Neither Side Claims Victory... Yet

Thursday was the day for US Airways Group, as CEO Doug Parker and others met with executives at Delta Air Lines in New York, to make their case for a proposed merger between the two carriers. Also in attendance, a committee made up of Delta's creditors... and it is that audience US Airways hoped to entice into considering the merger bid.

Management and employees at Delta have said in no uncertain terms they are against a merger... saying they want Delta to reemerge from Chapter 11 bankruptcy next year the same carrier it is now, without any "help" from US Airways. But does everyone at Delta feel that way?

The answer lies with Delta's creditors. After all, Delta has postponed filing a reorganization plan three times. Delta says it plans to do so by the end of the year... but creditors have been waiting over a year to find out how Delta plans to repay them, and for how much.

Secured creditors, like Boeing, don't have as much to fear from the delay... after all, if Boeing doesn't get its money, the planemaker can simply repossess Delta's planes.

It's the "unsecured" creditors, including employee groups who took claims against the airline as part of earlier concession agreements, who have the most to lose if Delta opts to repay mere cents on the dollar. They may also have the most to gain if US Airways' $8 billion buyout offer stands.

That's why Delta's creditors may find the merger appealing... but why does US Airways think a merger with Delta would be a good idea?

Aero-News obtained a copy of the airline's presentation to its investors regarding the merger. In it, US Airways says both carriers could realize savings of $1.65 billion annually by consolidating their operations -- thus eliminating duplicated routes, and jobs.

US Airways also claims the "New" Delta could claim over 20 percent total annual revenue share in the US market -- that's more than any other airline can now claim. US Airways also says the two carriers offer complimentary route networks, that target different parts of the United States and the world. That means relatively little overlap on routes.

Delta issued a statement Thursday after the meeting, to say, essentially, that it listened to the US Airways presentation because it had too.

"Consistent with our obligation to review US Airways’ unsolicited proposal, today we, along with representatives of our Creditors’ Committee, met to listen to US Airways’ presentation concerning US Airways’ proposal to merge with Delta," the airline said in a release to ANN. "While we will fulfill this obligation, we will, as we have stated, continue to progress toward filing our stand-alone plan by the end of the year, which would have us emerge from bankruptcy as a highly competitive, independent and financially sound airline by mid-2007. Our plan is working and we have tremendous, hard-won confidence in it."

US Airways's Parker says USAG was happy to present its case... and encourages Delta to review the offer closely.

"We were pleased to have made a presentation to both Delta and its creditors about what we believe are the compelling and unique benefits of our plan," Parker said. "We reviewed our offer and had a chance to engage in discussions on the many facets of this proposal. While we recognize the steps that Delta management has taken, we are confident that our proposal for a 'New' Delta will create more value than a stand-alone plan."

For the moment, the next step is up to Delta.

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