Kip Powick Posted November 15, 2006 Share Posted November 15, 2006 US Airways on Wednesday is making an apparently hostile $8 billion offer for larger competitor Delta Air Lines, under which the companies would combine after Delta's emergence from bankruptcy. The proposed deal could set off a round of mergers in the U.S. airline industry that could leave the industry with two or three fewer large air carriers. The proposal would provide about $4 billion in cash and 78.5 million shares of US Airways stock that was also worth $4 billion based on Tuesday's closing price. US Air has proposed keeping the Delta name if the merger is complete. Oh yeh...where have we heard that before??? WD to CP and WD will keep its name But Delta is apparently not in favor of any deal. A letter from US Air CEO Doug Parker to Delta CEO Gerald Grinstein said that the two met earlier this fall and that Parker laid out the terms of the deal in a Sept. 29 letter. But Parker's letter said that Grinstein declined to meet or even enter into discussions in his Oct. 17 reply. Delta spokeswoman Tanya Lee said she could not comment directly on the offer, although she said, "our CEO has said throughout the bankruptcy that our plan is to emerge as an independent airline." Shares of US Airways closed Tuesday at $50.93 on the New York Stock Exchange. Shares of Delta closed at $1.47 in over-the-counter trade, although those shares are likely to be worthless with Delta's emergence from bankruptcy. Delta is the nation's No. 3 airline, behind only No. 1 AMR Corp.'s American Airlines and United Airlines in terms of miles flown by paying passengers. But in terms of the number of passengers, Delta is No. 1, and it's No. 2 in terms of capacity. It also has a much more extensive international route structure than US Airways. US Airways as it now exists was created when it was purchased by the former America West in deal closed in September 2005, shortly after a downturn in airfares and high fuel prices sent both Delta and Northwest Airlines into bankruptcy on the same day. The value of the shares of US Airways have climbed nearly 150 percent since that merger. US Air is much smaller than Delta, with only about half the passenger traffic of Delta. It is the No. 7 U.S. airline in terms of most measures of airline size, behind low cost carriers Southwest Airlines , the nation's most profitable airline. Delta and US Airways together are even larger than American, but if there is a merger, it is clear the combined company would have to dump much its current operations to win regulatory approval. For example, the two airlines are the two competitors on the lucrative New York-Washington shuttle. One of the shuttles would have to be sold to a competitor in order to get approval. Link to comment Share on other sites More sharing options...
conehead Posted November 15, 2006 Share Posted November 15, 2006 Oh yeh...where have we heard that before??? WD to CP and WD will keep its name Well, when America West bought US Airways, the new company became US Airways, even though the people in charge remained ex-America West. I guess it's what they figure is the most marketable logo and corporate identity. Link to comment Share on other sites More sharing options...
Thebean Posted November 15, 2006 Share Posted November 15, 2006 As much as US Airways likes to spin that it's a low cost carrier, (it even uses LCC as it's ticker ), the facts suggest otherwise. YTD stats Southwest CASM: 8.80 cents US Airways CASM: 12.12 cents Southwest ASL: 620 miles US Airways ASL: 1,030 miles Southwest RASM: 9.91 cents US Airways RASM: 12.71 cents Southwest profit per ASM flown: 1.1 cents US Airways profit per asm flown: .6 cents Southwest BELF: 65.8% US Airways BELF: 74.5% Add the stage length adjustment to the CASM and Southwest's CASM is miles and miles below US Airways. It would be a fool hardy move for US Airways to try and compete with SWA on price given the enormous CASM differential. If the US economy slows down, consumers will gravitate to price, price and then price. That will make life very difficult for US Airways, IMO. Link to comment Share on other sites More sharing options...
Fido Posted November 15, 2006 Share Posted November 15, 2006 .......Delta is the nation's No. 3 airline, behind only No. 1 AMR Corp.'s American Airlines and United Airlines in terms of miles flown by paying passengers. But in terms of the number of passengers, Delta is No. 1, and it's No. 2 in terms of capacity. It also has a much more extensive international route structure than US Airways. .......... The only true test of who is the biggest is in their Gross Revenue. With this measure Delta comes off 4th. By revenue FedEx comes 1st, but some of that comes from ground operations. In order: FedEx $21.4 billion American $20.7 United $17.4 Delta $16.1 Northwest $12.3 Continental $11.2 US Airways $10.6 ACE $8.4 Southwest $7.6 UPS $4.1 Link to comment Share on other sites More sharing options...
Super 80 Posted November 15, 2006 Share Posted November 15, 2006 Is Frank Lorenzo into identity theft now? I would think the notion that a mega-merger of multiple weak or bankrupt airlines into one massive airline that is supposed to be unsinkable has been discredited... Link to comment Share on other sites More sharing options...
