american airlines inc. - · pdf filerecent news american airlines takes $200m stake in china...

May 24, 2018

American Airlines Inc.

United States

TransportationIndustry:

RECENT NEWS:

Qatar Airways Buys Cathay Pacific StakeNov 06, 2017

American Airlines Takes $200M Stake in ChinaSouthernMar 28, 2017

While oil improves, other trouble spots surface forworkout prosJul 29, 2016

Deal doctors: Deep in the heart of TexasMay 02, 2016

Would United be stronger if divided?Apr 27, 2016

Movers & shakers April 7: Halliburton-blocker may takeDOJ’s No. 3 spotApr 07, 2016

| Republic Airways Holdings Inc.Bankruptcy FilingFeb 25, 2016

Movers & shakers 21: Another structured productsbanker gets picked upOct 21, 2015

Back to the brinkOct 16, 2015

United Airlines invests $100 million to solidifypartnership with Brazil's AzulJun 26, 2015

Cooler heads prevail: Why mediation is growing as atool in bankruptcyMay 08, 2015

'Dean of the bankruptcy bar' Harvey Miller dies followingALS battleApr 27, 2015

TABLE OF CONTENTS:COMPANY PROFILE ................................................................................................................................................ PAGE 1RECENT DEALS ....................................................................................................................................................... PAGE 2RECENT NEWS ........................................................................................................................................................ PAGE 3

American Airlines Inc. of 3105/24/2018©Copyright 2018, The Deal. All Rights Reserved. null

mailto:?subject=The Deal Pipeline's Company Report on American Airlines Inc.&body=Here is the American Airlines Inc. company report from The Deal Pipeline: http://pipeline.thedeal.com/TheDeal_Report_American_Airlines_Inc..pdf%0D%0DIf you forgot your login credentials to The Deal Pipeline or are interested in becoming a subscriber, please contact Customer Service at [email protected] or 1-888-667-DEAL(3325). For international callers: 212-313-9251%0D%0DYou are receiving this email because a colleague found this report from The Deal Pipeline and wanted to share it with you. You are not subscribed to any e-mail list and will not receive any further email unless your colleague wishes to share information from The Deal Pipeline with you again.

Recent Deals

COMPANYROLE

DEALTYPE

DEAL INDUSTRY REGION DATEVALUE($ MIL)

Bankruptcy Filing Republic Airways Holdings Inc. TransportationUnited States - CentralNorth AmericaMidwest

02/25/16 3,561.49

Lien holder Lien Financing American Airlines Inc. Transportation 03/08/11

Likely bidder Auction Japan Airlines Corp. TransportationAsiaJapanEast Asia

01/01/10 1,000.00

Likely bidder Auction Midwest Airlines TransportationUnited States - CentralNorth AmericaUnited States

08/02/07 250.00

Bankruptcy Filing Northwest Airlines Corp. TransportationGreat LakesMidwest

09/14/05 14,352.00

Lender DIP Financing Transportation

United StatesNorth AmericaUnited States - CentralMidwest

01/10/01 200.00


Recent News

Qatar Airways Buys Cathay Pacific Stakeby Paul WhitfieldUpdated 12:39 PM, Nov-06-2017 ET

Qatar Airways Ltd. agreed to buy a 9.6% stake in Hong Kong-based Cathay Pacific Airways Ltd., turning its eyes east after failing tofind a way into the American market through an investment in American Airlines Inc.

The Middle Eastern carrier will become Cathay's No.3 shareholder once it completes the acquisition of the equity owned by KingboardChemical Holdings Ltd, and associated companies, for HK$5.16 billion ($662 million).

The announcement of the deal had a chilling effect on Cathay Pacfic stock, which fell almost 5% in early trading in Hong Kong beforeregaining some ground to close at HK$12.98, down HK$0.22 or 1.7%. The acquisition makes a much-rumored merger of Cathay andAir China Ltd. less likely.

Qatar will pay HK$13.65 per share for its stake in Cathay, a 3.4% premium to Cathay's Friday closing price.

"Cathay Pacific is ... one of the strongest airlines in the world, respected throughout the industry and with massive potential for thefuture," said Qatar's CEO Akbar Al Bakar in a statement. Cathay and Qatar are both members of the Oneworld alliance of carriers.

The deal comes just over three months after Qatar abandoned efforts to buy a 10% stake in American Airlines. Qatar had announcedthose plans in June, but met with resistance from American Airlines before seeming to cite the U.S. airline's second quarter results as areason that it could no longer justify an investment.

Buying a stake in Cathay Pacific will give Qatar a stake in air traffic into and out of China, which is expected to surpass the U.S. tobecome the world's largest airborne commercial aviation market within a decade. The deal also follows a difficult period for Cathay,which has seen shares fall from highs of over HK$20 in 2015, amid tougher competition from Chinese and Middle Eastern carriers onlong haul routes and Asian low-cost operators for regional services.

The company, in August, reported a first-half loss of HK$2.05 billion, its worst six month figures in at least 20 years, and announced amajor overhaul of operations, including job cuts and talks about pilot compensation. Despite those problems Cathay remains one of themost richly valued airlines with an Ebitda multiple of 9.5 times, almost twice that of local rival Singapore Airlines Ltd.

Qatar's acquisition is the latest in a spate of investment in Chinese airlines. In March, American paid HK$1.55 billion for a 2.68% stakein China Southern Airlines Co. Ltd. In 2015, Delta Air Lines Inc. snapped up a 3.55% stake in China Eastern Airlines Corp. Ltd. foraround $450 million.

Cathay's biggest shareholder is Hong Kong conglomerate Swire Pacific Ltd., which owns a 45% stake, followed by Air China,which has a 30%, combined with Cathay's recent struggles, had stoked rumors of a potential takeover of Cathay. Under that scenario AirChina might have bought the stakes held by Kingboard and Swire, establishing a platform from which it could de-list Cathay.

Qatar's acquisition of an equity stake continues a strategy of underpinning commercial alliances with equity holdings. The MiddleEastern airline owns 20% of International Airlines Group SA, the parent company of British Airways. It also owns 10% of SouthAmerica's biggest carrier group Latam Airlines Group SA. Both of those companies also operate as part of the Oneworld alliance.

Join us in New York City on Nov. 30 for The Deal Economy Conference, where leading industry experts and other influential membersof the deal community will gather to discuss key issues that will confront dealmakers in 2018.


Recent News

American Airlines Takes $200M Stake in China Southernby Martin BaccardaxUpdated 03:49 PM, Mar-28-2017 ET

American Airlines Inc. (AAL) will take a $200 million stake in China Southern Airlines Co. Ltd. in the second move by a U.S. carrierinto the world's fastest-growing commercial aviation market.

American will own around 2.68% of China Southern's outstanding shares after paying 1.55 billion Hong Kong dollars ($200 million) fora special issue of 270.6 million shares sold Tuesday, March 28, by China Southern, according to a stock exchange statement. TheHK$5.74 price is a 5.32% premium to China Southern's closing price on March 23, when the shares were suspended from trading amidspeculation of a deal with American.

China Southern shares resumed trading Tuesday in Hong Kong and were marked 2.73% lower by the close of the session at HK$5.34each, valuing Asia's biggest commercial airline by traffic at HK$76 billion ($9.78 billion).

The move marks the second foray into China's growing aviation market, which could overtake the U.S. in terms of passenger volumewithin the next decade, after Delta Air Lines Inc. (DAL) took a 3.55% stake in China Eastern Airlines Corp. Ltd. for around $450million in 2015.

Latham & Watkins LLP advised American Airlines with a team consisting of Anthony Richmond, Anthony Klein, Josh Dubofsky,Simon Cooke, Graeme Smyth, Arielle Singh, Valerie Fung and Rossina Petrova.

American Airlines shares closed at $41.74 each in New York on Monday after rising 0.02% on the session. The stock has fallen morethan 14% over the past three months, however, against a 4% decline for the Dow Jones U.S. Airlines Index.

AA, the world's biggest airline by value, has been battling to grow its share of the Chinese market, where it has lagged rivals includingDelta Air Lines and United Continental Holdings Inc. (UAL).

AA spent months lobbying Chinese authorities for slots at Beijing Capital International after the U.S. Department of Transportationawarded it a non-stop route from Los Angeles International Airport. Beijing initially responded by offering terms that AA claimed werecommercially non-viable, and then earlier this year pulled even that offer.

AA has accused Chinese authorities of denying it slots in an effort to protect Air China's non-stop monopoly on the same route. TheDOT has given AA until Sept. 16 to begin flights on the route or risk losing the right to operate the route.

AA's move could also prove a coup for its Oneworld Group loyalty program. China Southern is currently a member of rival SkyTeam,which includes Delta.


Recent News

While oil improves, other trouble spots surface for workout prosby Jamie Mason and Neil MalcolmUpdated 12:02 PM, Jul-29-2016 ET

With a recovery of oil prices to almost $43 a barrel recently, 53% more than the low they hit in December, is the energy industry out offinancial trouble?

Not exactly. But restructuring professionals believe things in the oil patch are much better.

