Appeals To Other Airline Investors For Support
Though officially disavowed by executives at both airlines,
investment company Pardus Capital Management hasn't given up on
swaying other hedge funds to support a merger between Delta Air
Lines and United Airlines.
The Wall Street Journal reports Pardus appealed last week to
investors in Boston to garner support for the merger; two weeks
ago, Pardus took its message to roughly 75 airline investors in New
York. And that message is, a merger between the two carriers makes
sense... and not just because Pardus has stock in both
airlines.
As ANN reported, many believe
Pardus floated a trial balloon about the merger November 14... when
an unnamed source told The Associated Press a merger between the
two airlines was imminent. The source described a combined
United-Delta airline carrying forth under the United name, with
headquarters in Chicago and an operations center in Atlanta. The
source said both sides expressed a "sense of urgency" to the
talks.
Executives at both airlines eventually dispelled the rumors...
saying later that day the source cited by the AP was, in essence,
full of it.
"There have been no talks with United regarding any type of
consolidation transaction and there are no such ongoing
discussions," Delta CEO Richard Anderson told The Los Angeles
Times, echoing similar statements from United.
Pardus has at least one influential backer... former Continental
CEO Gordon Bethune, who advised the hedge fund in seeking a
Delta/United merger. This week, Bethune reiterated his belief
Pardus' "logic is pretty damn impeccable," saying a lack of
consolidation among the nation's airlines has led to the industry's
cyclical 'feast or famine' nature.
Bethune argues Pardus is attempting to tell both airlines, "Stop
talking. Get off your butts. Do something."
It would appear Pardus will need all the support it can muster
to sway the airlines. With over $3 billion in assets, the hedge
fund doesn't hold enough financial clout to bully either airline --
more specifically, each carrier's cautious investors -- into a
hostile takeover scenario.
It's unclear just how successful Pardus' efforts will prove to
be. The hedge fund admits it doesn't plan to assemble a formal
coalition of investors to force the issue, relying instead on
building a quiet consensus.
Pardus holds seven million shares in Delta, or about 2.4 percent
of all shares in the reorganized airline. It owns 5.6 million
shares in United, a 4.6 percent stake in that airline.