Airline Financial Aquisition

TABLE OF CONTENTS

Delta Airlines……………………………………………………………………………………...3

Target Cost………………………………………………………………………………………..3

Cash Available……………………………………………………………………………............3

Debt to Equity…………………………………………………………………………………....3

Equity Available………………………………………………………………………………….4

Role of Investment Bankers……………………………………………………………………...4

Buyers of Stocks/Debts……………………………………...…………………….…………......5

Market for Debt………………….……………..………………………………………………...5

Cost of Financing for Acquisition………………….………………..…………………………..5

Background to Investment Bankers and Services……....…………………………………….....6

Cost of Debt and Equity Calculations…………………………………………………………..7

Analysis of Calculations...............................................................................................................7

Determining Optimal Capital Structure to Acquire US Airways............................................... .7

Determining Optimal Capital Structure to Acquire US Airways……………………………... .8

Determining Optimal Capital Structure to Acquire US Airways……………………………... .9

Proposed Capital Structure to Acquire US Airways................................................................. .9

Proposed Capital Structure to Acquire US Airways………………………………………… 10

Proposed Capital Structure to Acquire US Airways………………………………………… .11

References…………………………………………………………………………………….12 

Delta Airlines

Target Cost

It will require Delta Air Lines, Inc. to purchase 100% of the outstanding stock of US Airways in order to acquire them. On August 15, 2012 US Airways had 162,400,000 outstanding stocks, which closed at $10.08 a share. This would make the cost of acquisition to be $1,636,992,000.00. This price would be only if the company was acquired at this date. In the last 52 weeks, US Airways has had stocks sell as low as $3.96 a share to as high as $14.51 a share (Bloomberg Businessweek, 2012).

Cash Available

As of June 30, 2012 Delta Air Lines, Inc. had (Yahoo! Finance, 2012):

Delta Air Lines,...