"Activity in the restructuring space has slowed down as oil prices have come back up and the panic in the sector has diminished," saidWilliam Derrough, managing director and co-head of the recapitalization and restructuring group at Moelis & Co., which finished firstamong investment banks with 18 financial adviser to creditors assignments in The Deal's Out-of-Court Restructuring League Tables forthe second quarter. "The rush to judgment to put companies into bankruptcy protection has slowed down quite a bit and shareholdersand junior creditors are looking at improving potential recoveries and in general the environment is better for the energy industry."

But that doesn't mean new trouble spots haven't surfaced for restructuring professionals.

"There is so much potential for the global credit markets to break in so many different directions with Brexit, ongoing challenges inBrazil, issues in China and the U.S. general elections," said Ryan Preston Dahl, a partner at Kirkland & Ellis LLP (16 counsel todistressed companies, ranking it first among law firms.)


Meanwhile, James L. Bromley, a partner at Cleary Gottlieb Steen & Hamilton LLP (7 counsel to distressed company assignments, tiedfor third place among law firms with Vinson & Elkins LLP) believes today's low-interest rate environment is having a very seriousnegative impact on pensions, which will increase the issues facing government budgets and pension obligations.

He noted that, with low interest rates, governments have to put more money into pensions than they anticipated. Under such duress,some states and municipalities to watch when it comes to increased distress include the City of Chicago, Chicago's public school system,Detroit's public school system, the State of Illinois, the State of New Jersey and the State of California, just to name a few.

Bromley also said that there are serious problems in Venezuela that haven't really materialized into restructurings yet, but that there isincredible pressure on the companies operating in and around that nation.


Moelis' Derrough agrees, feeling that Venezuela, Brazil and other parts of Latin America will have significant restructuring going onwithin their borders the rest of the year.

Meanwhile, Michael C. Eisenband, the global co-leader of corporate finance and restructuring at FTI Consulting Inc. (12 adviser todistressed companies assignments, ranked first), has his eyes trained on the automotive and healthcare sectors when it comes to distresssignals in 2017. He said that mid-tier automotive suppliers are facing pressure from manufacturers to cut their prices and that morerestructuring activity throughout the entire healthcare space could occur because of a broad trend away from fee-for-servicereimbursement towards one based on outcomes.

Still, the energy industry will continue to see the most restructuring activity.

Derrough, who said that Moelis completes more than 60% of its restructuring assignments outside of bankruptcy court, has started to seeoil and gas workouts starting to slow down from earlier this year but still found it difficult in January and February to get investors toput new capital into the energy sector. Now, however, he said more investors are stepping up and having greater interest in cyclingmoney into the industry.

In 2015, some 107 energy companies filed for bankruptcy in the U.S., according to data compiled by The Deal. But Derrough believes adifferent mindset has taken hold this year.

"Energy companies are thinking more critically about how they want to address their balance sheets now, rather than just filing forbankruptcy protection," he said.

FTI Consulting's Eisenband agrees that things have slowed down compared to the "breakneck pace" that we saw in the first half of theyear. He said that the amount of actual bankruptcy filings in the energy and commodity space has slowed over the last 60 days or so.

(Indeed, according to data from The Deal, there have been 24 bankruptcy filings in the U.S. by energy companies between May 1 andJuly 22, compared to 28 for the same period in 2015.)


Eisenband said that out-of-court restructurings have not slowed down as much, but noted that those assignments are quicker to get done.Many of the troubled companies are not hiring as many advisers as they would for a major restructuring since they are just doing quickfixes, such as amending covenants or modifying debt, to buy time, hoping that the price of oil continues to go up.

Not everyone is so sanguine.

"I don't think we have run through the volume and inventory of companies in trouble," said Cleary's Bromley, even though heacknowledges that there has been stabilization in the oil and gas sector..

Others agree.

"Restructuring in the U.S. continues to be dominated by the energy sector," said Peter Knight, a partner and co-chair of restructuring,insolvency and workouts group at Latham & Watkins LLP (16 counsel to creditor assignments, ranked first; 8 counsel to distressedcompanies, tied for second with Weil, Gotshal & Manges LLP), noting that he expects this to continue for at least the next severalmonths, due to a combination of further borrowing base redeterminations and hedges rolling off.

Knight also believes that more restructuring will be taking place among midstream energy companies in the next six to eight months, notjust with the upstream exploration and production companies. This development will largely be because of recent bankruptcy decisionspermitting the rejection of gathering and servicing agreements with midstream companies, he said, noting that the denial of thesecontracts can create substantial cash flow holes for the midstream companies.


Knight said that companies with even a tangential connection to the energy industry will continue to see trouble, as "the trickle-downeffect of the energy sector distress is more pronounced than I think anyone would have anticipated initially."

So much so that some energy companies may either be running out of options or are already devoid of them.

"Commodity prices have been down long enough that the out-of-court restructuring tools are more limited now," Knight explained."These companies have already converted unsecured debt into less expensive secured debt and now they need to convert debt into equityto delever their balance sheets."

Twelve months ago, companies just wanted to survive and thought oil prices would come back, but right now companies seem to beresigned to oil prices returning to the necessary levels anytime soon, he asserted.

In the energy space, companies are restructuring not just because they have to but also because they want to be more competitive withother industry players, Knight said.

It's a situation reminiscent of what happened with the airlines, he added.

AMR Corp., the parent of American Airlines Inc., filed for bankruptcy on Nov. 29, 2011, after blaming a lagging financial performancesince 2009 that left it behind its major network rivals, many of which restructured and emerged from bankruptcy before 2009. AMR wasthe only major airline that had not sought Chapter 11 protection previously, whereas its rivals had, enabling them to have loweroperating costs because they were able to break union contracts, reduce debt and take other measures.

Companies also have different views on when the right time to restructure is, Knight said, noting that some believe it was beneficial tobe early in the cycle of oil and gas distress while others have decided it is best to be later.

"It's too early to know which view is right and which view is wrong," he said.


Some that restructured early in the cycle have already filed for bankruptcy protection a second time, and Knight said he wouldn't besurprised if we see more repeat petitioners. He did add that companies going into bankruptcy now are generally stronger than the ones inthe first wave were, however.

One thing that may help energy companies, or any distressed U.S. corporation really, is a flight of capital to America.

"Post-Brexit, we are seeing a lot of interest in U.S. dollar-denominated assets, as people want to lower their risk in Europe and otherareas," said Derrough. "The U.S. is doing better than some other countries or regions and it's attracting capital into the market here,which is part of the reason that debt trading prices have come back up. The other reason is increasing oil and gas prices, which has alsohelped lift debt trading prices."

He posited that "across all industries, there has been a bounce back in debt prices from the lows we saw in January, with significantprice increases today."

As a result, there are now fewer opportunities for companies to go out into the market and buy back their debt at a steep discount.

But it has also meant that companies that seemed to be on death's door now have a new lease on life.

"This has, in some cases, put off the day of reckoning for some companies," Derrough said.n


Recent News

Deal doctors: Deep in the heart of Texasby Kelsey ButlerUpdated 05:02 PM, May-02-2016 ET

Deborah Williamson, a member in Dykema Gossett PLLC's San Antonio office, has written the book on oil and gasbankruptcies--literally.

Williamson's second version of "When Gushers Go Dry: The Essentials of Oil & Gas Bankruptcy," released April 15, details thestruggles of the industry. In 2015, 42 North American oil patch companies sought bankruptcy protection, with combined debt of $17billion, the book said.

Williamson told The Deal she is confident that number will be topped in 2016, given the amount of large filings that already haveoccurred this year. "I don't see how the numbers can't be [larger]," she said.

In the past three weeks alone, oil and gas companies Energy XXI Ltd. (EXXIQ) (April 14), Goodrich Petroleum Corp. (GDPMQ) (April15), Pacific Exploration & Production Corp. (April 27), Ultra Petroleum Corp. (UPL) (April 29) and Midstates Petroleum Co. (MPOY)(April 30) all filed for bankruptcy with massive debt. Goodrich Petroleum carried the smallest debt load with $507.06 million inliabilities; all the other companies had more than $2 billion in outstanding obligations.

Williamson predicted large exploration and production companies will continue to avail themselves of debt-for-equity swaps, whichmany have implemented in Chapter 11 recently.

"I think for the bigger companies, you have a defined group [of lenders] to negotiate with, so you've got somebody to talk to about arestructuring," she said. "If you're a smaller or midsize E&P with a more traditional debt structure, you can still talk to your seniorlenders, but you don't [necessarily] have an ad hoc group."

Jones Day has added Baker & Hostetler LLP alum Thomas M. Wearsch to its Cleveland office.

Wearsch will work in the firm's business restructuring and reorganization practice, advising distressed companies, financial institutions,equity funds, hedge funds, bondholders, boards, management and investors.

Wearsch advised Irving H. Picard, the Securities Investor Protection Act trustee responsible for liquidating Bernard L. MadoffInvestment Securities LLC following the brokerage's Ponzi scheme. Wearsch also was debtor counsel to Houston oil and gasexploration company Black Elk Energy Offshore Operations LLC in its ongoing Chapter 11 case.

In the fourth quarter of 2015, Jones Day ranked 31st among bankruptcy law firms by case number with 38 active cases, according to thelatest edition of The Deal's bankruptcy league tables.

John Lyons has departed Skadden, Arps, Slate, Meagher & Flom LLP for DLA Piper.

