Thu, Dec 21, 2006
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.
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