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  • 36

Delta, TPG Assessing Bids for American Airlines

Übermittelt
 
Delta Air Lines Inc. and private equity firm TPG Capital are separately assessing possible bids for American Airlines parent AMR Corp., with hopes that AMR's troubles present another opportunity for airline consolidation, people familiar with the matter said. AMR filed for bankruptcy court protection in late November and is in the midst of restructuring its debt and cutting labor costs after it. Any bid for AMR likely would come several months from now. AMR could use the bankruptcy process… (online.wsj.com) Mehr...

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preacher1
preacher1 0
Without reading the whole story, an assessment of any kind is hard. I personally think that a DAL bid would be held up or turned down based on anti trust and the fact that they really haven't got the NWA merger put to bed yet. On the other side, I really doubt that TPG would buy it to get into the Airline business. They might for awhile, but I feel like it would be shut down and sold off rather quickly, either in hopes of a profit or it would be a big fire sale so they could take a big tax write off. For employees and all concerned, even though there would be a realignment and probably force reductions, DAL would probably be better.
mattnyc
Matt Molnar 0
TPG has a long history of buying troubled airlines.
preacher1
preacher1 0
Yeah, I know, but that big?
mattnyc
Matt Molnar 0
They bought CO in the 90s, which was pretty big. They could buy AA and break it up. Who knows. I see them as a stronger possibility than DL.
canuck44
canuck44 0
Actually they bought into Continental with Air Canada and another partner whose name escapes me after the second bankruptcy as Bethune took over. They didn't have a huge amount of money invested but took out a bundle when they left. TPG has had lots of "near miss" investments in attempting take overs (Qantas being one) and lost their shirts on Midwest which they unloaded on Republic for ten cents on the dollar.
BoeingFan59
Troy Raiteri 0
I remember when I was back in BNA for a Tournament I was attending. And seen an NWA DC-9-30 still painted in NWA colors and this was in late 2010 after I though all NW planes were painted in DL colors. DL already has NW in it's pocket now they're looking to load AA too.
preacher1
preacher1 0
The problem I really see with AA is that everything is still in house rather than farmed out, wich is the direction other Airlines are going. i.e. Eagle, and all their maintenance, particularly at Tulsa, Ft. Worth and DFW. I hate to see it for the region, what with the lick that Wichita got from Boeing last week, but I feel like Tulsa is gone if they can't sell it.
Boatinman
Boatinman 0
Like Wayne said I also have a hard time believing that Delta would be able to get an American acquisition past the government. However, they may be able to. The only reason Delta was allowed to acquire NWA was because it was a failing firm. AAL going through bankruptcy most certainly would qualify it as a failing firm. I wouldn't take it completely off the table. After United got Continental I could see Delta brass wanting to place Delta firmly at the top. My two pennies.
flyinchief
John Oddo 0
Yeah, one huge differance, AA has tons of $$$ in the bank unlike all the others before them. I think because they have so much cash, I think they have a better foot for coming out of this on there own.
preacher1
preacher1 0
It will all be interesting. Failing firm yes, but there is a whole bunch more head to head competition between DAL and AA/Eagle. If DAL does get it, 1 of 2 things will happen on the regional - Either Eagle will just go away and ASA or whatever it is now will take it over or else they will expand and revitalize Eagle and vice versa.
canuck44
canuck44 0
I suspect Wayne and Boatinman are correct primarily because there are too many political folks with oars in that water. The JFK operation would have to be sold off although might be a buyer in USAir who could well be looking for a new home for PHL ops. DFW and MIA would not be problems but what happens with MSP, ORD and DTW all lined up as hubs within a ~300 mile radius from Chicago waiting to see which are to become the next Cincinnati or Memphis. Mergers or acquisitions don't make sense unless new markets can be penetrated or economies of scale obtained.
skuttlerats
Jeffrey Babey 0
Interesting. If it were to happen would Delta just repaint the planes like they did with Northwest and call it a day or would it be renamed DELTA/AMERICAN?
Just postulating here for the sake of conversation. It really made me sad when the big NORTHWEST letters came down from the hanger on 494 here in Bloomington,MN after Delta aquired Northwest. Besides, Northwest's livery's on their planes were much nicer then Delta's. Especially the old Northwest/Orient color schemes.
preacher1
preacher1 0
Hindsight is 20 20 and I can't remember all the details, but if they would have stayed as Northwest Orient and concentrated on what they were doing pretty good, instead of getting into all the other, the whole picture might be different today. Seem like Republic was in there somewhere and then one day they weren't and there was NWA
skuttlerats
Jeffrey Babey 0
Seems likes when they were Northwest/Orient a 747 was either coming or going from KMSP every hour. Now Delta doesn't even use it for the KMSP/RJAA flight anymore.
It is nice to see the 777-200ER/LR a plane we haven't seen much of here. But I digress, Delta/American would be a huge monopoly over the industry. Ticket prices here at KMSP would be outrageous.
preacher1
preacher1 0
Semi retired, but my old company just traded our 757 a few months back and bought a brand new 767-200ER. Although they carry the same type rating, I had about an hour and a half transition/check ridede in it. Sweet.
canuck44
canuck44 0
Do they give you a senior citizen's discount?? LOL
preacher1
preacher1 0
I ain't that old yet;lol; and I believe you were the one that chastsed here wile back when I talk about hanging it up.lol Best I remember you ain't no spring chicken.
skuttlerats
Jeffrey Babey 0
Sweet is right :) Glad you had a chance to fly in it!
indy2001
indy2001 0
Please stop posting from the WSJ (or any other site that requires an account and/or password) unless you are willing to copy the entire article!