Lyons, who has worked on notable restructurings for American Airlines Inc., Delphi Corp., US Airways Group Inc., ExodusCommunications Inc. and VeraSun Energy Corp., will work out of DLA Piper's Chicago office.

In addition to his practice, Lyons serves as a director and vice president of the Illinois Holocaust Museum and Education Center andco-chairs the annual fundraiser for the Sunshine through Golf Foundation, which assists individuals with special needs.

SunEdison Inc. (SUNEQ) is banking on a new chief restructuring officer to help the company through a dark time.

The Maryland Heights, Mo., installer of power plants on Monday, May 2, announced John S. Dubel had been tapped to serve as thecompany's CRO.

Dubel, the CEO of restructuring firm Dubel & Associates LLC, also is the manager of Residential Capital LLC's liquidating trust. Dubelalso was chairman and CEO of Financial Guaranty Insurance Co., whose parent filed for bankruptcy on Aug. 3, 2010.

SunEdison was required to appoint a CRO as one of the terms of postpetition financing provided by the company's first- and second-lienlenders. The CRO will have to submit regular updates to the lenders, who are providing $300 million in new money through thedebtor-in-possession loan.


Recent News

Would United be stronger if divided?by Lou WhitemanUpdated 05:25 PM, Apr-27-2016 ETUnited Continental Holdings Inc. (UAL) is a perennial underperformer that tripped up again last week when it released first quarterearnings, but the airline's troubles have gotten so bad that some are beginning to wonder whether the only way to save the company is totear it apart. Chicago-based United on April 21 reported adjusted earnings per share that topped estimates, but actually saw its sharestrade down afterwards because of its guidance that passenger revenue would continue to weaken in the months to come. United haslargely been a laggard since its 2010 merger with Continental Airlines Inc., but a new management team installed last year has madeprogress towards curing some of the labor and integration headaches that for years plagued the airline, causing investors to hope goinginto earnings season that the worst was finally behind it. The poor guidance has caused some company followers to question thatassumption. Wolfe Research analyst Hunter Keay concluded after reviewing United's first quarter results that the airline has "no obviousplan" to cure what he sees as a structural disadvantage, saying "we do not see the current strategy" closing the airline's margin gapversus its competitors. "Last year one could attribute UAL's poor revenue performance to an unreliable operation," Keay wrote. "ButUAL is now running its best operation run since the merger and the gap is widening." Keay highlighted issues involving the Unitedroute map, including a predominance of coastal hubs that mean longer flight lengths and awkward north/south connections, especiallyalong the East Coast. United's hubs tend to be in large markets with significant rivals, leaving the company with more competitivebattlegrounds than rivals and generally lower market share at its so-called strongholds. The solution, to some at least, is a revamp orperhaps a slice-and-dice of United's sprawling U.S. network. United takes great pride in its expansive route map, but if the company isunable to generate returns that match those of rivals, what's the point? "UAL may have the best network for passengers but we doubt it'sthe best network for shareholders," Keay wrote. United Continental today is almost without question a stronger and more viablecompetitor than either pre-merger United or Continental would be on their own, and there is unlikely to be a call for the two companiesto completely unravel that deal. Instead, the push by critics is for a more drastic dose of what airlines do whenever they merge: retreatfrom weaker markets to focus on areas of strength. The idea is not exactly new. As far back as two years ago, Imperial Capital analystBob McAdoo called on United to drop its hub at Washington, D.C.'s Dulles International Airport, which routinely ranks as the airline'sleast profitable. Dulles, McAdoo noted at the time, is just 211 miles from United's far more lucrative Newark, N.J., hub, and a shutdownwould follow the trend airlines have used mostly successfully to bring down costs post-deal. Delta Air Lines Inc. cut out of Cincinnatiand Memphis after acquiring Northwest Airlines Corp. and gaining a hub in Detroit, and American Airlines Inc. shuttered the St. Louishub it gained when it bought Trans World Airlines. United has already applied this strategy elsewhere, downsizing the Clevelandoperation it bought when it merged with Continental in favor of its large Chicago presence. Today, Dulles would still be a likelytarget. Legacy United, in the days before it had Continental's Newark stronghold, had established a largely-international presence therethat it hoped to support based on government travel, but that business has proven to be less lucrative than the corporate trans-Atlanticflying out of the New York area. Dulles is also located a very long 30 miles from downtown Washington, a trip that can easily takemore than an hour by taxi in rush hour, putting it at a disadvantage for local business compared to Reagan National Airport, from whereyou can look across the Potomac River to the Washington Monument. Others would like to see United reconsider its scale at LosAngeles International, especially given the airline's success in building a trans-Pacific operation up the coast in San Francisco. LosAngeles is both overcrowded and the center of a buildup by Delta and others, meaning United could likely attract significant interest if itwere to sell assets or leases there. Denver, too, has been under the watchful eye of United management, and could be targeted for moreof a downsizing. The airport offers a relatively favorable location for collecting and distributing West Coast traffic but is plagued byweather issues. Also, United faces intense competitive pressure there from hometown Frontier Airlines Inc., as well as a large SouthwestAirlines Co. (LUV) presence. But United sources have mainly downplayed the idea of dramatically reducing the airline's footprint. Theyargue that, in an age where large-scale domestic consolidation is complete, United, American and Delta, thanks to internationalalliances, can all offer business travelers access to the entire globe. As a result, they insist, factors such as quality real estate, along within-flight amenities, are growing in importance. "There is expense in operating out of Los Angeles and New York, but there is also strongdemand from customers to fly in and out of those cities," one source said. "Long-term cuts would make the airline weaker, not stronger,and that is not good for shareholder value." The coastal hubs that mean longer flights are also ideal gateways for more-lucrativeinternational traffic, perhaps helping to offset any added costs from the increased flying time. More broadly, many at United woulddispute Keay's assertion that the issues plaguing the company are structural, and cannot be overcome with time. The airline is in theearly stages of a restart under new CEO Oscar Munoz, making peace with some key labor groups and more recently reaching asettlement with two activist investors that involved revamping the board and adding considerable additional airline experience. Unitedvice chairman and chief revenue officer, James E. Compton, during last week's call with investors, responded to a question from Keayabout potential divestitures or breakups by saying, "I think it's way too early for anyone, particularly me, to answer." Cowen & Co.'sHelane Becker in a note points out that United Continental's capacity is already down since the 2010 merger, and argues that shouldUnited shrink, that capacity would likely be backfilled by "another potentially irrational operator," resulting in market share lost toUnited and potentially an even worse revenue environment depending on the level of the new entrant's recklessness. Management said itintends to host an investor call in late June to go over its plans to boost revenue and prove skeptics are wrong about the airline'sstructural issues. Executives also said they will list initiatives that will likely include reworking the fleet and restructuring new fares toboost revenue. A fleet revamp, in which the airline retires its aging and expensive 747s and phases out less-efficient regional jets, wouldbe a start. From there, perhaps investors can get a clearer view of what kind of earnings this slumbering giant can deliver and make a


more clear-headed judgment about whether a breakup is in order. "United is in a difficult spot and needs to prove they are not broken,"Becker wrote. "We are willing to wait to hear what management says to investors in June." If the company fails to deliver by then, allbets are off.


Recent News

Movers & shakers April 7: Halliburton-blocker may take DOJ’s No. 3 spotby Baz HiralalUpdated 10:57 AM, Apr-07-2016 ET

Attorney General Loretta E. Lynch said acting associate attorney general Stuart F. Delery will leave the Department of Justice's No. 3spot on April 14. He will reportedly be replaced by assistant AG Bill Baer, the head of the antitrust division that just asked the U.S.District Court in Delaware to block Halliburton Co.'s proposed $35 billion acquisition of Baker Hughes Inc. Baer (pictured) has workedconcessions from companies including Anheuser-Busch InBev NV, AMC Entertainment Inc., American Airlines Inc. and Apple Inc.,and recently blocked Tribune Publishing Co. from its attempt to buy bankrupt Freedom Communications Inc. On Wednesday, the DOJdropped its antitrust suit after United Continental Holdings Inc. killed its deal to acquire takeoff and landing slots at Newark LibertyInternational Airport from Delta Air Lines Inc.

Delery, who gave no information on his next move, has argued cases regarding the unconstitutionality of the Defense of Marriage Act,the availability of Affordable Care Act subsidies on federally run health insurance exchanges, and the legality of NSA bulk datacollection. He joined the DOJ in January 2009 and, from March 2012 to September 2014, led the civil division. He became AssistantAG for the civil division on Aug. 1, 2013. Earlier, Delery was a partner in the Washington office of Wilmer Cutler Pickering Hale andDorr LLP, where he was a member of the litigation department and the appellate and Supreme Court litigation practice, and a vice chairof the firm's securities department.

Before being sworn in on Jan. 3, 2013, Baer was a partner and head of the antitrust practice at Arnold & Porter LLP in Washington.From April 1995 to October 1999, Baer was director, bureau of competition at the Federal Trade Commission.

