Pilots Union To Fight Pardus Airline Plan

Nov 20 2007 | 1:49pm ET

Pardus Capital Management has made a powerful enemy in its effort to force Delta Air Lines and United Airlines’ parent company to merge.

Delta’s only large union, the Air Line Pilots Association, has told its members that it will do everything it can to derail the hedge fund’s “poisonous vision” for the world’s second-largest airline. He also said the union would hold onto the $1 million warchest it raised from members to battle US Airways’ hostile takeover bid last year.

“Pardus’ demand for a merger between Delta and United is a poisonous vision built upon an artificial timeline and focused primarily on a financial transaction,” union chief Lee Moak wrote in a letter to his members, posted on the union’s Web site. “As we demonstrated in the case of the US Airways assault on our company, we can stop a consolidating event that is not in our best interests, and we will treat the demands by Pardus no less seriously than those presented by US Airways last year.”

Pardus argues that Delta has to merge to survive. “We believe it is imperative that you seek to enter into a merger transaction with another carrier given the rapid rise in fuel prices and the increased risk to the business as a stand-alone entity,” President Karim Samii and principal Shane Larson wrote to the carrier last week. And they said that a tie-up between Delta and United is preferable to one with either Continental Airlines or Northwest Airlines.

Both Delta and UAL Corp., United’s parent, deny that they are in talks, but both say that consolidation in the industry is inevitable and that they are amenable to merger proposals. The union, too, says it is not opposed to all mergers, but warns that one “could very likely trigger competitive responses from the managements of other carriers resulting in industry-wide consolidation.”

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