Delta Snubs Hostile Offer of Merger From US Airways
By Mary Schlangenstein, Shanghai Daily | Dec. 20, 2006
Delta Air Lines Inc rejected a hostile US$8.38 billion merger proposal from US Airways Group Inc and filed its own plan to emerge from bankruptcy as an independent company worth as much as US$12 billion, the carrier said on December 19.
Delta's board said its plan will create a greater return for creditors. The US Airways offer is unlikely to receive antitrust approval, is based on flawed economic assumptions and would give Delta the largest debt load in the industry, Atlanta-based Delta said in a statement.
On December 19, Delta's five-year business plan was filed with US Bankruptcy Court in New York, 15 months after the airline sought Chapter 11 protection. The carrier said it will emerge from court supervision in the first half of next year after cutting labor costs, grounding planes and expanding more-profitable international routes. It forecast a profit in 2007.
"We will emerge as a thoroughly new Delta that will be a strong global carrier with a solid foundation for profitable growth in a highly competitive environment," Delta Chief Executive Officer Jerry Grinstein said in the statement.
Delta, the third-largest US carrier, was saddled with more than US$28 billion in debt when it sought bankruptcy protection. It blamed growing low-cost competition, increased fuel costs and a drop in travel following the September 11 terrorist attacks. Northwest Airlines Corp filed on the same day, in the same court, citing the same problems.