Macquarie Capital appointed Jeremy Parker in New York as a managing director, aerospace, defense and government services. He wasmost recently at Sagent Advisors LLC, where he was managing director and co-head of the aerospace, defense and technologyinvestment banking practice. Before joining Sagent in June 2013, Parker was managing director and head of aerospace, defense andgovernment investment banking at Gleacher & Co., where he worked on deals including Evolvent Technologies Inc.'s sale to ManTechInternational Corp., New Mountain Capital LLC's acquisition of a majority stake in SNL Financial, CKX Inc.'s sale to Apollo GlobalManagement LP and Mercury Systems Inc.'s equity offering. Parker also worked at Science Applications International Corp. (nowLeidos and SAIC), where he worked on mergers and acquisitions and principal investments. Parker started his investment bankingcareer in June 1997 at Donaldson, Lufkin & Jenrette Inc.

Piper Jaffray Cos. hired Kalan MacGinley in San Francisco and Michael Perry in New York as managing directors, financial institutionsinvestment banking.

MacGinley managed the western U.S. financial services sector at Macquarie Capital, covering international and western U.S. financialservices companies where, prior to the Macquarie acquisition, he established the Fox-Pitt Kelton practice. Previously, he was a directorat RBC Capital Markets in FIG investment banking.

Perry, who has worked at Morgan Stanley, Bear, Stearns & Co., Merrill Lynch & Co. and Sterne Agee, will lead the financialinstitutions investment banking practice for Piper Jaffray in the southeastern U.S.

BNY Mellon added Piers Murray in New York as chief operating officer, markets. He succeed nearly four-decade BNY veteran ReginaMeredith-Carpeni.

Murray was recently global co-head of listed derivatives and markets clearing at Deutsche Bank AG. He was previously global head ofOTC derivatives clearing and derivatives prime brokerage at the bank. From 1986 to 2012, Murray was with JPMorganChase & Co. incredit portfolio, credit risk management and OTC interest rate clearing. From 1988 to 1999, he worked in the bank's FX options businessin London, Singapore and New York.

Activist investor Jeffrey Smith, CEO and chief investment officer of Starboard Value LP, resigned as chairman of Darden RestaurantsInc. as the restaurant operator reported a better-than-expected quarter. Smith joined the board in October 2014 when Starboardunprecedentedly overthrew the entire Darden board, while taking aim at operations such as the flagging Olive Garden brand, wheresame-restaurant sales increased 6.8% for the third quarter versus the same fiscal quarter last year. Among the changes Darden completedthe spinoff of Four Corners Property Trust.


Smith stated, "It is with mixed emotion that I leave the board of directors." Charles M. Sonsteby, a current independent director, is nowchairman. He is also chief administrative and financial officer of Michaels Cos.

Last month, Ricardo Cardenas was named senior vice president and CFO, replacing Jeffrey Davis who left Darden to pursueopportunities. Cardenas was chief strategy officer and began his career with Darden as an hourly employee in 1984. Additionally,Harald Herrmann, president of the specialty restaurant group, informed the company he is leaving in August to return to his roots as anentrepreneur in California. He joined Darden in 2012 as part of the acquisition of Yard House.

David P. Kreisler joined Sidley Austin LLP as a partner in Boston to counsel clients on private equity matters, with a focus on fundformation. He was a partner at Weil, Gotshal & Manges LLP, joining the firm in September 2002 after nine years at Hutchins Wheeler& Dittmar and two at Nutter McClennen & Fish LLP.

Mayer Brown LLP said Douglas Donahue joined the firm's global banking and finance practice and derivatives and structured productsgroup as a partner in New York. Previously, he was special counsel with Cadwalader, Wickersham & Taft LLP.

Daniel J. Edelman Holdings Inc., the public relations firm doing business as Edelman, named Lex Suvanto global managing director ofits financial communications and capital markets offering, leading a team covering M&A and shareholder activism to investor relationsand IPOs. Before joining Edelman three years ago, Suvanto was a managing director and chief marketing officer at AbernathyMacGregor Group Inc.

Clippings from the next column:

-- Pierre-Emmanuel Juillard returns to AXA Investment Managers. -- Bank Julius Baer adds David Shick as head of private banking,Greater China.


Recent News

BANKRUPTCY FILING PROFILE

Republic Airways Holdings Inc.More on this company

Basic filing information

Debtor Republic Airways Holdings Inc.Case number 16-10429Filing Type Chapter 11Court Southern District of New York, ManhattanFiling date Feb 25, 2016Exit date Apr 30, 2017Assets $ 3,561,491,520.00Liabilities $ 2,971,485,269.00

Filing Notes:The Indianapolis regional airline files for Chapter 11 to reorganize following a pilot shortage that groundedplanes and cut into its revenue.

Exit Notes:Republic Airways' reorganization plan takes effect on April 30, 2017.

Republic Airways en route to confirmation [Dec 28, 2016]

Republic files flight plan to depart bankruptcy [Nov 17, 2016]

Republic Airways secures American Airlines contract but with fewer aircraft [Sep 07, 2016]

Republic lands DIP from Delta Air Lines [Mar 30, 2016]

Republic hit by self-inflicted turbulence during descent into bankruptcy [Feb 29, 2016]

Republic Airways looks to sell smaller jets [Feb 26, 2016]

Republic Airways flies into Chapter 11 [Feb 25, 2016]

Republic pilots ratify labor deal [Oct 27, 2015]

Delta increases pressure on Republic Airways [Oct 07, 2015]

Republic Airways cuts Teamsters deal to avoid bankruptcy landing [Sep 28, 2015]

Republic inches toward bankruptcy as union refuses to send contract offer to pilots [Sep 02, 2015]


Recent News

Movers & shakers 21: Another structured products banker gets picked upby Baz HiralalUpdated 10:52 AM, Oct-21-2015 ET

New York-based CIFC Corp. hired Robert J. Klein as senior portfolio manager and managing director for structured products, aninvestment strategy that is getting more play lately. Klein was lead portfolio manager for collateralized loan obligation investments atProspect Capital Management. Before founding the CLO business there, he worked at American Capital Ltd., where he was a managingdirector and led the New York private equity and financial sponsor lending teams. Klein previously worked at middle-market privateequity firms American Securities and American Industrial Partners. Klein began his career in the mergers and acquisitions groups ofFirst Boston and Morgan Stanley.

CIT Group Inc. chief financial officer Scott T. Parker will become finance chief at Springleaf Holdings Inc. in November. CIT chairmanand CEO John A. Thain noted Parker led efforts to improve the liability structure as the firm eliminated or refinanced about $31 billionof high-cost debt and was instrumental in efforts to return about $1.7 billion to investors. In addition, Thain stated Parker oversaw theexits of CIT's non-strategic portfolios over the past five years.

At Springleaf, Parker will succeed Minchung Kgil, who will continue to serve as CFO of the company's subsidiaries. Among Parker'sduties will be to oversee the close of the acquisition of subprime lender OneMain Financial Holdings for $4.25 billion from CitigroupInc. In August, the deal hit an antitrust snag, as the U.S. Department of Justice extended its review.

Before joining CIT in 2010, Parker was chief operating officer and CFO of Cerberus Operations and Advisory Co. LLC, an affiliate ofCerberus Capital Management LP. Before joining Cerberus in 2006, he spent 17 years in financial roles in the industrial and financialservices businesses at General Electric Co., most recently as CFO for GE Capital Solutions.

Warburg Pincus LLC appointed Thomas W. Horton as a senior adviser, industrials and business; and Scot W. Melland as an industryadviser, technology, media and telecommunications.

Horton was most recently chairman, president and CEO of American Airlines Inc. He led American through its restructuring whichculminated in an $11 billion merger with US Airways Group Inc. Earlier, at AT&T Corp., Horton was chief financial officer and vicechairman, where he reduced the company s gross debt by 75% and eventually structured its $16 billion merger with SBCCommunications Inc.

Melland was most recently chairman and CEO of DHI Group Inc., a global online recruiting firm formerly known as Dice Holdings Inc.While at DHI, he led the company through a public offering. Before that, Melland was co-founder and CEO of Vcommerce, ane-commerce software company. He was also a senior vice president of interactive services at Cendant Corp. (now Affinion Group),where he built and managed a portfolio of online businesses, including Match.com and Rent.net. Melland also worked at Ameritech(now AT&T) and McKinsey & Co.

ClearBridge Investments added Michael Testorf as a portfolio manager for international growth equity strategies. He was a seniorportfolio manager and senior partner at R Squared Capital Management LLP, overseeing the research efforts of the firm's analyst teamand members of the operations and trading team. For 13 years, he worked at Artio Global Management (formerly Julius Baer), where hewas most recently a senior portfolio manager and senior vice president.

In New York, Tetragon Financial Group Ltd. named Stephen Prince co-head of TFG Asset Management and head of North America forTetragon Financial Management LP, TFG's investment manager. He was deputy chief investment officer and chairman of Silver CreekCapital Management LLC's investment committee. Before joining the alternative investment firm in 2007, Prince co-founded long/shortequity hedge fund Pivot Capital Partners and worked at Claiborne Capital Partners from June 2001 to September 2004. Prince began hiscareer at Tiger Management LLC and remains a trustee of the Tiger Foundation.

Ropes & Gray LLP said Jieni Gu joined its mergers and acquisitions practice as a partner in Shanghai. At Weil, Gotshal & Manges LLP,she was counsel in the M&A and private equity groups. She also practiced at Sullivan & Cromwell LLP in New York and Beijing.

