UA + DL? "Legs" or panicky hedge fund managers.

[Doug Taylor]

Does it have "legs" or is it yet another panicky hedge fund manager that got burned because the next big thing was supposed to be a flurry of consolidation and M&A action?

Official: Delta, United Mull Combination
Wednesday November 14, 2:38 pm ET
By Harry R. Weber, AP Business Writer
Official Says Delta, United Have Discussed Combining the Nation's No. 2 and No. 3 Carriers

ATLANTA (AP) -- UAL Corp.'s United Airlines and Delta Air Lines Inc. have been discussing a combination between the nation's second- and third-largest carriers that would keep the United name and the corporate headquarters in Chicago, The Associated Press has learned.
There is a sense of urgency in the talks, which have been going on for some time and continued as recently as a week or so ago, an official with knowledge of the talks said Wednesday. The official spoke on condition of anonymity because the person was not authorized to speak publicly.

"They want to get something done before a new administration gets in and so they get the clock ticking on" federal regulatory approval, the official said.

The exact financial details of the transaction being discussed are not clear. But the talks involve United being the name of the combined airlines, the headquarters staying in Chicago and Delta's Atlanta hub being an operational center for the two carriers, the official said. One possible scenario involves Delta CEO Richard Anderson being the chief of the combined airline, the official said.

A spokesperson for Chicago-based United did not immediately return a call Wednesday seeking comment. Delta spokeswoman Betsy Talton declined to comment.

Delta said in a statement Wednesday that its board has established a special committee to work with management to review and analyze strategic options for the airline. Top executives have said recently they are trying to determine whether consolidation makes sense for Delta.

The company was responding to pressure by a hedge fund that owns 7 million Delta shares to consider combining with UAL.

Pardus Capital Management LP said in a letter to Delta's top management on Tuesday that it is "imperative" that the company undertake a merger transaction with another airline in view of soaring fuel prices and what it described as the increased risks of going it alone.

"Consolidation is needed to de-risk the industry and time is of the essence as now is the right regulatory environment," said Karim Samii, president of Pardus, and Shane Larson, a principal.

The hedge fund executives said they had determined since making a similar recommendation in a Sept. 7 letter that "the most attractive and practical combination would be a Delta and United Airlines combination."

It cited figures from a consulting firm estimating that the benefits of such a pairing would be about $585 million and said a combined Delta-United would boast a broader network than any other combination.

Pardus also owned 5.6 million shares in Chicago-based UAL as of Sept. 30.

Associated Press Business Writer Dave Carpenter in Chicago contributed to this report.

(This version CORRECTS that the airline would be based in Chicago, where United is based. )

[frog_flyer]

Both stocks are up 10%


Watch them be unloading their UAUA and DAL.

[GJ1]

Fox news is talking about it right now

[Ophir]

uh oh

[charlie1017]

If $100 a barrell becomes a reality maybe it might happen...

[pilot602]

There is no Delta in Ted?

There's no U n I in Delta?

Ted buys a Song?



Eh, when the unions start battling about merged seniority, then I'll believe it ...

[pilot602]

Originally Posted by charlie1017

If $100 a barrell becomes a reality maybe it might happen...

Why would creating an even bigger, slower esponding monster be a good or viable answer to $100 barrel fuel? And in my book $97 is close enough.

[Doug Taylor]

Originally Posted by charlie1017

If $100 a barrell becomes a reality maybe it might happen...

Majors consolidating in order to reduce capacity and drive prices up to fend off $100 oil is just going result in more markets primed to be snapped up by LCC's.

[jtrain609]

Originally Posted by Doug Taylor

Majors consolidating in order to reduce capacity and drive prices up to fend off $100 oil is just going result in more markets primed to be snapped up by LCC's.

SYNERGY! PARADIGMS! FREEDOM HATER!

[Minnesota_Flyer]

My vote is "no legs."

[daru1]

Originally Posted by Doug Taylor

Majors consolidating in order to reduce capacity and drive prices up to fend off $100 oil is just going result in more markets primed to be snapped up by LCC's.

