received a memo from Gerry this morning (CEO), referring to this proposal. Delta is not considering at this time a possible merge. We have re-organized (as you all know), we are still in bankruptcy, and we are counting on coming out of it by mid2007. Our intention is to operate solo. However, the fact that we are still in court, and the pressure of the stockholders (which are the ones who will be part of that group to make a decision that it's going to make more sense to them, as far as money goes), will have a big say on the final outcome.
The majority of the Delta people, and you have to trust me on this, does not want this to happen. I will be in touch as soon as the information becomes available to me. Sorry for writing in English. a
Per quanto riguarda "la verita'", e' sempre una buona idea chiedere conferma alle persone coinvolte direttamente.
Se avessimo creduto a tutto quello che dice la stampa, l'AZ sarebbe gia'fallita 100 volte.
Big, Bigger, Biggest: US makes blockbuster bid for Delta
Thursday November 16, 2006
US Airways Group continued its one-airline assault on the US airline market structure with an $8 billion bid to merge with Delta Air Lines as part of that carrier's bankruptcy restructuring.
The bid comes as US and America West Airlines continue their own integration into a single airline after America West acquired US Airways Group out of bankruptcy in 2005.
But US will need to overcome opposition from Delta CEO Gerald Grinstein, who rejected the same offer in mid-October when it was proposed in a letter from US Chairman and CEO Doug Parker. In a statement issued yesterday, DL said it favors emerging from Chapter 11 as "a standalone carrier." US also must win the support of unsecured creditors and the bankruptcy court and convince the US. Dept. of Justice that the merger will not hurt competition.
"There are no antitrust issues that can't be resolved," Parker said in a conference call to announce the proposal Wednesday morning. US and DL operate the two East Coast Shuttles between Boston, New York and Washington, but Parker said the merger plan "contemplates selling one of [them]."
US valued its offer at $8 billion in cash and stock and said the merger would generate annual synergies of $1.65 billion. However, Parker emphasized that half the synergies "will be lost" if the merger is delayed until after Delta emerges from Chapter 11 protection. "Bankruptcy gives you a tremendous amount of leverage you don't have when you come out of it," he explained. Citing the experience of the America West-US merger completed last year, he said, "bankruptcy gave us the opportunity to go through and renegotiate every contract."
In particular, the merged carrier, which would retain the Delta name, would cut capacity by 10% and expects to use the reorganization process to achieve much of that. Capacity would come out of both mainline and regional fleets.
Under the proposal, Delta creditors would receive $4 billion in cash and 78.5 million shares of US stock with an aggregate value of $4 billion based on the closing price the day before the proposal. Citigroup has committed to provide $7.2 billion in new financing.
Synergies come from combining the route networks ($935 million) and cost reductions ($710 million). Parker said that in calculating the cost synergies, US assumed it would move "to the highest of the existing labor costs in every group," reducing savings by $90 million. Although the workforce would be reduced, US expects to achieve its goals through attrition and "not furloughs." Parker noted that US has begun hiring in all work groups.
Assuming the merger is consummated, the new Delta will be the largest domestic carrier, with an 18.2% ASM share based on first-half 2006 performance, and the largest across the Atlantic. "This is an extremely exciting opportunity for us, one that will create one of the world's largest airlines," Parker stated.
by Perry Flint
ATWonline
Thursday November 16, 2006
US Airways Group continued its one-airline assault on the US airline market structure with an $8 billion bid to merge with Delta Air Lines as part of that carrier's bankruptcy restructuring.
The bid comes as US and America West Airlines continue their own integration into a single airline after America West acquired US Airways Group out of bankruptcy in 2005.
But US will need to overcome opposition from Delta CEO Gerald Grinstein, who rejected the same offer in mid-October when it was proposed in a letter from US Chairman and CEO Doug Parker. In a statement issued yesterday, DL said it favors emerging from Chapter 11 as "a standalone carrier." US also must win the support of unsecured creditors and the bankruptcy court and convince the US. Dept. of Justice that the merger will not hurt competition.
"There are no antitrust issues that can't be resolved," Parker said in a conference call to announce the proposal Wednesday morning. US and DL operate the two East Coast Shuttles between Boston, New York and Washington, but Parker said the merger plan "contemplates selling one of [them]."