Investment consultancy Meketa Investment Group is opening a Chicago office. Ted L. Disabato, managing director of Disabato


Advisers, will join the firm as a managing principal and consultant. Alexandra Wallace, a Meketa principal, will relocate to Chicagofrom Boston.

United Continental Holdings Inc. named general counsel Brett J. Hart acting CEO as Oscar Munoz is on medical leave following a heartattack he suffered on Oct. 15.

Before joining United in 2010, Hart was executive vice president, general counsel and corporate secretary at Sara Lee, a partner atSonnenschein Nath & Rosenthal LLP and special assistant to the general counsel at the U.S. Department of Treasury.

Research and analytics firm Aranca took on Mark Shifrin as vice president of valuation and advisory services, based in Boston. He wasmanaging director for Brookline Valuation Services, a valuation firm he founded in 2014. Earlier, he worked at Capstone Partners LLC,Valuation Research Corp., Grant Thornton LLP and Sanford C. Bernstein.

Clipping form the next column:

-- Frederic Janbon becomes head of asset management at BNP Paribas SA.


Recent News

Back to the brinkby William McConnell and Ronald OrolUpdated 02:15 PM, Oct-16-2015 ET

If Tea Party Republicans in the House of Representatives instigate another shutdown of the federal government, recent history showsthat dealmakers can expect delays in getting approvals for mergers, public offerings and other regulatory check-offs necessary to greasethe wheels of finance. The 16-day shutdown in 2013 gives a pretty good glimpse of what may be in store if all but the few federalworkers deemed essential personnel are told to stay home for some appreciable period sometime in the coming months. GuggenheimPartners LLC analyst Chris Krueger has said the chance of a federal shutdown between now and early December is about 40%--he stillgives the best odds to any of several scenarios that could avoid a fiscal cliff but in an Oct. 8 note to clients he said "brinksmanship,procrastination or political gridlock" could prevent Congress from raising the federal debt limit by Nov. 3, as it must to avoid the firstpotential trigger for a shutdown. A second trigger looms on December 11 when a government funding agreement expires and Congressmust pass a new continuing resolution. Republicans have threatened to block any resolution that contains funding for PlannedParenthood. Democrats have demanded relief from the sequester, which has locked in funding for discretionary spending at levels set ina 2011 agreement, and reopening of the Export-Import bank. Establishment Republicans in the GOP leadership have some maneuversthat can head off a shutdown. For starters House Speaker John Boehner, R-Ohio, who announced on Sept. 25 he would resign when areplacement is picked, can stay in office through the end of the year and patch together enough GOP and Democratic votes to raise thedebt limit and pass a continuing resolution. Alternatively the same feat can be accomplished if a caretaker speaker with little concern forholding the job long-term is chosen. Finally, a consensus speaker like Wisconsin's Paul Ryan could placate the Tea Party faction bypromising them more committee posts and a bigger voice in future policy fights. Absent a speaker who can broker a truce among HouseRepublicans, regulatory agencies across Washington will be forced to pare down to skeleton staffs and those who remain will do whatthey can to keep the machinery of government grinding along. And, they may have to do that with the added distraction of making runsto the Costco in Pentagon City, Va. to keep their office bathrooms stocked with paper towels and toilet paper and of hauling contents oftheir wastepaper baskets to the dumpsters outside their buildings. Such mundane tasks fell to senior staffers at the antitrust agencies in2013, even as they engaged in triage with their limited staff resources to keep merger reviews moving along according to statutorydeadlines. The progress of merger reviews and approvals for other corporate actions was slowest at agencies like the FederalCommunications Commission and the Securities and Exchange Commission, which generally don't face congressionally imposeddeadlines for approving mergers or license transfers or for authorizing stock offerings. How the various agencies relevant to dealmakersfared in 2013 provides a glimpse of what should be expected if there is another fiscal impasse. Many functions of the Federal TradeCommission and the Department of Justice antitrust division will be suspended but staffers essential to keeping pre-mergerinvestigations on track will continue to work. That's because the Hart-Scott-Rodino Act requires the agencies under a 30-deadline toclear a merger submitted to the government or launch an extended review to consider any suspected antitrust concerns. The FTC and theDOJ fulfilled their legal obligations during the 2013 ordeal by keeping HSR reviews on time and continuing litigation of four mergercases, including the DOJ's effort to block US Airways Group Inc.'s acquisition of American Airlines Inc. (The DOJ did, however, pointto the shutdown in seeking a stay in the airline merger case, a request the judge denied.) But antitrust merger reviews were neverthelessaffected to a fair degree. "A shutdown will be disruptive and will make life harder for those who do come into work," said JonathanLewis, a partner in the antitrust practice at Baker & Hostetler LLP. "They will not have all the resources they normally have at theirfingertips. Also non-merger and conduct investigations will be put on hold." Louisiana-Pacific Corp.'s (LPX) unsuccessful attempt toacquire rival Ainsworth Lumber Co. Ltd. in 2013 highlights the kind of delays merging parties may face. Despite facing staffingshortages during the initial 30-day HSR review clock, the Department of Justice refused, apparently as a matter of principle, to askLouisiana-Pacific to withdraw and refile its pre-merger notification notice to restart the clock and allow the DOJ an extra month todecide whether to issue a second request. Louisiana-Pacific ultimately decided to pull and refile its HSR notification to allow the DOJmore time to conduct its preliminary review of the transaction, although this move did not succeed in avoiding a second request. DavidSmutny, one of the partners who led the Orrick, Herrington & Sutcliffe LLP team representing Louisiana-Pacific, said that thegovernment shutdown led to a smaller than usual team working on the deal-two staff lawyers and an economist-during the initial 30-daystage. "The government shutdown fell right in the middle of the 30-day review and staff was limited fairly significantly in terms of whowas allowed to come in and work," Smutny said. "In a deal like this, which was in an industry that had undergone antitrust investigationbefore and required some initial voluntary document production by the parties, I think it would be typical to have a larger staff." Despitethe upfront delays, Smutny doesn't blame the shutdown for the DOJ's ultimate resistance to the merger and the companies' decision toterminate the deal. "I think the government really worked hard to give as much attention and evaluation as possible under thecircumstances. The shutdown did contribute to the decision to pull and refile, but I do not believe it affected the overall outcome-eitherin terms of issuing a second request or opposing the merger." Former FTC staffer Darren Tucker, now a partner at Morgan Lewis &Bockius LLP, noted that agency staffers review procedures that will be in place in case of a shutdown. Although the former attorneyadviser to a couple of commissioners left the FTC before the 2013 episode, he said the training gives staff a pretty good idea of what toexpect. Being designated as essential personnel carries a bit of bragging rights within an agency, he said. Most agency attorneys andeconomists will not be considered essential unless they are facing a statutory deadline in an investigation. Even in those cases, not allstaff working on a matter will necessarily be considered essential. Tucker said the transactions most likely to be affected by a shutdownare those that have already received a second request for information. While the merging parties are in discussions with governmentstaff about what documentation must be submitted, the agencies are under no deadline for moving forward. (Only after the companieshave certified compliance with a second request is the government back on another 30-day clock to complete its review.) "After a


