'My Delta' Will Be Kept 'My Delta'... At Least For Now

ANN REALTIME REPORTING 01.31.07 1230 EST: There's cheering in a few executive boardrooms in Atlanta today... as Wednesday morning, US Airways Group (USAG) formally withdrew its bid to merge with Delta Air Lines.

A release by US Airways to ANN stated the airline was informed earlier today Delta's Official Unsecured Creditors' Committee would not meet demands by USAG's established deadline of February 1, 2007.

As reported earlier today by Aero-News, US Airways' offer of $5.0 billion in cash and 89.5 million shares of US Airways stock would have expired on that date, unless there was a sign of support from the Official Unsecured Creditors' Committee for commencement of due diligence.

Despite calls from a loose group of the Atlanta, GA-based carrier's creditors to consider US Airways' offer, the Official Committee rejected the bid.

"We are disappointed that the Committee, which has been chosen to act on behalf of all Delta creditors, is ignoring its fiduciary obligation to those creditors," said US Airways Chairman and Chief Executive Officer Doug Parker. "Our proposal would have provided substantially more value to Delta's unsecured creditors than the Delta stand-alone plan. We would have created a better and more financially stable airline that offered more choice to consumers and increased job security to its employees. Our merger would have been able to be consummated in a reasonable time-frame and we would have been able to obtain all requisite regulatory approvals."

Despite recent stock losses -- as it became apparent to investors the hostile takeover bid for Delta was in trouble -- Parker added US Airways will be able to stand on its own quite well, thank you.

"Earlier this week, we announced a 2006 profit (excluding charges) of over $500 million, far and away the best performance by a network airline," Parker said. "Our employees will share $59 million of well-deserved profit sharing payments as a result. Looking forward, we expect even higher earnings and a higher profit sharing pool in 2007."

US Airways launched its hostile takeover bid for Delta on November 15. From the onset, USAG targeted Delta's unsecured creditors for their support of the bid, over protests from Delta employees and management. Executives at Delta pleaded with creditors to stick firm to the carrier's plan to emerge from Chapter 11 bankruptcy this year as a stand-alone carrier.

Delta CEO Gerald Grinstein applauded the decision by US Airways to pull the bid... and thanked the Creditor's Committee for sticking to its guns.

"Using the bankruptcy process the right way, Delta people have transformed their company’s business model," Mr. Grinstein said. "Our focus now is on the work still before us to emerge from Chapter 11 this spring as a strong, healthy, and vibrant global competitor."

The withdrawal of the US Airways bid, however, does open the door to a possible merger by Delta with another airline. Analysts have speculated Delta could chose to merge with United Airlines, or fellow bankrupt carrier Northwest.

FMI: www.usairways.com, www.delta.com