Delta Air Lines’ management doesn’t have a vote. The Delta board doesn’t have a vote. Except for its pilots, Delta employees who wear “Keep Delta My Delta” buttons don’t have a vote.
The 104,000 signatories of a petition to Congress don’t have a vote. The senators who grilled US Airways CEO Doug Parker at a hearing Wednesday don’t have a vote.
Only the creditors have a vote on US Airways’ hostile takeover attempt of Delta.
But all those other folks have a voice. Delta CEO Gerald Grinstein gave them one, and as a result Grinstein is outflanking Parker in the battle for the future of Delta.
US Airways looked to have an unbeatable hand. The Tempe airline proposed a $10.2 billion deal to the creditors, with $5 billion in cash. Delta only offers stock in its restructured company after it emerges from bankruptcy protection. Its business argument focuses on the long-term benefits of holding stock in the new Delta. Creditors tend to love cash in bankruptcy cases. Their payment has already been deferred. They are less than enamored with the idea of a longterm investment in an entity that stiffed them.
But Delta management has succeeded in turning up the heat against the US Airways proposal. Protesters, petitioners and now Washington politicians are all coming out strong against the merger and all the bad things that might happen because of it. Call it the sumof-all-fears argument.
The national news media has covered this saga mostly from the perspective of how it will affect Delta.
Delta got its story out early. And it kept the volume on high. I would say US Airways’ chances of pulling this off are now iffy.
If US Airways fails in its bid to acquire Delta, it will be because Parker saw this primarily as a business deal. Grinstein sees it as a political fight.
Parker was considered something of a boy wonder in the airline industry even before he engineered the merger of America West and US Airways, which only enhanced his reputation.
He is great with numbers. And he has put his faith in the strength of his numbers. He has kept his focus on the people who matter — the creditors.
But the creditors do not live in a vacuum. Surely, they are not oblivious to mounting public sentiment.
Grinstein has been the CEO of two legacy airline carriers and a railroad, but he is trained as a lawyer. He knows his way around Washington.
He once served as chief counsel of the Senate Commerce Committee — the one raking Parker over the coals Wednesday. Just as the race is not always to the swift, nor the battle to the strong, the merger is not always to the one with the most cash.