second request the process can shut down completely," he said. "There may be no way of getting in touch with the staff," he said, notingthat staffers in many cases will be required to turn in their government-issued smartphones. Merging parties will really feelinconvenience if a shutdown goes beyond two weeks, he said. In that event, more merging companies will need to refile their mergernotifications and government staff will have a harder time requesting and reviewing responses to subpoenas and civil investigativedemands from third parties affected by a merger in a timely manner. Antitrust attorneys say there's little benefit merging parties canglean from a shutdown. For instance, being short-staffed won't mean that the agencies are less likely to issue second requests for dealsthat might raise competition concerns. "There's not a single transaction I can think of that should have received a second request but forthe skeleton crew working on the deal," said Karen Kazmerzak, counsel at Sidley Austin LLP and a former FTC staffer. "The DOJ andthe FTC are already strapped for resources so they are already adept at adapting to restraints." Added Baker & Hostetler's Lewis: "Don'tthink you'll be able to get something through that otherwise would get a second request. Trying to game the system is shortsighted andyou're going to get caught." As much as the antitrust agencies may be sources of delay, mergers may face a more serious threat at othergovernment offices. At the FCC, which operates under a self-imposed 180-day timetable to review mergers that can be suspendedvirtually at will, merging cable operators, TV station groups and telecom companies will be vulnerable TO even longer slowdowns ingetting approvals. During the 2013 shutdown, Gannett Co.'s (GCI) purchase of Belo Corp. TV stations and Sinclair Broadcast GroupInc.'s (SBGI) acquisition of Allbritton Communications Co.'s stations faced the prospect of delay. As it turned out, Gannett was able tomeet its goal of closing its deal by the end of 2013. Sinclair was unable to get its done until Aug. 2014. Foreign acquirers of U.S. assetsmay face a virtual halt in approvals by the Committee on Foreign Investment in the U.S. In 2013 CFIUS, the Treasury Department-ledpanel charged with reviewing acquisitions of U.S. assets for national security threats, let it be known to lawyers representing clientsbefore the panel that parties would be asked to withdraw their merger notifications until after the shutdown. Despite the national securityimplications of CFIUS reviews, its functions were considered non-essential because CFIUS applications are voluntary. Under federallaw, foreign buyers may close their deals without CFIUS approval, although the panel is free to investigate the deals at any time afterclosing. Lawyers in the CFIUS bar warn their clients, however, that it's a big mistake to bypass CFIUS approval if a deal presents anyconceivable security concerns as the panel is likely to force a consummated deal to be broken up and a fire sale is the likely outcome.When it comes to corporate finance, a shutdown also will force the Securities and Exchange Commission and Commodity FuturesTrading Commission to reduce their staffs to bare-bones levels. IPOs and any other transactions requiring SEC or CFTC approval wouldessentially come to a halt until the shutdown ended. In 2011, a government shutdown was averted with an 11th-hour budget deal.However, in the period leading up to it, the CFTC said it had plans to retain 25 of its then-675 employees in the event of a shutdown.The SEC estimated that of its then roughly 4,000 employees, it would retain only 174 staffers engaged in law-enforcement activities and158 workers needed to protect life or property. Currently, the SEC has an operational plan for a government shutdown, noting that thecommission will have only "an extremely limited" number of staff around to respond to emergency situations "involving the safety ofhuman life or the protection of property, including law enforcement." Meanwhile, the Federal Reserve, because it is self-funded and notsubject to the congressional appropriations process, would likely continue to review bank mergers and operate mostly normally in theevent of a shutdown. However, a former Office of the Comptroller of the Currency staffer noted that bank regulators may be instructedto go home "in solidarity" with employees at other agencies directly impacted. The OCC, an independent division of the TreasuryDepartment that charters, regulates and supervises national banks, is also self-funded by assessments on national banks. "We wereinstructed to prepare to go home," he said, referring to a previous shutdown threat. Beyond a shutdown, a debt default-or coming closeto one-could have a major impact on banks and economic stability. Cornelius Hurley, director of the Boston University Center forFinance, Law & Policy, suggested that even a last minute deal to avert a debt default would likely lead to further U.S. debt credit ratingagency downgrades, which could increase U.S. borrowing costs. Immediately after an 11th hour deal to raise the U.S. debt limit wasreached in 2011, Standard & Poor's downgraded the U.S. debt rating one notch below AAA and criticized the US. policymakingprocess. "Maybe this time Fitch and Moody's will downgrade their U.S. debt ratings," said Hurley. He noted that the U.S. is perhaps onthe verge of beginning a long steady increase in interest rates. More credit rating debt rating downgrades combined with the expectedinterest rate hike would have a combined negative impact on borrowers, Hurley argued. Beyond that, he suggested that a U.S.government default on its debt would have much wider systemic implications for banks. "It is a very dangerous game of chicken weplay when we do this," said Hurley. "If a bank has a significant Treasury securities portfolio, suddenly that portfolio becomes muchriskier." However, the former OCC official said he thought it was extremely unlikely that the U.S. would ever default on its debt. Healso argued that credit raters will think "long and hard" before downgrading U.S. debt further in light of the Justice Department's S&Plawsuit in 2013, when the government accused the rater of overly optimistic mortgage-backed securities ratings. "The problem ratershave is, do they want to be credible in the marketplace or be in trouble with the government?" he asked. Nevertheless, Jaret Seiberg, ananalyst at Guggenheim Securities LLC in Washington, noted that the firm is concerned about banks, which own more than $400 billionin Treasury securities. "The concerns go beyond whether banks will get interest payments on time. There is also the issue of whetherTreasury securities will still be used to collateralize overnight loans," he said in a report. Seiberg also questioned whether Treasurysecurities would still be permitted to count towards bank regulatory liquidity requirements. "Our expectation is that regulators will issuenumerous exemptions so that there is no immediate impact on bank capital levels or other supervisory measures," Seiberg said.

However, Seiberg was cautious about making a full prediction about what the broader impact would be on U.S. banks. "There is simplyno modern-day reference for what a default would mean," he said in a statement.


Recent News

United Airlines invests $100 million to solidify partnership with Brazil's Azulby Lou WhitemanUpdated 03:34 PM, Jun-26-2015 ETUnited Continental Holdings Inc. (UAL) said Friday it would invest $100 million in Brazil's Azul Linhas Aereas Brasileiras SA, part ofa broader push by U.S. airlines to expand their influence overseas. Terms of the deal call for Chicago-based United to acquire a 5%stake in Azul, Brazil's third-largest airline, as part of a broader agreement for the two companies to codeshare on flights and offerbroader connection opportunities to passengers on routes between the U.S. and Brazil. United will also gain one seat on Azul's board.Azul, of Sao Paulo, was started by JetBlue Airways Corp. founder David Neeleman and has been flying since 2008. The company offersmore than 900 flights to more than 100 destinations. Though laws in most countries prohibit outright takeovers of local carriers, U.S.airlines have been opportunistic in recent years in expanding their reach. Atlanta-based Delta Air Lines Inc. last year acquired a 49%stake in Virgin Atlantic Airways Ltd. for $360 million, and also holds minority positions in Grupo Aeromexico SA de CV of Mexicoand GOL Linhas Aereas Inteligentes SA of Brazil. And the former parent of American Airlines Inc. in 2010 offered to invest in therestructuring of Japan Airlines Corp. to keep that Asian airline in its global alliance. With the Azul deal, all of Brazil's three largestairlines are now affiliated with a U.S. carrier. Tam, Brazil's largest carrier, is a member of American's Oneworld alliance through itsparent Latam Airlines Group SA. United is also affiliated with Brazil's fourth-largest airline, an operation run by Colombia's AviancaHoldings SA. "Brazil is an important market in United's global route network and this partnership with Azul further strengthens our tiesto the region," Jim Compton, United's vice chairman and chief revenue officer, said in a statement. "Together we will offer our mutualcustomers more choice and convenience when traveling to and from destinations across Brazil." United received financial advice from aBarclays team of Ben Metzger, Josh Connor, Kristin Healy and Mike Calabrese, with Kevin Lewis, Anna Ha, Mary Isensee and TroyHunt of Sidley Austin LLP teaming with Aidar SBZ to providing legal counsel.


Recent News

Cooler heads prevail: Why mediation is growing as a tool in bankruptcyby Jamie MasonUpdated 01:05 PM, May-08-2015 ET

Friends and colleagues asked Peter L. Borowitz when he retired from Debevoise & Plimpton LLP's bankruptcy and restructuring groupin 2007 if he was going to spend more time with his family and do some more traveling. Hardly. Borowitz spends his days in his homeoffices in New York and Florida surrounded by binders full of court documents and on the phone with warring lawyers.

Not much of a retirement for Borowitz, who is a professional mediator.At least not yet. But the 62-year old didn't realize when he became one how much mediation work would mushroom. "There were veryfew mediations in bankruptcy. It was quite rare when I retired," he said. "But there has been a boom in mediation."

Nor is it now just applicable to debtors. The City of Atlantic City, N.J., for example, appointed a mediator in April to help keep it out ofbankruptcy. According to James Mesterharm, a managing director at AlixPartners LLP, mediation can be used in out-of-courtrestructurings to resolve commercial disputes, litigation logjams and patent infringement claims.

But it's been in bankruptcy cases that mediation has had its largest impact, even though it's not legally binding and is completelyvoluntary. "There is a trend toward trying to use mediation more and more to have the parties try to negotiate rather than have a judgerule on the issues, so that the court hearing can be more streamlined and efficient," said Sharon Levine, a partner and vice chairwomanof bankruptcy, financial reorganization and creditors' rights at Lowenstein Sandler PC.

MEDIATION IS COMMONLY used in all types of legal proceedings in state and federal courts, and is actually mandatory in theSecond Circuit Court of Appeals, which handles the influential federal courts in New York.

In bankruptcy, a judge will either appoint a professional mediator such as Borowitz or a judge, either still on the bench or retired. "Ithought the person who had the best job was the mediator," said Borowitz, who was drawn to it after some of his largest cases, includingelectric utility , involved mediated settlements. "Everyone was friendly to the mediator and there was veryUSGen New England Inc.little hostility directed toward the mediator."

Mediation can last for one day or for a year. The process is completely confidential. The mediator doesn't write a report or presentfindings to a judge, since any deal struck in a mediation isn't binding. That's how it differs from arbitration, which is legally binding.

As bankruptcy cases have become more complex and litigious, mediation has increasingly offered a forum for negotiation, especiallywhen talks break down. Mediation is especially put to good use when the law is gray and both sides have a good argument, according toAlixPartners' Mesterharm.

Others said legal matters that are candidates for appeal are also good mediation fodder. "The cost, delay, drain on resources anddistraction from the focus of a company's actual business [caused by litigation] drives mediations," said Steven J. Reisman, the co-chairof the restructuring and insolvency group at .Curtis, Mallet-Prevost, Colt & Mosle LLP

Reisman explained that a mediator will typically receive a mediation statement from each party, which discloses their positions. Thestatement, which isn't shared with the other parties involved, usually also explains the parameters or terms on which the party is willingto settle. The mediator will dissect the statement, meet with the parties and look for ways for the parties to reach common ground.

Financial advisers, lawyers, lenders, hedge funds, company employees and other people who are ultimate decision-makers attendmediation, Mesterharm explained.