Guest rattler Posted November 17, 2006 Share Posted November 17, 2006 Here is what the US Airways pilots think of the issue. US Airways Pilots Demand Fair Contracts US Airways pilots demand fair contracts before airline moves to acquire Delta Air Lines PHOENIX, Nov. 16, 2006 By AMANDA LEE MYERS Associated Press Writer -------------------------------------------------------------------------------- (AP) (AP) US Airways pilots are demanding fair contracts before the airline moves to acquire rival Delta Air Lines Inc. About 200 of the pilots belonging to the Air Line Pilots Association picketed at Phoenix Sky Harbor International Airport on Thursday, a day after the company announced a hostile cash and stock bid valued at about $8.7 billion for Atlanta-based Delta. US Airways pilots work under two contracts _ one for pilots who came from America West Airlines after it bought US Airways when it was in bankruptcy protection in September 2005, and another for pilots who were always at US Airways. Contract negotiations began shortly after the airlines combined, and there are no deals in sight. US Airways and America West are still integrating their operations. For instance, to date only 57 percent of America West planes have been painted over with US Airways' logos, a spokesman said. At Thursday's informational picket, the solemn-faced pilots donned their Navy blue uniforms and caps, walking in a circle and carrying signs that read, "Pilots get nothing, management gets millions" and "Empty promises for a single airline." "I'm picketing to defend my career, my profession and my family," said pilot Tania Bziukiewicz. "While the company keeps us on these bankruptcy-type wages, they're making multimillions of dollars in compensation packages. That's taking advantage of employees and the situation, and we're here to let them know that we're no longer going to let them do that." US Airways Chairman and Chief Executive Doug Parker's base salary is $550,000 a year plus stock options. In August, he sold more than 270,000 shares of company stock, netting Parker more than $9 million before taxes. Parker was not available for comment Thursday. Airline spokeswoman Andrea Rader said Parker had every right to cash in those stock options. "A significant piece of his income is what we call at-risk income _ that's money that he may get or may not depending on how well the company is performing," she said. "The company, as you can see, is performing quite well since the merger, and so that's where that element of his income comes from. He cashed in some of that, which he is absolutely entitled to do." She said it's understandable some US Airways employees are upset about Parker's stock options. "The careers that they signed on for are very different today than they were 20 or 30 years ago," she said. "There's been a lot of disruption in their pay scales and things. It's completely understandable that people would look at people cashing stock options and say, 'Hey.'" She said the airline will agree to a single contract for all pilots, but that it will just be a matter of time. "As you do contract negotiations, you start with the low-hanging fruit, the stuff that you can reach agreement on quickly," she said. "We're moving into some of the economic issues _ wages, seniority scales. But we're absolutely interested in getting to a timely agreement, as well." Hundreds of other US Airways pilots also planned to picket at the Charlotte Douglas International Airport in Charlotte, N.C. Prescott resident Lisa Harrs was at Sky Harbor on Thursday for a flight to Chicago on a US Airways plane. She said she had no idea the airline's pilots were dissatisfied. But she said that each pilot deserved a fair contract. "That makes sense," she said. "If they're all part of the same entity, then everyone should be treated equally." In October, US Airways' losses shrank to $78 million, or 88 cents per share, from $99 million, or $5.74 per share, a year ago. Total revenue climbed to $2.97 billion from $929 million last year. Shares of US Airways Group Inc. rose $1.11 to $60.61 in afternoon trading Thursday on the New York Stock Exchange. ___ MMVI The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. Link to comment Share on other sites More sharing options...
Super 80 Posted November 20, 2006 Share Posted November 20, 2006 the more I look at this, the less sense it makes. At a Citigroup conference last week Parker talked about how important it was for the deal to go through while Delta is still in the courts for the sake of unloading aircraft in the bankruptcy. He said that he anticipated the lessors would be very cooperative as they desire to pull their investments out of the US and put aircraft into Asia. When I heard this I assumed he was talking about the 737-800's. But they are owned and not leased. Looking at the Delta fleet, their most desireable aircraft are all owned. The aircraft that are leased such as the MD-88's, CRJ's, non-ER 767's and ancient non-ETOPS 757's that won't be of a whole lot of interest to anyone and would not easily be placed anywhere. Uhh... it is a given that Delta will unload leased aircraft in the bankruptcy but I don't see how Parker can think that he will rally Delta's lessors to his side based on an oppertunity to move their aircraft out of the US. Unless their breaking Boeings at Alang now. Link to comment Share on other sites More sharing options...
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