Regarding the article, this type of conjecture is way too premature. From what I've read, American seems to be in a much stronger financial position than any of the other airlines when they went through each of their bankruptcies. So I'm pretty sure they will emerge from this reorganization in good shape. And joining up with USAir seems like a likely possibility.

If things didn't work out for AA, I don't see the Justice Dept. allowing Delta to acquire American, even without United screaming their lungs out. On the other hand, a private group shouldn't be a problem. However, if AA is still weak after it reorganizes its debt, then I would doubt that the private interest would still be there.
preacher1
preacher1 0
Well, this forum breeds conjecture and conjecture is a close synonym for OPINION and everybody has one. I think that a merger with US Air is ascenine. 2 weak ones don't necessarily make a strong one. However dreamy it might be for DAL to enter the picture, I really think AA will emerge as a stand alone, shedding eagle But farming out the routes to Mesa or somebody. 64$ question if they keep their maintenance in house or send it offshore.
indy2001
indy2001 0
My comment about being premature was about the Wall St talk, not posting opinions here. You should recognize that since I went ahead and posted my own opinion. (I don't need to write in all caps to make my point.)

As for whether the merger with USAir is asinine or not, I believe that's probably the second most likely to happen. I still believe that AA will emerge in basically the same form that it is now, minus the bloated labor and fuel contracts. Just like Delta and United emerged from their bankruptcies, and before they merged with their respective partners.
preacher1
preacher1 0
CAPS were just to highlight the word opinion. A second read on your comment indicates it is as you say, but at first read, it sounded like you were chastising everyone in the column. Just sayin'

Sorry if you took offense but that is how it came across until you explained it here.
conmanflyer
connor oslie 0
... or let delta maintain the fleet?.. alot of fleet commonality...
sparkie624
sparkie624 0
In away this is kind of funny. A few of us at work (for a regional carrier) were joking about DAL obtaining AMR and now I see this article. Not really surprised however.
StymieHo
Chris Donawho 0
US Air stands the best chance from both operational and regulatory stances. The whole enchilada would operate under the AA banner and certificate too.
preacher1
preacher1 0
If US does get in there, I don't think it will be an offer prior to Bankruptcy emergence as the DAL and TPG offer are. If it happens it will be post Bankruptcy and probably as a merger. As to whose flag, I think it will be entirely dependent on how it goes down and who the strong side is. AA was the stronger financially than the other legacy's when they went into their's and probably if you get down to real $, they were stronger going in than US and will much leaner coming out. My guess, if it were to happen, would be the AA flag. That being said, if they do shed a lot of the excess baggage they now carry and emerge lean, they may can stand alone, having shed unprofitable route and aircraft, and just march into new markets they want. It will all be interesting.
tyketto
Something to consider..

If DAL buys AMR, I see three big issues coming up (I'll leave the NWA merger out of this; assume it gets closed, plus any internal issues; seniority, etc.).

1. SkyTeam vs. OneWorld. Like a girl choosing between two leaders of rival gangs in a 1950s musical, they gotta choose. This also would cause issues with other partners (KLM, etc.)

2. DFW. DAL had a hub there as far back as 2000, then pulled out. while they still have service to there, do they want to set that back up again, as they eat up AAL? Speaking of DFW,

3. Wright Amendment. AMR was the only company screaming about it and endorsing it. If they go away, any/all support for the Wright Amendment goes belly up.