US valued its offer at $8 billion in cash and stock and said the merger would generate annual synergies of $1.65 billion. However, Parker emphasized that half the synergies "will be lost" if the merger is delayed until after Delta emerges from Chapter 11 protection. "Bankruptcy gives you a tremendous amount of leverage you don't have when you come out of it," he explained. Citing the experience of the America West-US merger completed last year, he said, "bankruptcy gave us the opportunity to go through and renegotiate every contract."
In particular, the merged carrier, which would retain the Delta name, would cut capacity by 10% and expects to use the reorganization process to achieve much of that. Capacity would come out of both mainline and regional fleets.
Under the proposal, Delta creditors would receive $4 billion in cash and 78.5 million shares of US stock with an aggregate value of $4 billion based on the closing price the day before the proposal. Citigroup has committed to provide $7.2 billion in new financing.
Synergies come from combining the route networks ($935 million) and cost reductions ($710 million). Parker said that in calculating the cost synergies, US assumed it would move "to the highest of the existing labor costs in every group," reducing savings by $90 million. Although the workforce would be reduced, US expects to achieve its goals through attrition and "not furloughs." Parker noted that US has begun hiring in all work groups.
Assuming the merger is consummated, the new Delta will be the largest domestic carrier, with an 18.2% ASM share based on first-half 2006 performance, and the largest across the Atlantic. "This is an extremely exciting opportunity for us, one that will create one of the world's largest airlines," Parker stated.
by Perry Flint
ATWonline
US takeover of Delta faces big hurdles despite potential value
Friday November 17, 2006
The US airline industry is taking stock of US Airways Group's $8 billion takeover bid for bankrupt Delta Air Lines (ATWOnline, Nov. 16), a deal that would reshape the landscape of the world's largest commercial aviation market but must overcome significant hurdles before coming to fruition.
Delta management, for one, is opposed to the transaction and has vowed to press ahead with filing its own reorganization plan in bankruptcy court, which it has the exclusive right to do until Feb. 15. Ultimately it may come down to competing reorganization plans that will have to be evaluated by Delta's unsecured creditors, according to Merrill Lynch Senior Airline Analyst Michael Linenberg. "You're going to have to win the hearts and minds of the creditors," he said during a conference call yesterday, noting that DL executives must tread carefully to avoid being "accused of looking out for their own interest rather than those of creditors."
The takeover would be a blockbuster no matter how it is valued, but Linenberg asserted that the "true transactional value" actually would be "closer to $18 billion" because US would be taking on nearly $10 billion of Delta's secured debt. That may be difficult for DL, given its Chapter 11 status, to turn down.
Standard & Poor's Ratings Services said in a commentary issued yesterday that Delta "needs the support of its unsecured creditors--the future shareholders--to implement a plan of reorganization, which could place pressure on management to enter into merger negotiations."
Also complicating US's efforts is a likely review by the US Dept. of Justice, which prevented a merger between the former US Airways and United Airlines that was proposed in 2000. "Obviously, this is a big deal so it's most likely not going to get a first-look pass," a DOJ spokesperson told ATWOnline. "Either DOJ or the [Federal Trade Commission] would take on an investigation and take a closer look...We are aware [of the proposal] and we're interested in taking a closer look. We'd be looking at competitive effects and how it would affect consumers." DOJ declined to put a timeline on such an investigation, which would not start until an actual merger agreement was reached and relevant regulatory filings were made by the carriers.
Linenberg pointed out that US airlines have gone through massive changes in the last five years and DOJ's concern that the proposed merger would lead to diminished service yet higher fares "may no longer hold water." One key change is that LCCs now control more than 30% of the domestic market, up from 15%-18% in the late 1990s, and are present in markets that account for 95% of domestic airline revenues. "That keeps the major carriers in check" and prevents significant fare hikes, he said.
For example, yesterday the Dept. of Transportation announced that Southwest Airlines carried more passengers on its network in August than any other US carrier, the first time it or any LCC has finished first in that category. Southwest has been the leading domestic passenger airline since May 2003, according to DOT.
Also in US's favor, analysts said, is the credibility gained from the apparent successful integration of the former US Airways and America West Airlines.
But there clearly is potential opposition from various players, including the US Pension Benefit Guaranty Corp., which is saddled with funding much of Delta's terminated pilot pension plan and likely would seek some kind of accommodation from US.
