If It Was Civil Before, It Ain't Anymore

One day after Delta Air Lines submitted its reorganization plan to the US Bankruptcy Court -- and let it be known, in no uncertain terms, that it feels a merger with US Airways is a bad idea -- US Airways CEO Doug Parker says he refuses to back down on the hostile takeover bid.

"We remain a disciplined and determined bidder for Delta," Parker said.

Parker's response came after Delta CEO Gerald Grinstein told investors via a conference call that, for the moment, Delta has no intentions to merge its airline with anyone... least of all, US Airways Group (USAG).

"A prescription for disaster," is how Grinstein put it. "US Airways is the worst of all potential merger partners," adding USAG's bid was based on "flawed economic assumptions."

Grinstein also said a merger of the nation's third-and-fifth-largest airlines would never clear anti-trust hurdles, it would leave the combined carrier with too much debt, and with too many unsolved labor issues -- especially, Grinstein implied, from the US Airways side.

Delta's board of directors also rejected the merger proposal USAG presented two weeks ago.

As Aero-News reported Tuesday, Delta's reorganization plan says the airline's value is between $9.4 billion and $12 billion. Even if the latter valuation is a tad optimistic -- as some analysts have suggested -- that's still at least a billion higher than USAG's offer.

It is up to Delta's creditors to decide which offer is best for their interests -- Delta's plan, or USAG's offer. And now that Delta has showed its hand by stating a value, it's entirely possible US Airways will up its bid.

"...[W]e have always expected that Delta would submit a stand-alone plan," Parker told the Pittsburgh Post-Gazette, adding Delta's creditors now have 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."

In any case, the unfolding drama over US Airways' takeover bid for Delta, filed November 15, is proving the ancient adage -- some say curse -- "may you live in interesting times."

It "is quite exciting," said airline consultant Darryl Jenkins. "Certainly, Parker is not going to give up. Parker is a very driven young man" and "not one that shirks from a fight."

As for Grinstein, Jenkins says he is "a tough old bird. ... He is not going to let some young snot-nose tell him what to do with his airline."

We've got ourselves a dogfight, folks...

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