Amen. Further proof that Keynes was a genius. This statement will be the overriding theme as to whether this will happen. To quote Star Wars, "The more you tighten your fist, the more star systems will slip through your grasp."

It's got legs, but those legs are quivering at the reality of the situation.

[CcrlR737AMT]

Originally Posted by Minnesota_Flyer

My vote is "no legs."

Me too!

I would rather see them work with another carrier like Northwest. I would rather see US Airways merge with United. Continental would stay put since DL and CO have a big stake in the NYC Market.

[Chris_Ford]

My inside sources indicate absolutely no legs.

[Doug Taylor]

Delta Responds to Reports of Consolidation

Company reiterates position on industry consolidation

ATLANTA, Nov. 14, 2007 – Delta Air Lines (NYSE: DAL) today denied published reports that it had engaged in merger talk with United Airlines. Delta Chief Executive Officer Richard Anderson said: “There have been no talks with United regarding any type of consolidation transaction and there are no such ongoing discussions.”

Delta will not speculate on possible airline consolidation and has reiterated its position on the issue. In an earlier statement responding to reports of Pardus Capital Management’s call for Delta to be a leader in airline consolidation, Anderson said:

“We appreciate receiving Pardus’ views on the best course for Delta’s future. We have been consistent in our public statements that Delta believes that the right consolidation transaction could generate significant value for our shareholders and employees and that strategic options should be evaluated. With oil at over $90 a barrel, this analysis takes on a heightened importance as we factor those prices into our long-term planning process.”

[frog_flyer]

[quote=daru1;730429]Amen. Further proof that Keynes was a genius. This statement will be the overriding theme as to whether this will happen. To quote Star Wars, "The more you tighten your fist, the more star systems will slip through your grasp."
/quote]

Hey, comon chief.

It's fingers.

slip through your fingers.

[GaTechKid]

Since Tilton is intent on selling United, all airlines have to factor that into their scenario building.

[flyover]

Originally Posted by Doug Taylor

Majors consolidating in order to reduce capacity and drive prices up to fend off $100 oil is just going result in more markets primed to be snapped up by LCC's.

LCCs aren't the issue. The two biggest factors that will drive an inevitable consolidation of US carriers are:

1) US carriers are and have been killing each other by fighting for market share on virtually every existing city-pair. Reducing the number of carriers by 2 or 3 will boost revenues and reduce the number of airplanes on (ie expense of serving) each market. It will not open up those markets to LCCs in most cases because the legacies will still be flying them, only with larger more efficient equipment.

2) Airport capacity issues are going to really hurt these carriers going forward. The efficiency that would come from bigger jets flying fewer flights to serve the same markets would greatly help in this area and as many have observed actually must happen because areas like NY are toast already.

Consolidation done properly should make these carriers less vulnerable to LCCs, not more.

The big question is how many and which hubs will be shuttered. That will be the painful part.

And of course there will be worldwide consolidation someday as well. So maybe a Paris base in your future Doug?

I'd say legs but a little wobbly right now. If these two make a move others will quickly follow and must be considering their options and starting discussions right now. There will be mergers but the first two to dance may not end up married to each other.

[launchpad]

A merger with United would definitely help Delta get a hold on the West coast like they want to......

[Chris_Ford]

100% this will not happen any time soon.

[Maximillian_Jenius]

http://biz.yahoo.com/ap/071114/delta_united.html


AP
Official: United, Delta Mull Combination
Wednesday November 14, 6:19 pm ET
By Harry R. Weber, AP Business Writer Official Says United and Delta Have Discussed Combining; Airlines Deny It
ATLANTA (AP) -- United Airlines and Delta Air Lines have been discussing a combination between the nation's second- and third-largest carriers that would keep the United name and the corporate headquarters in Chicago, according to an official with knowledge of the talks.

The reported talks come as all airline executives are wrestling with the implication of oil prices hovering close to $100 a barrel. That has sharply boosted jet fuel expenses -- and accelerated a search for ways to cut costs, which typically are the result of airline takoevers.

Earlier Wednesday, Delta said its board established a special committee to work with management to review and analyze strategic options for the airline. Top executives have said recently they are trying to determine whether consolidation makes sense for Delta.