"Typically the rules agreed to under the mediation require that the people that are there have the authority to cut a deal, and that bothsides will negotiate in good faith," he said.

And while it matters who is at the table, it also matters who the mediator is. The mediator has the experience and knowledge of the lawto give the combatants a good idea of how a judge would rule on their arguments, Mesterham explained.

There are also differences between having a professional mediator or a former judge handle an assignment and a sitting judge on one,starting with cost. Sitting judges aren't paid for mediation and instead just get their expenses reimbursed, but professional mediators orretired judges get paid either hourly fees or a flat one for their services.

BEYOND THE PAY issue, there's also gravitas involved when it comes to a former or current member of the bench. "There is a levelof respect that comes along with being a judge or former judge, which often makes people act better," said Damian Schaible, a partner at

. "More importantly, though, the judge or retired judge may be able to better deliver tough messagesDavis Polk & Wardwell LLPabout parties' positions and views and how they are likely to play out in court if mediation fails."

Hon. James M. Peck, a former judge in the U.S. Bankruptcy Court for the Southern District of New York who is now the co-chair of thebusiness restructuring and insolvency group at , did his first mediation while he was still on the bench at theMorrison & Foerster LLPrequest of one of his colleagues at the time, Judge Sean H. Lane.

He said his colleagues would occasionally ask him to mediate difficult cases when they thought the case could benefit from havingsomeone come in who was independent and could aid in a settlement. Peck has handled a total of 10 mediations, both as a judge and aretired jurist.

For example, Lane asked Peck to work on the labor issues that were causing a great deal of litigation and disagreement in the American bankruptcy case.Airlines Inc.

Peck said that the mediation went on for months in conference rooms atthe U.S. Bankruptcy Court in Manhattan or at different law firms, such , which wasSkadden, Arps, Slate, Meagher & Flom LLPrepresenting the unsecured creditors committee. Peck noted that there were three separate unions involved in the mediation-for thepilots, flight attendants and mechanics unions-as well as various other individuals.

According to Curtis, Mallet-Prevost's Reisman, having a sitting judge as a mediator is sometimes helpful because such individualsprovide "judicial persuasion," which is an influence that judge tends to have over the parties involved when expressing his views abouthow facts should be applied to the law in a mediation context. In other words, people involved in a mediation may listen more to whatsuch a judge has to say because he still adjudicates cases in court. The flip side? You can't tell a sitting judge that "they are full of it," hesaid.

Reisman was involved in two Peck mediations, one involving bankrupt and the other involving a litigationMF Global Holdings Ltd.surrounding the bonds of General Motors Nova Scotia Finance Co., the Canadian unit of General Motors Corp. when the automaker wasin bankruptcy.

Davis Polk's Schaible notes as capital structures have gotten more complicated and investors more sophisticated, large corporatebankruptcy cases feel like they've become more difficult, expensive and intricate.

"Judges are severely overworked and even more severely underpaid, and they are left to understand and address complex capitalstructures and contested matters, sometimes with eight or 12 different constituencies all with different counsel, and they just aren'thumanly able to keep up with the amount of paper and number of issues that are being raised," he asserted. "At the same time, from theinvestor and debtor perspective, there is also a desire to keep complexity and cost down. People are grasping for solutions in these bigChapter 11 cases and one of them is plan mediation."


Peck said that, in a complex Chapter 11 case, parties at some point during the process of negotiating a reorganization plan or atransaction associated with the plan always think about whether or not mediation would help.

"It comes up routinely, as a natural part of the process, and I don't think that used to be the case," he added.

In fact, mediation has been used for a long time to resolve adversary proceedings and litigation arising in a bankruptcy, but not the entirecase.

"What is new is the use of mediation to develop a compromise that can produce a plan of reorganization with the consent of all themajor parties," Peck explained.

He pointed to the case as the best example of this development. He said that the bankruptcy case wasResidential Capital LLC"massively complex" and the mediation, which he was appointed for, went on for months and involved many parties.

Borowitz goes further, saying that debtor counsel once effectively played the role of mediator in intercreditor disputes but now more andmore people are turning to mediation with a third-party to solve such issues.

The fact that plan mediation is working has only reinforced confidence in its increased use, Peck said. Helping, too, he added, is thatsome judges prefer mediation because it's a way to promote compromise and for the court to avoid the burden of litigation.

PLAN MEDIATION resolved the bankruptcy cases, according to Schaible, who represented the first-lienCengage Learning Inc.agent. The unsecured creditors' committee, senior creditors, junior creditors and very junior creditors were all fighting over the same setof assets. There were also copyright valuation and collateral issues, which made up a big part of the value of the company. There waseven a question as to whether or not certain copyrights had been perfected and were valid collateral of the first-lien lenders.

The parties agreed that litigation would take too long and collectively asked for a mediator, Judge Robert D. Drain of the U.S.Bankruptcy Court for the Southern District of New York, to be appointed.

Schaible said that Drain held a number of plan mediation sessions and helped fashion a settlement that was the basis for a consensualreorganization plan. The Cengage mediation spanned at least four months.

Then there are the one-day mediations, such as the one for While it was a long day-it started at 8 a.m., ended atNautilus Holdings Ltd.8 p.m.-issues had actually been resolved with several lenders before it started, so the mediation was down to just three or four parties,said Jay Goffman, a partner and global head of restructuring at Skadden, Arps, who has also been involved in mediations in thebankruptcies of , , and Excel Maritime Carriers Ltd. Evergreen Vintage Aircraft Inc. Syms Corp. Filene's Basement Inc.

One of the longer mediations recently occurred in the Chapter 9 case of the . The year-long mediationCity of Detroit, Michiganinvolved an entire team of mediators- Chief Judge Gerald Rosen the U.S. District Court for the Eastern District of Michigan wasappointed as the lead mediator for Detroit, and he appointed Judge Victoria Roberts of the U.S. District Court for the Eastern District ofMichigan, Judge Elizabeth Perris of the U.S. Bankruptcy Court for the District of Oregon, Senior Judge Wiley Daniel of the U.S.District Court in Colorado, former bankruptcy and district court Judge David Coar and Eugene Driker, the co-founder of Detroit lawfirm , to his mediation team. Professor Gina Torielli of the Thomas Cooley Law School alsoBarris, Sott, Denn & Driker PLLCconsulted with the mediators on public finance issues.

There were "literally thousands of claims and issues in the case," Rosen said in court documents.

Schaible, who was briefly involved in the Detroit mediations as counsel to a major creditor, said the use of the process was "one of thethings that made the Detroit case successful."

Lowenstein Sandler's Levine, who represented American Federation of (AFSCME) in the Detroit bankruptcy case, noted that the mediation was unique because ofState, County and Municipal Employees


how big it was and the number of issues involved.

Given the Detroit success, Atlantic City, N.J., appointed Hon. Donald H. Steckroth, formerly a judge for the U.S. Bankruptcy Court forthe District of New Jersey and now a member of 's bankruptcy and corporate restructuring group, as its mediator to helpCole Schotz PCwith the troubled city's out-of-court restructuring negotiations.

Atlantic City is hoping to avoid a Chapter 9 filing to deal with its decline in property taxes from casinos. But the city also has litigationto deal with, namely a lawsuit brought by in March that argues that tax rebate money owed to theBorgata Hotel Casino & Spacompany should take priority over repaying a loan to the state.

Mediation involving municipalities is a good fit. Said Peck: "The use of mediation in Chapter 9 cases of municipalities, is conventionaland expected because it's very difficult to reach a resolution in Chapter 9 without everyone's agreement."

Many participants in mediations note that it's about as fun as going to the dentist.

"It is not a pitched battle," said Skadden's Goffman. "Instead, it is shuttled diplomacy with the mediator going from room to room,telling you what he or she is hearing and how you can bridge the gap."

But the process is no less grueling for the mediator.

"There is a tendency for the parties to be open with the mediator because of the cloak of confidentiality, so the mediator ends up withquite a lot of information that hasn't been disclosed to the other side," said Peck, who once endured sessions for days and nights on endinvolving 14 separate conference rooms in the ResCap bankruptcy. "The mediator is always on the spot, going from party to party. It'sexhausting work."

The process has pitfalls, too. While mediation may not be as costly as litigating, it can still become a fee generator. All sides in amediation have to tip their hands, which could compromise their positions later. Moreover, not all mediations are successful.

Schaible goes back to his Cengage experience, when some 20 different professionals took part in several mediation sessions-andcharged by the hour. The debtor, he said, ends up assuming much of that tab.

Mediation often reveals the strengths and weaknesses of the arguments of the parties involved and you may not get everything that youwant or that you need in order to settle, since it's most effective when there is a compromise of positions, according to Reisman.

A willingness to mediate can actually be interpreted as a sign of weakness, he noted. Why mediate if you have an extremely strongposition?

Some bankruptcy professionals actually think mediation is a waste of time or a distraction because they know their clients will neversettle, Reisman pointed out.

To be sure, "there is an art to determining when to go to mediation," Schaible said.

Go to mediation too early and you risk a more streamlined resolution, he said. Wait too long and you risk people hardening theirpositions, he added.

Cengage went into mediation after being in bankruptcy just four months, while it started for Tribune Co. 30 months after its filing.

