This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Hedge Funds Can't Fix the Airlines

This would be a merger of unprecedented scope, combining the second- and third-largest U.S. carriers. In 2001, the Justice Department rejected a proposed merger -- one that had little overlap -- between United and US Airways (LCC), then the first- and sixth-biggest airlines.

The review, by the way, took 14 months. That may or may not be a precedent. As US Airways President Scott Kirby has said, "The companies chose to have the process take 14 months because United got cold feet."

Perhaps it would take just seven months. It is not unlikely that the hedge funds and strategic investors would move on well before the process ended.

One thing about such investors: They are often in a hurry. In its letter to Delta, Pardus -- which holds 2.5% of Delta and 4.8% of United -- noted: "Time is of the essence as now is the right regulatory environment."

Similarly, in a September letter calling for a frequent-flier program spinoff by American Airlines parent AMR (AMR), the Icelandic company FL Group, who owns about 9.1% of the company's shares, said "there is no time to lose."

By one important measure, the letters had the desired impact, because share prices rose after they were made public. Fittingly, the gains were largely short-term. Now, shares in all three carriers have largely receded to their levels of before the activists got involved.

3 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
LCC $0.00 0.00%
DAL $47.04 0.13%
AAPL $132.79 1.90%
FB $82.48 1.20%
GOOG $557.07 -1.40%

Markets

DOW 18,134.66 +54.52 0.30%
S&P 500 2,121.30 +3.61 0.17%
NASDAQ 5,103.0280 +10.9430 0.21%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs