UAL & CAL merger?

[Kristie]

CAL peeps, your gonna wanna pay attention to this....it may not go thru, just like DAL/HP/USairways but it's good to keep in tune and know what could be coming down the pipe...

granted, it's all talk but we know what can happen when there's talk involved...
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United, Continental in early merger talks: sources

By Chris Reiter and Jessica Hall 13 minutes ago


NEW YORK/PHILADELPHIA (Reuters) - United Airlines' parent UAL Corp. (Nasdaq:UAUA - news) and Continental Airlines Inc. (NYSE:CAL - news) are in preliminary talks about a merger that would create the largest airline in the world, sources familiar with the situation said on Wednesday.

The talks come amid heightened merger activity in the airline sector, which is emerging from a prolonged slump following the September 11, 2001, attacks on the United States.

US Airways Group Inc. (NYSE:LCC - news) last month made an unsolicited bid for larger, bankrupt rival Delta Air Lines Inc. (Other OTC:DALRQ - news); AirTran Holdings Inc. (NYSE:AAI - news) on Wednesday offered to buy Midwest Air Group Inc. (AMEX:MEH - news); and bankrupt Northwest Airlines Corp. (Other OTC:NWACQ - news) is evaluating strategic alternatives, including a merger.

"Everyone talks to everyone all the time, but (United and Continental) renewed contact after the USAir and Delta situation emerged," said one source, who declined to be identified. "It's far from certain. At the moment, it's just talks."

Despite the potential hurdles, the combined company would have many interesting components.

United brings its strength on the West Coast, coveted gates at London's Heathrow Airport, and its strong presence in the important Chinese market. Continental offers its key Newark, New Jersey, hub, Transatlantic access, and a strong presence in Latin America.

"It makes a lot of sense," said Roger King, an analyst with CreditSights. "It would be a good aggressive strategy by United and a good defensive strategy by Continental."

'MORE SMOKE THAN FIRE'

A deal between United and Continental would have to contend with the usual complexity of integrating work forces and combining fleets and route networks.

But the carriers would face an even more difficult road than other potential airline deals. First and foremost may be convincing Continental's management to do a deal, said airline consultant Mike Boyd. "There's probably more smoke than fire at this point," he said.

Continental has repeatedly said it would prefer to remain independent but would consider a deal, if necessary, to remain competitive. The company was not immediately available to comment. United declined to comment.

A deal, which would create an airline with more 26 percent market share, would surely face close scrutiny from antitrust authorities.

"The big question is what the regulators will do," said Ray Neidl, an analyst with Calyon Securities.

In the past, U.S. regulators have frowned on big airline mergers, with competition concerns derailing a planned merger between United and the old US Airways in 2001.

But given the industry's troubles over the last five years, airline executives have said they believe the U.S. Department of Justice may be more amenable to big deals now.

A Continental-United deal also faces a unique problem: Northwest Airlines holds a so-called "golden share" in Continental that gives it the right to block mergers involving the Houston-based carrier.

The airlines could offer Northwest assets or other incentives in exchange for its support.


"Anything can be negotiated," said airline consultant Bob Harrell of Harrell Associates.
Continental shares rose 5.6 percent to $45.31 in morning trade on the

[lucky81698]

Kellner said he does not want to merge with anyone. But, if the DL/US thing goes through he may not have a choice. I can only imagine what a mess both of those mergers would be, regarding employees. Let's hope they don't happen! The "magic" share that NW holds prevents CAL from being taken over, but does not prevent CAL from buying someone else. But then again NW could always "give that away" for the right price.

[Kristie]

as far as I know.. Doug Parker pulled out of the DAL merger, which is good...it's not time nor is his airline ready for that.

considering NWA's stance in BK, who knows what they might do! just like with DAL...

[Amanda]

Nick and I are hoping no mergers go through... it would mean an instant furlough! It probably won't happen... at least we pray it doesn't!

[roz]

Originally Posted by Kristie

as far as I know.. Doug Parker pulled out of the DAL merger, which is good...it's not time nor is his airline ready for that.

considering NWA's stance in BK, who knows what they might do! just like with DAL...

Not as of yesterday...

Delta Board Weights US Air’s Offer

NEW YORK (WSJ) – The board of Delta air Lines Inc. met by conference call to discuss US Airways Group Inc.’s $8.5 billion hostile bid, but the directors aren’t expected to issue a formal position on the offer for several days, according to people familiar with the matter.

The meeting came as executives at Delta and its major creditors prepared for a new round of talks regarding the US Airways bid scheduled for tomorrow in New York. US Airways presented details of its offer, consisting of $4 billion in cash and about $4.5 billion in stock, nearly two weeks ago, in a session marked by occasionally tense exchanges between executives from the airlines.

Delta, which filed for Chapter 11 bankruptcy-court protection in September 2005, is expected to release early next week its reorganization plan for exiting from bankruptcy as a stand-alone company. Coming one month after US Airways launched the hostile offer, the Delta plan effectively will be the company’s counterproposal aimed at persuading its creditors not to support the US Airways bid.

The board vote is largely a formality, since there is nearly no possibility that Delta’s board would endorse the US Airways offer, according to people familiar with the situation. Delta officials, including Chief Executive Gerald Grinstein, have made repeated public assertions that Delta should emerge independently from bankruptcy early next year. He has resisted US Airways’ request for access to Delta financial records to perform due diligence on the offer.

Tomorrow’s meeting of creditors could increase pressure on Delta to open its books. The group of nine major creditors, who represent unsecured claim holders in Delta’s bankruptcy proceedings, is scheduled to hear presentations from their own advisers hired to evaluate the US Airways bid and an analysis of the offer by Delta. Main topics include the deal’s financial aspects, antitrust risks and labor implications, among other issues. No major Delta creditors have publicly embraced the US Airways bid, and one of the largest creditors, the Air Line Pilots Association unit that represents pilots, ahs repeatedly attacked the proposal.

Despite long business relationships with Delta and its management, some major creditors such as Boeing Co., whose Boeing Capital Corp. unit leads the committee and holds claims in excess of $117.5 million, may feel obligated to insist on a full hearing of the offer, say people familiar with the situation. That could force the creditors committee to demand that Delta open its financial records and enter into full due diligence with US Airways, of Tempe, Ariz.

Delta has lobbied the Chicago aircraft maker for its support in warding off US Airways. People familiar with the discussions said Boeing has decided to remain neutral while the offer is being evaluated.

Separately, a federal judge upheld a bankruptcy judge’s decision permitting Delta to terminate its pension plan for its pilots. A group of 223 retired pilots had appealed the bankruptcy-court decision issued in September. The Pension Benefit Guaranty Corp. now becomes trustee of the plan and reached a deal with Delta last week in which it receives a $2.2 billion unsecured claim against the airline and $225 million in unsecured notes.

[Kristie]

mmmm.. ok... last i heard, Parker was pulling out since he wanted the DAL board & upper mgmt with him on the deal...but i guess that means they don't have to stop talking about merging the two if they can come to terms...

i'd just rather Parker get his act and his own airline together first before deciding to drop in a third....

I just don't see it happening with this statement

No major Delta creditors have publicly embraced the US Airways bid, and one of the largest creditors, the Air Line Pilots Association unit that represents pilots, ahs repeatedly attacked the proposal

HP operates via Airbus, I'm not sure if USairways is Boeing or Airbus(?)... and Boeing has a large share of DAL.. as well does Coca-Cola and ALPA.. ALPA itself won't allow it.