Delta issued a statement denying "published reports that it had engaged in merger talk with United." CEO Richard Anderson was quoted as saying, "There have been no talks with United regarding any type of consolidation transaction and there are no such ongoing discussions."
United called the report of recent talks "wholly inaccurate."

The Wall Street Journal's online edition, citing unidentified people, reported Wednesday that Anderson has informally talked about consolidation possibilities with counterparts at other airlines, including senior executives at United and Northwest Airlines.

Then-Delta CEO Gerald Grinstein said during a stop in New York on Oct. 12, 2006, that he had previously received "feelers" from United about a possible merger.

There is a sense of urgency in the most recent talks, which have been going on for some time and continued as recently as a week or so ago, the official with knowledge of the talks said Wednesday. The official spoke on condition of anonymity because the person was not authorized to speak publicly. The official stood by the assertions about the talks after learning of the statements by Delta Air Lines Inc. and United, a unit of UAL Corp.

"They want to get something done before a new administration gets in and so they get the clock ticking on" federal regulatory approval, the official said.

Financial details were not clear. But the talks involve United being the name of the combined airlines, the headquarters staying in Chicago and Delta's Atlanta hub being an operational center for the two carriers, the official said. One possible scenario involves Delta's Anderson being the chief of the combined airline, the official said.

Delta also has had talks with other airlines, the official said, without specifying which airline or the status of any such talks.
Shares of Delta rose 77 cents, or 4.1 percent, to $19.52 in trading Wednesday while UAL shares gained 67 cents, or 1.5 percent, to $44.17.

When Anderson was named in August as Delta CEO to replace Grinstein, there was immediate speculation in the investment community that Delta and Northwest might eventually merge. Anderson is a former CEO of Northwest Airlines Corp.

Anderson immediately tried to dispel such speculation, telling Delta employees he wasn't coming to Delta to facilitate a deal with Eagan, Minn.-based Northwest.

Delta's initial statement Wednesday about the establishment of a board committee followed the release of a letter by a hedge fund that owns 7 million Delta shares that called on the airline to consider combining with UAL.

Pardus Capital Management LP said in the letter to Delta's top management that it is "imperative" that the company undertake a merger transaction with another airline in view of soaring fuel prices and what it described as the increased risks of going it alone.

"Consolidation is needed to de-risk the industry and time is of the essence as now is the right regulatory environment," said Karim Samii, president of Pardus, and Shane Larson, a principal.

The hedge fund executives said they had determined since making a similar recommendation in a Sept. 7 letter that "the most attractive and practical combination would be a Delta and United Airlines combination."
It cited figures from a consulting firm estimating that the benefits of such a pairing would be about $585 million and said a combined Delta-United would boast a broader network than any other combination.

Pardus also owned 5.6 million shares of Chicago-based UAL as of Sept. 30.
Pardus executives said a Delta combination with Northwest would produce even bigger benefits of about $1.5 billion, primarily from combining the smallest hubs -- Detroit/Cincinnati and Memphis/Atlanta.

"However, Northwest may not enable Delta to complete the breadth of network that business travelers require, resulting in the need for a potential follow-on transaction at a later date in order to achieve the same breadth of network that UAL would provide out of the box."
Pardus, citing information provided by the air transport consultancy Simat, Helliesen & Eichner Inc., said a third potential combination, with Continental Airlines Inc., would produce no synergies and would raise other challenges.

Robert Mann, an airline consultant in Port Washington, N.Y., said United's broad Pacific network and Delta's huge Atlantic presence would complement each other. However, he said, combining fleet information systems and labor could pose challenges. The biggest problem would be that neither carrier has any recent track record of integration, he said. "I would see this as a very risky move from the standpoint of the actual implementation," Mann said.

Bolded points are key parts of article!

First if this does in fact have legs, I thought Delta wanted to be the buying airline and retain the name Delta on the side of planes. Also, the GA United states senator that greatly assisted Delta in fending off US, mpt sure he'd be too keen on the states largest employer moving it's headquarters out of state.

Point three, seems as if the hedge funds managers are in fact the ones driving this recent round of merger mania!

