Tempe-based US Airways is not daunted or distracted from its mission of merging with Delta Air Lines despite the bankrupt carrier’s attempt to fast-track its stand-alone plan. But stay tuned for the latest volley in an increasingly bitter battle for the air.
US Airways said Thursday it is not upping its $8.5 billion cash-and-stock offer in hopes of getting a nod from the Delta board.
“We believe our offer is fair, and there is no need to increase it at this point,” said Valerie Wunder, US Airways spokeswoman. “We are standing fi rm.”
That’s despite word a day earlier that Atlanta-based Delta has landed a Feb. 7 hearing date for its own reorganization plan, which values the company at $9.4 billion to $12 billion.
“We expected that,” Wunder said. “It doesn’t mean the hearing will occur on that date if circumstances change.”
Wunder would not elaborate on what circumstances might change.
US Airways CEO Doug Parker previously said Delta’s self-evaluation is “out of whack,” and his merger option is worth much more than the Delta plan.
Delta’s board has steadfastly refused to even consider US Airways’ proposal, but Parker hopes to convince the carrier’s creditors, who could then force the board to propose both options to the bankruptcy court.
At least one group of 17 creditors representing $2.25 billion in unsecured claims against Delta already urged the board to consider alternatives. Most of Delta’s creditors have stayed publicly mum about the issue.
Wunder said Parker is in ongoing communications with them.
Delta’s fast-approaching hearing date doesn’t kill US Airways chances of doing a deal, but it “tightens the time line and increases the urgency,” airline consultant Michael Boyd of The Boyd Group said.
“Delta wants to send a message to US Airways that the deal is done or about to be done,” Boyd said. “There’s a lot of rhetoric going on, but I think if things keep going like this, we’ll see less ardor (by Parker) to do a deal.”
Delta is throwing major roadblocks in Parker’s path by lobbying pilots, legislators and even state officials to mount a defense against a US Airways takeover.
While creditors, the bankruptcy court and antitrust regulators have the only say in how it all plays out, pressure from interested parties can have a big impact, Boyd said.
“Creditors see a plan with Delta that doesn’t involve union negotiations, the Department of Justice, and every attorney general from every state they fly to,” he said.
Wunder said although Delta is raising alarm about the potential loss of competition and hubs, US Airways has addressed that issue on a route-by-route basis. The Tempe airline contends that competition actually would increase as low-cost airlines jump into the fray. Some analysts agree. But Boyd disagrees and said the merged airline may be better off, but consumers would lose. Boyd said he believes a US Airways-Delta merger will be a difficult sell. And he thinks too many details, including the potential headquarters location, are still up in the air.
“That demonstrates that this is a window of opportunity that Parker wants to jump through and worry about the details later,” he said. “But he doesn’t know if that window is on the first floor or the 40th floor.”