Say They Back Delta's Bankruptcy Plan, But Will Keep Options Open

A committee composed of Delta Airlines' unsecured creditors financing the company's emergence from bankruptcy finally spoke publicly about US Airways' merger bid on Wednesday. The committee's statement, as are all such statements involving the fate of so much money, is cryptic, at best.

The statement read, "A number of issues, including those left open in the plan of reorganization, will be the focus of continuing discussions between the committee and Delta over the coming weeks. At the same time, the committee will continue to consider potential alternatives in order to maximize the ultimate recoveries for the unsecured creditors in the Delta bankruptcy."

The public relations battle between the two airlines has become rather heated of late. Delta maintains its plan to emerge from bankruptcy as a stand-alone company is the best option for the company, its employees, its investors and its customers. The latest round of press releases has Delta renouncing US Airway's offer as a bad idea calling the merger plan "a prescription for disaster."

US Airways CEO Doug Parker continues to press ahead with his overtures choosing to ignore Delta's invective. In fact, he's chosen to view the committee's statement as favorable to US Airway's position. A US Airways statement claims the committee has not decided to endorse Delta's emergence plan and that US Airways will continue to work with the committee on finding a way to merge the two airlines.

Delta's rejection of US Airways' merger bid is based in part on its belief Delta is worth more than US Airways' offer. Delta estimates its value between $9.4 and $12 billion. Although opinions differ among industry observers, many believe taking into account rising fuel prices and a still-recovering airline industry would seem to indicate a more accurate range nearer $8 to $9.5 billion.

Based on the level of acrimony in Delta's denouncements of US Airways' offer, it doesn't seem likely the bankrupt carrier is holding out for a higher bid from its seemingly unwelcome suitor, but one never knows...

Whatever happens moneywise, the other major hurdle for US Airways' bid is a governmental one -- many analysts say a merger between two of the nation's largest airlines will never fly under anti-trust scrutiny from the Department of Justice.

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