US Airways insists it remains committed to merging with bankrupt Delta Air Lines despite its target’s rejection of the takeover bid yesterday.
Star Alliance carrier US Airways says in a statement: “We remain a disciplined and determined bidder for Delta. We continue to work productively with the Creditors Committee and the Ad Hoc Bondholders Committee. Finally, we recognise and appreciate the creditors’ ultimate authority in this process.”
Last month US Airways made a formal merger proposal to SkyTeam alliance carrier Delta under which it would invest $8 billion in cash and stock. The merged entity would operate under the Delta name.
Yesterday Delta said its board had unanimously rejected the bid and submitted a plan of reorganisation to a bankruptcy court outlining its intention to emerge from Chapter 11 bankruptcy protection as a standalone carrier by the second quarter of 2007.
Delta called the US Airways proposal “structurally flawed” and said it stood little chance of clearing antitrust hurdles.
US Airways says in its statement today: “We have always expected that Delta would file a standalone plan with the Bankruptcy Court. This plan will provide Delta creditors with a benchmark against which to evaluate the competing proposals and we welcome that comparison. This is an important step in a process that we believe will result in the merger of US Airways and Delta.”
It adds: “Combining US Airways and Delta will create at least $1.65 billion in annual synergies beyond the value that could be created by any standalone plan. These synergies come on top of the certainty of $4 billion in cash and the upside potential of 78.5 million shares of US Airways stock. These shared synergies will benefit all shareholders in the ‘New’ Delta. Factoring the synergy benefits into our offer, the current value of our proposal is significantly greater than the value of Delta’s standalone plan.”
US Airways on 15 November made a formal merger proposal to Delta, under which it offered to invest $8 billion in cash and stock to combine the two carriers and operate under the Delta brand name.