Left At The Alter

Friday, February 2nd
by Shane Bogni

Doug Parker could be cast for Runaway Bride II as his dreams of a shotgun wedding were shatered this week by Delta Air Lines and their official Creditors Committee. While the Committee was issuing a statement in support of Delta's standalone plan, Parker simultaneously withdrew is hostile take over bid. Parker who approached Delta back in August about a possible hook up, made his first of two bids for Delta in November. Most industry experts believed that his proposed takeover attempt had little chance to succeed until a second offer was made in January. However, momentum started to shift in Delta's favor following hearings last week in Washington D.C.

Appearing at a packed hearing before the Senate Commerce Committee Wednesday, Delta Air Lines CEO Gerald Grinstein said both workers and consumers will suffer if US Airways' takeover bid for Delta succeeds. The tone of the meetings suggested that there were serious concerns in the Capital over airline mega mergers and the potential impact in communities and consumers. Industry Analyst Ray Neidl once gave Parkers' bid a 50/50 shot, but following the Senate hearings last week, Neidl changed his stance by saying "people are really doubting this deal is going to happen." Neidl said his sense is that creditors would prefer to let Delta emerge from bankruptcy as an independent carrier, something that could take place as soon as April, giving them stock in the new carrier that they can cash out in the current strong environment for airline shares.

Six institutions: J.P.Morgan, Goldman Sachs & Co., Merrill Lynch, Lehman Brothers, UBS, and Barclays Capital gave Delta a huge vote of confidence this week by providing $2.5 billion in exit financing. The announcement made by CFO Ed Bastian on Tuesday cast even more doubt that US Airways proposal would come to fruition. Parker who gave the Creditors Committee a February 1st deadline to respond favorably to his offer was rumored to be considering increasing his bid for a third time.

So what went wrong for Parker???

Delta won the battle of public opinion - clear and simple. Grinstein has been the CEO of two airlines and a railroad, but he is trained as a lawyer - and oh by-the-way, he once served as chief counsel of the Senate Commerce Committee — the one raking Parker over the coals Wednesday. Another key was an employee led grass roots effort called "Keep Delta My Delta." The effort paid off big as they were able to muster support from hundreds of thousands of people in all 50 states and 105 countries. At the Senate hearings last week, employees delivered more than 104,000 signatures opposing US Airways bid for Delta. Also key, was 16 "Keep Delta My Delta" rallies, not only in big cities like Atlanta and Washington, but perhaps more importantly in places like Baton Rouge, La., Tampa Fl., Butte, Mont., Columbia, S.C., and Jackson, Miss. The issues raised at these rallies like jobs, competition, consumer choice and increased fares are bread and butter concerns - issues people are passionate about. At the end of the day, Parker was schooled by a savy business man/lawyer who knew how important public opinion would be.

Whether or not consolodation will take place in the industry is unclear. But one thing is for certian, Wednesday's endorsement from the Creditors Commitee was a huge victory for Delta. It ensures they will emerge from bankruptcy this spring as a standalone carrier. Congratulations to Gearld Grinstein and to the people of Delta. You have earned the right to keep Delta Air Lines, your airline...