Airlines Stock Take Flight on More Industry Consolidation News

Speculation in the airline sector is rampant today following news that UAL Corp (Nasdaq: UAUA), the parent of United Airlines, and Continental (NYSE: CAL) have held exploratory merger talks over the past several months, but talks have picked up recently following US Airways Group's (NYSE: LCC) recent hostile bid for Delta Air Lines Inc. (OTC: DALRQ). Link

In addition, AirTran Holdings Inc. (NYSE: AAI) confirmed it made an $11.25 per share offer for Midwest Air Group (NYSE: MEH), which was rejected. Link

Other stocks in the sector are also higher as industry consolodation takes shape: AMR Corporation (NYSE: AMR), Frontier Airlines Holdings, Inc. (Nasdaq: FRNT), JetBlue Airways Corp. (Nasdaq: JBLU), Northwest Airlines (OTC: NWACQ), Hawaiian Holdings Inc. (NYSE: HA), Alaska Air Group Inc. (NYSE: ALK)

Northwest Airlines (NWACQ) Hires Evercore for possible M&A Deal

Reports from Dow Jones News, Northwest Airlines Corp. (OTC: NWACQ) hires Evercore for possible M&A transaction.
Remember in the past, hedge fund Owl Creek Asset Management said NWACQ could be worth $19.75-$33.50 per share in a merger deal with Continental Airline (NYSE: CAL) LINK

Fund Discusses a Possible Northwest Airlines (NWACQ) / Continental Airline (CAL) Merger

Continental Airline (NYSE: CAL) to merge with Northwest Airlines (OTC: NWACQ)?

In its 13D filing on Northwest Airlines today, 5% Owl Creek Asset Management, which said NWACQ could be worth $19.75-$33.50 per share, said, "US Airways announced that it expects the combination to generate $1,650,000,000 of annual synergies, which is 6.2% of the combined Delta/US Airways passenger sales. Assuming comparable proportional synergies to a Northwest merger with Continental (Continental Airlines is the most logical partner, but this analysis would be equally applicable to another carrier), then the synergies generated by a combination of Continental Airlines with Northwest would be approximately $1,250,000,000annually. Valuing the company at a post-merger multiple of 5.25x EBITDAR including one half of the synergies accruing to Northwest (the other half to the merger partner) results in an implied stock price of $33.50 per share."

More at 13DTracker

Continental Airlines (CAL) Higher Following Merger Openness

Shares of Continental Airlines Inc. (NYSE: CAL) are higher following a report from Reuters, quoting the CEO in a recorded message, saying the company would consider a merger to stay competitive.

Last week, US Airways Group (NYSE: LCC) made an $8 billion bid for bankrupt rival Delta Air Lines (OTC: DALRQ), sparking talk of more consolidation in the sector.

Shares of Continental Airlines are 3.7% higher to $44.10 in mid-day action.