Tempe-based US Airways was vague Monday in response to a published report that it is upping its offer for Delta Air Lines by another $1 billion in cash as the Feb. 1 deadline for creditors to budge into action looms.
The hometown airline is not denying a report by the Wall Street Journal Monday that it is willing to raise the ante for the bankrupt carrier to nearly $11 billion, based on US Airways closing stock price Monday. Creditors could pocket $6 billion in cash and pick up enough stock to own 49.5 percent of the “new Delta.”
It would be the second $1 billion pot sweetener in the last three weeks. So far creditors are staying mum on whether they are sufficiently swayed.
“Our advisors are in regular contact with the ad hoc committee and the advisors to the creditors’ committee,” US Airways said in a statement. “We expect this will continue as the Feb. 1 deadline on our offer to continue the process approaches. However, we are not going to comment on the specifics of any conversation.”
The new deal, the Journal reported, is contingent on creditors asking for a postponement of the Feb. 7 bankruptcy court hearing on Delta’s go-it-alone plan and requiring that Delta ask for the government’s antitrust assessment of the US Airways hook-up.
Delta CEO Gerald Grinstein has consistently said the merger would reduce competition and would not be approved by the Department of Justice because of antitrust concerns.
US Airways CEO Doug Parker has compiled statistics that he says proves that is not the case, and he wants to let the government agency have a look and make its own determination. Justice can’t voice an opinion unless Delta submits a potential merger plan to the court.
Wall Street liked the US Airways offer from the start when it was nearly $3 billion lower, but Grinstein is apparently winning public sentiment.
The Delta chief has been lobbying everybody from employees, who usually have a contentious relationship with an airline in bankruptcy looking for concessions, and U.S. politicians, who don’t have a say in the matter.Industry analysts and consumer groups are split on whether the merger would be good or bad for passengers and the U.S. airline industry as a whole.US Airways first made its $8 billion-plus hostile takeover bid for Delta Nov. 15.
Delta management spurned the offer, although Wall Street liked it so much US Airways stock soared 17 percent, adding more than $500 million to the value of the deal within a day after it was announced. When creditors didn’t pressure Delta management to consider the offer, US Airways boosted it on Jan. 10 by $1 billion in cash and more shares of US Airways stock. The Journal reported that Parker is not willing to add more shares into the pot this time. US Airways shares rose $2.30 Monday to $54.43.