Nevertheless, analysts and investors are busy examining how the merger would change the US airline business. JP Morgan projects domestic capacity may be "as much as 3% lower," which it believes is a positive for investors since flat capacity has "propelled earnings and equity values in 2006." US has said its plan would slash 10% of the "new Delta's" combined capacity and JP Morgan noted that Delta's 118 MD-80s and 16 MD-90s "are clearly some of the least desirable aircraft from a fuel burn perspective and are likely candidates for removal."
by Aaron Karp
ATWonline
US, DL regional, Shuttle operations up in air
Friday November 17, 2006
US Airways' bid to acquire bankrupt Delta Air Lines raises questions about the future of the regional airlines that have service agreements with the mainline carriers and compete on a number of routes.
As part of the proposal, US said it would reduce overall fleet capacity by 10% but did not say from where the cuts would come. "Who knows what will happen," asked Doug Abbey, an analyst with The Velocity Group. "For Delta Connection carriers it now means there is even a larger pool of potential competitors. It's logical that people like Mesa and Republic would try to leverage that for a larger franchise," he told ATWOnline.
A carrier like Comair, a bankrupt DL subsidiary that has had significant operational problems, could face drastic cuts or even be shut down, Abbey and others have suggested. "The bigger question is what happens to the networks," he said. "It could be a total reapportionment with some 15 different partners."
JP Morgan analysts note that Republic Airways could be at risk because of its heavy investment in flying 50-seat regional jets for Delta. Republic has not had its contract affirmed by the bankruptcy court, according to JPM, leaving it exposed with some 49 small RJs. JPM concluded that the proposed merger "will most likely bode negatively for the regional sector as a whole."
But Abbey disagreed. "The business model for the regional remains intact," he said. "That hasn't changed. Ultimately, the mission they provide is unassailable. The majors can't operate 70-seaters or certainly 50-seaters."
US Airways also acknowledged that the merger likely would require it to divest one of two East Coast Shuttles currently operated by the carriers between Boston, New York and Washington. DL acquired its shuttle in 1991 from Pan Am during that ill-fated carrier's bankruptcy proceedings, while US acquired its shuttle operation from creditors of Donald Trump, who had purchased it from failing Eastern Airlines.
If the two shuttles aren't merged into a single operation, there is speculation that East Coast LCCs JetBlue or AirTran could be suitors. "It's too early to speculate on what assets will be available," JetBlue spokesperson Bryan Baldwin told this website yesterday. "We will just have to wait and see how things go."
by Sandra Arnoult
ATWonline
US Airways, Delta employees have mixed reaction to potential merger
Friday November 17, 2006
US Airways and America West Airlines pilot groups, represented by the Air Line Pilots Assn., conducted informational picketing yesterday in Charlotte and Phoenix, upset that the company is looking to acquire Delta Air Lines even though it "has yet to complete the integration of the pilot groups that is required" by terms of last year's US/AWA merger.
"So far, the company's empty promises have failed to capture all the synergies that just the US Airways/America West merger can provide," US Airways ALPA MEC Chairman Jack Stephan said.
"We recognize US Airways senior management's enthusiasm for a merger with Delta. However, before it can be successful, management must first focus on fulfilling the promises made to their investors, customers and employees," AWA MEC Chairman Kevin Kent added.
US pilots' desire to share in the company's improving financial situation (ATWOnline, Oct. 27) has been a source of recent tension (the picketing was planned before Wednesday's announcement), but it appears to have been exacerbated by the Delta bid. "US Airways has posted remarkable profits for three consecutive quarters due to the efforts of frontline employees such as the pilots, yet they refuse to fully engage in negotiations for a contract that recognizes our contributions," Kent concluded.
ALPA said from Washington that "pilots shouldn't be surprised" by the merger and that the union "will be intensely involved in defending our members' interests as this deal and any others are considered."
US flight attendants, represented by the Assn. of Flight Attendants-CWA, were more reserved, saying only that US "wants to continue the process of merging US Airways and America West labor contracts and operations prior to the potential Delta merger," which would occur "in excess of eight months." The union said its MEC would be briefed by AFA attorneys on the issues that may result from nonunionized Delta cabin staff working without a collective bargaining agreement.
The International Assn. of Machinists and Aerospace Workers, which represents more than 10,000 maintenance and fleet service workers at US, also expressed concern over the timing of the Delta deal, saying, "If US Airways hopes to complete a successful merger with Delta or any other airline they must first conclude the ongoing negotiations with the Machinists Union regarding the integration of America West employees into US Airways." IAM General VP Robert Roach Jr. said US CEO Doug Parker "contacted me and indicated a desire to work with the Machinists Union. We are prepared to work together as long as all affected employees' interests are fully protected."