SWA has to be sitting back with a big bucket of popcorn watching how this unfolds..
preacher1
preacher1 0
I think what will be really interesting is to sit back and see how it unfolds and then look back on this forum one day and see who was right.lol
Just for squirts and giggles, the DAL DFW hub was there since about day 1 of DFW or close to it.I remember flying thru there in the early 80's and then they had that bad L-1011 crash down there in 84. I think the bulk of the wright amendment is about gone anyway and if it completly goes away it will just totally unleash SWA, which is almost done anyway, with the way they have just worked around it over the years.
TXCAVU
The DAL crash was '85 and Wright Amendment ends in 2014. As you well know, a lot can happen in 2 years.
duncan05
bill mcclure 0
I fly american everywhere and I live close to dtw --a hub for delta---simple solution for me--I would fly anyone but delta--the airline that overcharged the troops from Irag for their extra baggage--and changed their policy only after the video of this incident went viral--in other words, if these crooks were never exposed, then they would have kept right on doing it-----these troops are the real people in this country--not those, who have never served ------the money greedy folks at delta airlines---
duncan05
bill mcclure 0
I see no one remembers--Delta and Northwest--has filed for bankruptcy already---and Delta is a great business model--oh yeah---they really know how to welch on their debts-----anyone can make money if you don't pay the folks you owe-----we the taxpayers already pay the pensions of these airlines and now we get watch one broke airline , absorb another-----of course I am sure the idiots in congress would approve
preacher1
preacher1 0
All the legacy's have filed in earlier years except AA, until now. It had not filed bankruptcy, had Eagle instead of contracting out the regional and has the maintenance in house at Tulsa, Ft Worth and DFW. In addition, the article says only that DAL is assesing an offer, meaning one has not been made yet and as a lot of the comments here have alluded to, it is doubtful to come to pass because of Anti Trust anyway.Hide and Watch.
StymieHo
Chris Donawho 0
Wright Amendment is all but dead. You can fly SWA outta DAL to just about anywhere now. Some restrictions remain but are slated to go away sooner than later.
TXCAVU
The local Dallas news station mentioned a possible merger with USAir.
dbrooks84
David Brooks 0
I think all of this talk is just that - talk. AA/AMR is currently has to be working with the bankruptcy court to meet legal requirements. If AA can restructure the company where it can be come profitable again, then why buy out / merge with anyone?

Looking at the possibilities, I just don't see DL as a candidate as they are still integrating in NW acquisition. US Air is week still, even after the merger with America West and US Airways. These companies are all weak now and could end up in bankruptcy themselves.

Last, seeing the Government let AA to be taken over by DL or US Air would be stopped due to anti-trust issues.

From a outfit such as TPG, yes they would, but right now, the wait and see what happens to AA would seem to be prudent.

My 2 cents.
chalet
chalet 0
Big fish eating small fish, a game that never ends. In 1982 Braniff sold its South American routes to Eastern Airlines and went down in flames. Eastern after several tumultous years sold its So. American routes to American and the Transatlantic routes to Continental and nose-dived in 1991, American taking over. Now what. Delta has a full plate with the acquisition of Northwest and there are Government isues due to diminished competition. US Airways is not in good financial shape (who is, by the way?). TGP seems going for a buy-and-carve solution, don't give them much of a chance. So I am betting my pennies that American will continue being itself but through a severe reorg including selling off the regionals.
dbrooks84
David Brooks 0
I have read and seen that process going on from the 1920s. Mergers, buyouts and bankruptcies are still going on. Do we want only one or two airlines in this country?
skyfly12
shawn white 0
Delta would once again be the largest airline.
chalet
chalet 0
Is bigger better?. Alaska Airlines has demonstrated year after year that a well run airline with agents who care and when everyting is done efficiently, money can be made. Read this interesting article http://crankyflier.com/2011/04/28/why-dont-people-hate-alaska-airlines/ Why do the big airlines can´t; well, everybody knows why.
preacher1
preacher1 0
stockholders. Everyone of them wants short term $ instead of long term security. Look at the market by itself, and you can see common sense by some that are invested in blue chips that pay regular dividends and then look at the continual trading that goes on in hopes of making a quick buck.
chalet
chalet 0
Not some much when analyzing the airline industry separately but that certainly applies to the greedy monsters of Wall St., bankers and stock brokers (and their banking counterparts in Europe as well) but it is impossible not to recall Karl Markx famous?, infamous? dictum that sooner or later capitalism will devour itself to which some added: unless it is properly kept in check.
tgchurchman
Tom Churchman 0
Wow a lot of possibilities and there is still a long way to go. From the slant of a "what if" if AA did actually lose its identity in a merger the lack of silver in the air due to a new paint scheme would raise the power bills all over the World from the lack of the silver reflection off of the sun! (joke)

All of the comments have good merit and in the end nobody can really say but my guess based on our company going through a merger that was failed by the Justice Departement ruling the outcome as being a monopoly if played out so there will likely be no merger as described so far but as I said this is just the kick off it has a long, long way to go. And so the game is afoot!

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