US Airways Bid for Delta Hits Turbulance

Gerald Grinstein contacted the "fat lady" yesterday following Senate Hearings in Washington D.C. It appears she has been asked to sing a song now that US Airways hostile bid is about as likely as you running into Osama Bin Laden at your local Supermarket. Witnesses could hear her warming up last night in Atlanta. It is not clear what song she will be singing but what is clear is Doug Parker's hostile bid for Delta Air Lines is loosing altitude. What was also clear from Wednesday’s hearings is that Delta has overwhelming support for their standalone plan as they presented 104,851 e-petitions signed at http://www.keepdeltamydelta.org/ opposing US Airways' hostile takeover attempt. Delta people then delivered the signatures to Senate offices. Additionally, more than 155,000 letters of opposition have been sent to members of Congress and the Administration.

Appearing at a packed hearing before the Senate Commerce Committee Wednesday, Delta Air Lines CEO Gerald Grinstein said both workers and consumers will suffer if US Airways' takeover bid for Delta succeeds. Grinstein called the hostile takeover plan a "flight of fancy" that would saddle the resulting company with tens of billions of dollars of debt that he felt would, despite assurances to the contrary, make furloughs unavoidable. The debt load from the combined companies could skyrocket to more than $24 billion. That alone will probably be enough to persuade the creditors committee that Delta's standalone plan presents the greatest value. Several reports surfaced this week that suggested the creditors committee has grown skeptical of US Airways proposal although they have made no official comment. It's unclear what Parker will do next. He is on record as saying that his offer would be withdrawn on February 1st if the creditors committee had not given its approval. Although it us not clear what Parkers next move will be, it was obvious his plan was dealt a serious blow on Wednesday when almost no one testified in favor of his proposal. One industry analyst said that Parker would be best served to withdraw is proposal and move on. I couldn’t agree more.