IAM told The Philadelphia Inquirer that Delta baggage handlers had contacted the union. "One of the biggest issues they had was that they feared being lost in a merger between Delta and a unionized carrier," an IAM spokesperson told the paper.
Delta pilots, the only large unionized (ALPA) work group at the carrier, said, "Merger and acquisition talks are a part of normal business in the airline industry and in particular when bankruptcy scenarios are involved. The Delta MEC has expended considerable effort over the past year to ensure we are prepared for any eventuality and that we can fight to preserve the best interests of the Delta pilots in any potential merger or acquisition scenario."
by Brian Straus
ATWonline
Friday November 17, 2006
The US airline industry is taking stock of US Airways Group's $8 billion takeover bid for bankrupt Delta Air Lines (ATWOnline, Nov. 16), a deal that would reshape the landscape of the world's largest commercial aviation market but must overcome significant hurdles before coming to fruition.
Delta management, for one, is opposed to the transaction and has vowed to press ahead with filing its own reorganization plan in bankruptcy court, which it has the exclusive right to do until Feb. 15. Ultimately it may come down to competing reorganization plans that will have to be evaluated by Delta's unsecured creditors, according to Merrill Lynch Senior Airline Analyst Michael Linenberg. "You're going to have to win the hearts and minds of the creditors," he said during a conference call yesterday, noting that DL executives must tread carefully to avoid being "accused of looking out for their own interest rather than those of creditors."
The takeover would be a blockbuster no matter how it is valued, but Linenberg asserted that the "true transactional value" actually would be "closer to $18 billion" because US would be taking on nearly $10 billion of Delta's secured debt. That may be difficult for DL, given its Chapter 11 status, to turn down.
Standard & Poor's Ratings Services said in a commentary issued yesterday that Delta "needs the support of its unsecured creditors--the future shareholders--to implement a plan of reorganization, which could place pressure on management to enter into merger negotiations."
Also complicating US's efforts is a likely review by the US Dept. of Justice, which prevented a merger between the former US Airways and United Airlines that was proposed in 2000. "Obviously, this is a big deal so it's most likely not going to get a first-look pass," a DOJ spokesperson told ATWOnline. "Either DOJ or the [Federal Trade Commission] would take on an investigation and take a closer look...We are aware [of the proposal] and we're interested in taking a closer look. We'd be looking at competitive effects and how it would affect consumers." DOJ declined to put a timeline on such an investigation, which would not start until an actual merger agreement was reached and relevant regulatory filings were made by the carriers.
Linenberg pointed out that US airlines have gone through massive changes in the last five years and DOJ's concern that the proposed merger would lead to diminished service yet higher fares "may no longer hold water." One key change is that LCCs now control more than 30% of the domestic market, up from 15%-18% in the late 1990s, and are present in markets that account for 95% of domestic airline revenues. "That keeps the major carriers in check" and prevents significant fare hikes, he said.
For example, yesterday the Dept. of Transportation announced that Southwest Airlines carried more passengers on its network in August than any other US carrier, the first time it or any LCC has finished first in that category. Southwest has been the leading domestic passenger airline since May 2003, according to DOT.
Also in US's favor, analysts said, is the credibility gained from the apparent successful integration of the former US Airways and America West Airlines.
But there clearly is potential opposition from various players, including the US Pension Benefit Guaranty Corp., which is saddled with funding much of Delta's terminated pilot pension plan and likely would seek some kind of accommodation from US.
Nevertheless, analysts and investors are busy examining how the merger would change the US airline business. JP Morgan projects domestic capacity may be "as much as 3% lower," which it believes is a positive for investors since flat capacity has "propelled earnings and equity values in 2006." US has said its plan would slash 10% of the "new Delta's" combined capacity and JP Morgan noted that Delta's 118 MD-80s and 16 MD-90s "are clearly some of the least desirable aircraft from a fuel burn perspective and are likely candidates for removal."
by Aaron Karp
ATWonline
US, DL regional, Shuttle operations up in air
Friday November 17, 2006
US Airways' bid to acquire bankrupt Delta Air Lines raises questions about the future of the regional airlines that have service agreements with the mainline carriers and compete on a number of routes.
