WSJ Report Says Yes...

A report in the Wall Street Journal says US Airways' parent US Air Group hinted over the weekend it would increase its takeover bid of Delta Airlines to the tune of another $1 billion and add a clause to pay Delta's creditors should the deal fail regulatory review.

If the rumors prove true, a second offer in as many weeks would seem to indicate a US Airways pushing hard to win support from Delta's unsecured creditors, and perhaps an airline feeling the heat from last week's Senate hearings on airline consolidation. The east-coast carrier raised its initial November bid to just over $10 billion in US Airways stock and cash earlier this month, but a drop in US Airways' stock value has reduced the total value of that offer by around $500 million.

The latest rumored bid hike would push the cash portion of US Airways' offer to around $6 billion. The stock portion remains at 89.5 million shares, which is worth just under $5 billion based on Friday's close. US Airways has purportedly offered to add a termination fee it would pay to Delta's creditors should they agree to the merger only to have it quashed by the Justice Department.

As ANN reported, a Senate Commerce Committee hearing last week wasn't exactly encouraging for the merger's proponents. Committee members blasted US Airways' CEO Doug Parker suggesting less competition would mean poor service, higher fares and fewer choices for customers. At least one senator worried a US Airways-Delta merger would spark a spate of further mergers. Several hinted the answer is to return to the days of government regulation of the airline industry.

Parker argued consolidation has helped some smaller markets and will help cash-strapped airlines to expand service to poorly served areas of the nation.

Some industry analysts have speculated a US Airways-Delta merger will not pass regulatory scrutiny as the pair compete in too many markets on the US east coast.

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