Delta meets US Air, but plans no merger

Source: Economic Times

Saturday, December 2nd

NEW YORK: Delta Air Lines said it listened to a presentation by US Airways Group on US Airways’ $8.5 billion takeover offer for Delta, but repeated earlier statements that it intends to emerge from bankruptcy as a stand-alone carrier. US Airways, which pitched its plan to Delta’s senior management and creditor committee representatives on Thursday, said in a separate statement that it was pleased to have had the chance to discuss its proposal. It was US Airways’ first opportunity to speak directly to Delta’s official committee of unsecured creditors since launching its offer on November 15. It was not clear whether the parties would meet again to take US Airways’ unsolicited bid for its larger rival further. Delta was legally obliged to review the bid. “While we will fulfil this obligation, we will, as we have stated, continue to progress toward filing our stand-alone plan by the end of the year, which would have us emerge from bankruptcy as a highly competitive, independent and financially sound airline by mid-2007,”

Delta said after the meeting. Atlanta-based Delta has been recalling pilots and flight attendants to work this year as it expands internationally and restructures operations. Its monthly loss in October narrowed year-over-year, helped by lower costs. Delta’s pilots’ union, represented on the creditor committee, has expressed concerns about the offer. US Airways has argued that a combined airline would have more benefits than a stand-alone Delta. “We are confident that our proposal for a ‘new’ Delta will create more value than a stand-alone plan,” said US Airways CEO Doug Parker, in a statement after the meeting. US Airways has won some backing for its plan from Delta bondholders. An ad hoc group of bondholders, organised last week, aims to put pressure on Delta to fully consider the US Airways bid, a person familiar with the matter has said. The group, which was not present at Thursday’s meeting, is planning separate meetings with Delta and US Airways, Alan Kornberg of law firm Paul, Weiss, Rifkind, Wharton & Garrison, said. The firm represents the bondholder group. Meanwhile, US airline AirTran Holdings chairman and CEO Joe Leonard said he is interested in acquiring airport gates sold by US Airways or Delta Air Lines if those carriers merge, The Wall Street Journal reported. Mr Leonard said discount carrier Air-Tran, would consider buying jettisoned shuttle operations as a way to gain access to gates at New York’s LaGuardia International Airport and Washington's Reagan National Airport.