As part of the proposal, US said it would reduce overall fleet capacity by 10% but did not say from where the cuts would come. "Who knows what will happen," asked Doug Abbey, an analyst with The Velocity Group. "For Delta Connection carriers it now means there is even a larger pool of potential competitors. It's logical that people like Mesa and Republic would try to leverage that for a larger franchise," he told ATWOnline.
A carrier like Comair, a bankrupt DL subsidiary that has had significant operational problems, could face drastic cuts or even be shut down, Abbey and others have suggested. "The bigger question is what happens to the networks," he said. "It could be a total reapportionment with some 15 different partners."
JP Morgan analysts note that Republic Airways could be at risk because of its heavy investment in flying 50-seat regional jets for Delta. Republic has not had its contract affirmed by the bankruptcy court, according to JPM, leaving it exposed with some 49 small RJs. JPM concluded that the proposed merger "will most likely bode negatively for the regional sector as a whole."
But Abbey disagreed. "The business model for the regional remains intact," he said. "That hasn't changed. Ultimately, the mission they provide is unassailable. The majors can't operate 70-seaters or certainly 50-seaters."
US Airways also acknowledged that the merger likely would require it to divest one of two East Coast Shuttles currently operated by the carriers between Boston, New York and Washington. DL acquired its shuttle in 1991 from Pan Am during that ill-fated carrier's bankruptcy proceedings, while US acquired its shuttle operation from creditors of Donald Trump, who had purchased it from failing Eastern Airlines.
If the two shuttles aren't merged into a single operation, there is speculation that East Coast LCCs JetBlue or AirTran could be suitors. "It's too early to speculate on what assets will be available," JetBlue spokesperson Bryan Baldwin told this website yesterday. "We will just have to wait and see how things go."
by Sandra Arnoult
ATWonline
US Airways, Delta employees have mixed reaction to potential merger
Friday November 17, 2006
US Airways and America West Airlines pilot groups, represented by the Air Line Pilots Assn., conducted informational picketing yesterday in Charlotte and Phoenix, upset that the company is looking to acquire Delta Air Lines even though it "has yet to complete the integration of the pilot groups that is required" by terms of last year's US/AWA merger.
"So far, the company's empty promises have failed to capture all the synergies that just the US Airways/America West merger can provide," US Airways ALPA MEC Chairman Jack Stephan said.
"We recognize US Airways senior management's enthusiasm for a merger with Delta. However, before it can be successful, management must first focus on fulfilling the promises made to their investors, customers and employees," AWA MEC Chairman Kevin Kent added.
US pilots' desire to share in the company's improving financial situation (ATWOnline, Oct. 27) has been a source of recent tension (the picketing was planned before Wednesday's announcement), but it appears to have been exacerbated by the Delta bid. "US Airways has posted remarkable profits for three consecutive quarters due to the efforts of frontline employees such as the pilots, yet they refuse to fully engage in negotiations for a contract that recognizes our contributions," Kent concluded.
ALPA said from Washington that "pilots shouldn't be surprised" by the merger and that the union "will be intensely involved in defending our members' interests as this deal and any others are considered."
US flight attendants, represented by the Assn. of Flight Attendants-CWA, were more reserved, saying only that US "wants to continue the process of merging US Airways and America West labor contracts and operations prior to the potential Delta merger," which would occur "in excess of eight months." The union said its MEC would be briefed by AFA attorneys on the issues that may result from nonunionized Delta cabin staff working without a collective bargaining agreement.
The International Assn. of Machinists and Aerospace Workers, which represents more than 10,000 maintenance and fleet service workers at US, also expressed concern over the timing of the Delta deal, saying, "If US Airways hopes to complete a successful merger with Delta or any other airline they must first conclude the ongoing negotiations with the Machinists Union regarding the integration of America West employees into US Airways." IAM General VP Robert Roach Jr. said US CEO Doug Parker "contacted me and indicated a desire to work with the Machinists Union. We are prepared to work together as long as all affected employees' interests are fully protected."
IAM told The Philadelphia Inquirer that Delta baggage handlers had contacted the union. "One of the biggest issues they had was that they feared being lost in a merger between Delta and a unionized carrier," an IAM spokesperson told the paper.
Delta pilots, the only large unionized (ALPA) work group at the carrier, said, "Merger and acquisition talks are a part of normal business in the airline industry and in particular when bankruptcy scenarios are involved. The Delta MEC has expended considerable effort over the past year to ensure we are prepared for any eventuality and that we can fight to preserve the best interests of the Delta pilots in any potential merger or acquisition scenario."
by Brian Straus
ATWonline