'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.