[Doug Taylor]

Oh, this'll be fun!

Originally Posted by Maximillian_Jenius

according to an official with knowledge of the talks.

Who?

Earlier Wednesday, Delta said its board established a special committee to work with management to review and analyze strategic options for the airline.

And the webcast is online...

"There have been no talks with United regarding any type of consolidation transaction and there are no such ongoing discussions."
United called the report of recent talks "wholly inaccurate."

But I thought "Delta said..."

The Wall Street Journal's online edition, citing unidentified people, reported Wednesday that Anderson has informally talked about consolidation possibilities with counterparts at other airlines, including senior executives at United and Northwest Airlines.

That can pretty much be this thread or airliners.net for all intents and purposes.

Then-Delta CEO Gerald Grinstein said during a stop in New York on Oct. 12, 2006, that he had previously received "feelers" from United about a possible merger.

Filler.

There is a sense of urgency in the most recent talks, which have been going on for some time and continued as recently as a week or so ago, the official with knowledge of the talks said Wednesday.

Who?!

The official spoke on condition of anonymity because the person was not authorized to speak publicly. The official stood by the assertions about the talks after learning of the statements by Delta Air Lines Inc. and United, a unit of UAL Corp.

Uh huh. And Alexis Debat was singlehandedly responsible, for a period of time, for helping guide our Iran policy.

"They want to get something done before a new administration gets in and so they get the clock ticking on" federal regulatory approval, the official said.

Uh huh! Pump It!

Delta also has had talks with other airlines, the official said, without specifying which airline or the status of any such talks.
Shares of Delta rose 77 cents, or 4.1 percent, to $19.52 in trading Wednesday while UAL shares gained 67 cents, or 1.5 percent, to $44.17.

Uh huh! Now dump it!

[b]Delta's initial statement Wednesday about the establishment of a board committee followed the release of a letter by a hedge fund that owns 7 million Delta shares that called on the airline to consider combining with UAL.

What? Hedge fund? Nooooooo!

Pardus Capital Management LP said in the letter to Delta's top management that it is "imperative" that the company undertake a merger transaction with another airline in view of soaring fuel prices and what it described as the increased risks of going it alone.

Because, after all, a hedge fund has your best interests in mind!

"Consolidation is needed to de-risk the industry and time is of the essence as now is the right regulatory environment," said Karim Samii, president of Pardus, and Shane Larson, a principal.

I love it! De-risk.

The hedge fund executives said they had determined since making a similar recommendation in a Sept. 7 letter that "the most attractive and practical combination would be a Delta and United Airlines combination."

A little on Pardus' Airline expertise:

Ehh, already bored with it!

[B767Driver]

I need a new blazer...mine's getting pretty ratty. Maybe I should wait for awhile...it might have to be a blue one. BTW, I look for it to happen.

[ComplexHiAv8r]

Don't look behind the curtain! Delta is talking to JetBlue! The UAL is just a diversion.

[bike21]

I have no doubt, like many of you mergers/buyouts will happen. Just the waiting game now.

If we can point to one 'sure thing' IMO, is that it seems Tilton is hell bent on selling/merging UAL. No new aircraft orders, talks of grounding parts of fleet, ultra slim domestic capacity, and wanting to sell off the mileage program and mx program all add up to...buy me!!!

I am sure Tilton et al would be happy to walk away with big cash from a private equity buyout

[fly22]

Niether, hedge funds do this all the time before dumping stock. Its a self created bullish move. What happens is big funds create a stir, other funds or common man hears about it and goes uh oh I'm short the stock. They then cover the short and it causes a serious bullish move due to covering but only temporarily. Then they short it right back down. My opinion is its not panicky hedge funds nor does it have legs. Give it a week and we'll revisit this thread. I'll use Cramer as an example since most on here are familiar with him. He would hold major amounts of stock in a company and would tell the board to announce a buy back. If they didn't he threatned to dump it all, creating an overage of supply and drive their prices down. The board would do it and Cramers fund would make serious money.

Oil has been up for a while, Oil was not the major factor, if one at all in the stock peak it hit today.

My .02