Schaible applies the same logic to the mediation itself. Too many parties and too many issues may mean too overwhelming a pile to getthrough. Too few parties could mean other issues will haunt the bankruptcy case well after the mediation is done.

Mediations don't always work the first time around. Or at all. The first mediation that took place in the GM Nova Scotia dispute wasn'tsuccessful, but the second try was.

And sometimes, a case is too far gone for a mediation to work. tried a last-ditch mediation in the hopes ofHostess Brands Inc.preventing a liquidation on Nov. 20, 2012, but it was unsuccessful because the former maker of Wonder Bread and Twinkies couldn'treach a deal with the . One source who asked notBakery, Confectionery, Tobacco Workers and Grain Millers International Unionto be named also said that Drain, a standing judge at the time, tried to mediate between the parties before approving the company'sliquidation, but no progress was made in what was a one-day effort.

It's not likely, however, that the mediation trend will abate.

"In a world where restructuring has become more contentious and more adversarial, mediation is one tool that we have been able toidentify that has encouraged parties to act in a more rational and constructive way," according to Skadden's Goffman. "It has allowed forconsensual restructurings in situations where the parties wouldn't have otherwise reached a deal, and I think we will be seeing it usedmore in the future."n


Recent News

'Dean of the bankruptcy bar' Harvey Miller dies following ALS battleby Kelsey ButlerUpdated 06:18 PM, Apr-27-2015 ET

Legendary bankruptcy attorney Harvey R. Miller has passed away, following a decadeslong tenure at Weil, Gotshal & Manges LLP thatput him front and center in some of the biggest cases in recent memory.

Miller, who was involved in the cases of Lehman Brothers Holdings Inc., General Motors Corp., American Airlines Inc., WorldComInc., Enron Corp., Texaco Inc., Eastern Air Lines Inc. and R.H. Macy & Co., among others, was 82. In a Monday, April 27, statement,Weil said Miller died following a battle with amyotrophic lateral sclerosis, also known as Lou Gehrig's disease.

In the statement, Weil said Miller joined the firm in 1969 as its 14 partner. He stayed at Weil for 33 years before departing inth

September 2002 for investment bank Greenhill & Co. (GHL), where he served as vice chairman. He returned to the law firm in March2007. "I had a very good time at Greenhill, but in the last year, as I got more involved as financial adviser to [CEO] Jerry Grinstein andDelta, particularly in this hostile climate, the juices began to flow," Miller told The Deal at the time. "And when somebody comes afteryou ... all of a sudden, people started calling and saying, 'Would you consider coming back into the legal racket?' Initially, I said no, andthen I said, 'You ought to think about it.' " Bankruptcy professionals and Weil itself hailed Miller's status among restructuringpractitioners. "He was a leading force in the evolution of Weil into one of the world's preeminent law firms and is responsible formaking the bankruptcy, restructuring and reorganization practice an integral practice group of most major law firms," Weil saidMonday. "Harvey was a legendary figure in the restructuring community. He built the industry from a quiet, sleepy little practice in the'50s and '60s to what it is today, one of the most important industries in the world, because it helps companies restructure and savesjobs," said Jay M. Goffman, global head of restructuring at Skadden, Arps, Slate, Meagher & Flom LLP. "Clearly, he was the Dean ofthe Bankruptcy Bar for many generations and mentored many in the restructuring community. The entire restructuring community isworse today for his passing." Chief Judge Cecelia G. Morris of the U.S. Bankruptcy Court for the Southern District of New York saidMiller "was a leader among bankruptcy professionals, and he made an indelible impression on the practice of insolvency law."

Morris, who knew Miller for 28 years, said he was the first to approach her about seeking a judgeship in 1995. At the time, she wasclerk of court in the Southern District. "He asked, 'When are you going to start applying for these jobs?'" Morris said. "It was the firsttime anybody had ever said it to me."

Morris, who joined the bench in July 2000, said the biggest lesson others in the field can learn from Miller is his creativity in findingsolutions.

"He was completely well versed in the law--he knew it inside and out--and with that, he was also creative," she said. EdwardWeisfelner, a senior partner at Brown Rudnick LLP, said via e-mail: "The man single-handedly revolutionized the practice and probablyadded more value to his clients than any other lawyer. Truly a giant in his field. Not the easiest guy to get along with, he was a fighter(sometimes literally) but seemed to have mellowed with age. If you were lucky, you collected one or more of his famous letters thatepitomized sarcasm, wit and an encyclopedic knowledge of the law, at least as he saw it. Among his most lasting impacts are the legionsof lawyers he trained that went on to become leaders in their own right. Love him or hate him, his indelible mark on bankruptcy law isnot likely to be equaled anytime soon."

In the Monday statement, Weil executive partner Barry Wolf said: "Harvey was the premier bankruptcy law practitioner. He was atrailblazer and set the standard for how to approach, develop and expand the practice. He leaves an unparalleled and indelible impact onthe field of bankruptcy law and on Weil, and we will miss him greatly." Weil's Stephen Karotkin, a partner in the firm's business financeand restructuring department and also one of Miller's close friends, in the statement added: "Harvey was an incredible mentor andteacher, not only with respect to how to practice in the restructuring arena but, more importantly, in how to be a lawyer. The impact hehas had on those with whom he worked at Weil and the multitude of clients he represented is unprecedented. The respect and admirationhe engendered from the judiciary, his peers and his colleagues cannot be overstated. He truly was a legend in the practice, and he will besorely missed by so many."

Proskauer Rose LLP's Martin Bienenstock also highlighted Miller's teaching role in e-mailed comments. Bienenstock said he met Miller"fresh out of law school" in 1977, when he went to work in Miller's department at Weil. "My bankruptcy professor, Frank R. Kennedy,told me the two best people to learn bankruptcy from were Harvey Miller and Leonard Rosen" of Wachtell, Lipton, Rosen & Katz,Bienenstock added. (Rosen passed away last April at age 83.) "Luckily, I worked with Michael Cook at Weil before I worked on a casewith Harvey, because, as I told many associates over the years, you needed to learn a lot before working with Harvey because he hadforgotten what it was like not to know everything." Bienenstock, chairman of Proskauer's business solutions, governance, restructuringand bankruptcy group and formerly co-head of Weil's business, finance and restructuring department, also shared an anecdote involvingtwo of the cases for which Miller was best known. "In 1987, when Harvey and I returned to the office from filing the Texaco Chapter 11petition with the bankruptcy judge in his back yard on a weekend, he looked at me and said General Motors would be my big case,"Bienenstock said. "Sure enough, General Motors retained me to formulate its Chapter 11 transformation into new GM soon after I left


Weil Gotshal." (Bienenstock left the firm for Dewey & LeBoeuf LLP in December 2007 before moving to Proskauer in May 2012.) Henoted Miller's successes were "based on nonstop and intense scholarship and constant learning, and relentless preparation." In addition,"I learned from observation that Harvey was a master at human psychology," Bienenstock said. "Whether informally in a conferenceroom, or when cross-examining a witness, Harvey would ask a question implying he knew the witness had done somethinginappropriate, and even though Harvey had no knowledge of anything the witness had done, his question and tone led the witness tothink he knew, and the witness would start volunteering damaging information. Harvey was a master of the art of being an advocatewith all the skills that entails." Miller has left a lasting mark on the community, Bienestock said, as he "legitimized and helped draft thestatute for Chapter 11 reorganization for all U.S. businesses and trained many of today's most successful reorganization attorneys."Richard Levin, chairman of the National Bankruptcy Conference, said he first met Miller when he was a "very young House JudiciaryCommittee staffer in Washington," working on what would eventually become the Bankruptcy Reform Act of 1978--the legislationbehind the current Bankruptcy Code. Levin, chairman of Cravath, Swaine & Moore LLP's restructuring practice, said Miller was "one ofa group of about a dozen experts who was relied on in developing the ideas" for the act, adding that Miller was "very instrumental inthat process." Levin also noted Miller was a "major contributor to the thinking and the working and the policies that the NationalBankruptcy Conference has advocated over the years." Miller was "always knowledgeable, always thoughtful, always committed andinvolved in the process," Levin concluded. "He was a real student of the bankruptcy law, and he cared about it very deeply, as a legalinstitution, not just from his perspective as a practicing lawyer." During his storied career, Miller taught at several institutions includingColumbia Law School, Yale Law School and New York University School of Law. Weil has established the Harvey R. Miller LectureSeries in his honor at Columbia Law School, from which Miller graduated in 1959.

Miller was also a member of the National Bankruptcy Conference, a fellow of the American College of Bankruptcy, a fellow of theAmerican Bar Foundation and a trustee of the Committee on Economic Development. In 2008, he became a member of the inauguralclass of inductees for the Turnaround, Restructuring and Distressed Investing Industry Hall of Fame.

A lover of opera, he served as an advisory director of the Metropolitan Opera.

Born in Brooklyn in 1933, Miller worked at two small firms before coming to Weil. He is survived by his wife of 60 years, Ruth Miller.

"When Harvey joined Weil, we had only 45 lawyers and two offices," senior partner Ira Millstein said in the Monday statement.Millstein, who recruited Miller for Weil, added: "He was an unforgettable leader, my personal colleague and friend. He will be missedgreatly by me and many at Weil and beyond." --Jamie Mason contributed to this story.


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