Group May Ultimately Decide Merger's Fate

Two weeks after making an unsolicited bid to take over Delta Air Lines, US Airways Group Inc. will present its case before the carrier and a committee representing Delta's unsecured creditors in a meeting set for sometime this week.

Neither Delta nor US Airways would give any specifics on the date or time of the meeting, or even where it will be held. In any case, it should be quite an interesting get-together, as it will be the first time USAG will speak directly to Delta's creditors.

Management and employees at Delta have said they do NOT want to merge with US Airways, preferring to exit bankruptcy sometime next year as a separate entity. But the final merger decision will rest with the creditors.

As Aero-News has reported, Delta has been in constant contact with its creditors, asking them to be patient and allow Delta to emerge from Chapter 11 on its own terms. That places the onus on USAG to make a convincing argument for the merger.

"If they come in totally flat or with something that is not detailed and credible, it could kill the deal immediately," said airline consultant Michael Boyd to Reuters.

Should creditors agree to review USAG's offer, the next step in the process would be a due diligence phase conducted by US Airways. Delta would, essentially, be forced to cooperate.

US Airways has already won the conditional backing from some of Delta's shareholders, who formed a group last week to support the bid. Delta, for its part, has the support of its pilots union... which has expressed reservations about the merger deal.

It wasn't too long ago Delta and its pilots were barely on speaking terms, as the two sides fought a contentious battle earlier this year over pay concessions that, at one point, threatened to put the nation's number three airline out of business. As they say, though... "the enemy of my enemy is my friend."

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