I know there was a lot of emotion on the Delta side, and there are probably a lot of hangovers from the celebrations in Atlanta last night. I tend to think the celebration will be shortlived, however, as other merger possibilities come into play.
One thing is for sure. Delta will come out of bankruptcy as a standalone airline. The Official Unsecured Creditors’ Committee has decided to back management’s plan to emerge from bankruptcy alone. That means that instead of accepting the half cash/half stock offer from US Airways, the unsecured creditors will walk away with common stock in the new Delta upon exit from bankruptcy.
Not everyone is happy about this turn of events, notably the Unofficial Committee of Unsecured Claimholders who put a release out last night expressing disappointment that US Airways wasn’t even allowed to perform due diligence. Those people hold $2.75 billion in claims that will be settled with pieces of paper, common stock, valued anywhere from 63% to 80% of the total claim according to Delta.
So what does this mean? Well I bet Delta goes right back on the table after bankruptcy. I’d be surprised if US Airways jumped back in the ring. I mean, those guys wanted to use bankruptcy to make changes and without that option it’s not nearly as attractive. But a lot of those former debtholders turned new stockholders are going to be looking to get their money back, and a nice way to do that is to sell to someone who is willing to pay a premium.
My guess is the world of mergers will be quiet, with the exception of the ongoing AirTran/Midwest saga, until Delta and Northwest emerge from bankruptcy. It sounds strange, since bankruptcy is the right time to do these things, but I’m pretty sure we won’t see anything else until then.