One on One with Doug Parker, Chairman & CEO, US Airways
Wednesday, November 15, 2006
|
|
|
|
SUSIE GHARIB: I talked with U.S. Air's Chairman and CEO Doug Parker and I asked him how's he's going to convince Delta that a merger is the right deal.
DOUG PARKER, CHAIRMAN & CEO, U.S. AIRWAYS: What we're saying is we think if we put our two companies together, we could take each of our stand-alone plans, add them up and then add $1.65 billion a year in synergy, a tremendous amount of value to be created that neither of us could create independently. By putting our companies together, we can create for each other and share that value, us with the shareholders and them with their creditors and that is value that neither of us can create.
GHARIB: Mr. Parker, are you expecting any competing offers for Delta?
PARKER: We certainly aren't trying to start some bidding war. If that happens and that where we end up, where we're in a position where the creditors are looking at our proposal versus a stand-alone versus others, that would be a huge success for us. It's all that we really want is for people to give us a chance to sit down, explain the offer we have and compare it to the stand-alone without just giving exclusivity to that plan.
GHARIB: How committed are you to a merger with Delta? How far are you willing to go in terms of more money or a long, nasty hostile fight?
PARKER: I don't want to speculate as to any of the things that might occur. I can't imagine what they might be. What I believe is, this proposal in and of itself is strong enough that it will prevail over any other proposals.
GHARIB: Why are you interested in Delta?
PARKER: It's a very good airline. We know that. The good news is we have a very good airline at U.S. Airways as well. And the combination of them though results in a much stronger airline than either of us can have. The combination of U.S. Airways with Delta results in a larger synergy or value creation number than we believe we would have with any other airlines.
GHARIB: U.S. Airways was in bankruptcy twice. Delta is in bankruptcy now. Can two broken airlines become one strong carrier?
PARKER: Two fixed airlines certainly can. While they were broken once, they have both gone through the process and are now fixed. So yes, you can take companies that have gone through a bankruptcy process, gotten themselves fixed, combine them with another airline and create tremendous value in a very, very strong airline.
GHARIB: What does all this mean for consumers? Analysts tell me that it's going to mean higher air fares.
PARKER: There's still going to be so much competition. This airline industry is so fragmented. There's no airline with even 20 percent share. There is low-cost competition throughout the United States now. What we all know because it's been proven is that if any airlines get to a level where they raise their fares to levels that aren't competitive with low- cost carriers, low-cost carriers will come in and take share away.
GHARIB: Mr. Parker, what indications have you gotten from the Department of Transportation or the Department of Justice that if you do want to merge U.S. Air and Delta that you'll get regulatory approval?
PARKER: We haven't had any detailed talks with either the Department of Transportation or the Department of Justice yet because they would be premature. What we have done has done a lot of work with antitrust counsel and we feel very strongly that this deal would be approved by the Department of Justice without any material issues.
GHARIB: How can you keep all these balls in the air? You are still integrating America West into U.S. Air. You're talking about a merger with Delta and of course there's just the day-to-day operations of U.S. Air itself.
PARKER: We're not done yet. If we could make the world stop and let ourselves get finished and not have to do this now, we would. But the fact is if we wait, Delta will emerge stand-alone and this opportunity will be gone.
GHARIB: What's your plan B? What if Delta's answer is still no? Would you pursue another merger?
PARKER: We're perfectly fine where we are. We've been extremely successful as I've noted and I feel extremely good about our future prospects. So this is just an opportunity to do even more than that and we're hopeful we will be ale to do even more than that. If we're not, we're extremely happy where we are.
GHARIB: Some airline experts have been telling me that your offer for Delta today is the beginning of a wave of consolidation throughout the industry. But given that airline mergers are notorious for not doing well, is consolidation really a good thing for the industry?
PARKER: First off, in our case I think we've proven that mergers can go very well. We've created a tremendous amount of value for our shareholders, for our employees. U.S. Airways is going to liquidate the merger with America West and now we have one of the strongest airlines in the United States. We're not trying to start some sort of wave of consolidation. All we're doing is doing what we think is best as it relates to this transaction and for own employees and customers and shareholders and this is the transactions we're focused on.
GHARIB: Mr. Parker, thank you very much.
PARKER: Thank you very much. Appreciate it.
