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.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV