If They Pass On Bid, Offer Will Likely Be Retracted

While US Airways CEO Doug Parker says he won't rule out upping his bid once again for Delta Air Lines, he maintains if Delta creditors don't show some support of the bid by Thursday, February 1... then the deal is off. If that happens, Parker adds, the much-ballyhooed 'merger mania' forecast by analysts may not actually occur until the next time airlines are starving for cash.

"We're in regular contact with the (creditors) committee. We expect that will continue, maybe even accelerate, in the coming days," said Parker, according to CNN Money. "We're not going to comment on specifics of any discussion."

Parker (above, right) made his comments Tuesday during a conference call with analysts and reporters, following US Airways' better-than-expected fourth quarter earnings report. Despite the good news, however, US Airways shares dipped Tuesday, as investors feared time may be running out for US Airways Group's two-and-a-half month-old hostile takeover bid for Delta.

Curiously, even as the clock seems to be ticking down, Parker acknowledged US Airways could still raise its current $9.7 billion offer for the bankrupt Atlanta-based carrier. (The dip in US Airways' stock prices reduced that offer from a high of $10.3 billion.)

As Aero-News reported Monday, there are indications US Airways could up its bid by as much as an additional $1 billion... a figure that has attracted interest from a group of unsecured Delta creditors, who could see a significantly higher payoff from a US Airways/Delta merger than they would under Delta's reorganization plan to emerge from bankruptcy.

Parker says US Airways management has not gone to the board to approve a new offer just yet... and adds any new offer would require USAG to file the higher bid with the Securities and Exchange Commission.

"Once we have a different offer, we'd do so as quickly as we can," Parker told listeners on the conference call. "We haven't done that yet." CNN notes these comments would seem to suggest a higher bid is very much in the offing.

US Airways does not need to win over a majority of the creditors to block the intentions of Delta's management to remain independent... although Parker said he considers such a tactic to be a hollow victory at best.

Even if US Air offer doesn't win over a majority of the creditors, the offer could have enough support to block Delta's plan to remain independent.

"I believe we could form a blocking position," Parker said. "We've told them (creditors) we have no interest in that... I can't imagine they don't make the right decision, but they still haven't made it."

Delta's creditor committee is set to meet Wednesday, Parker added... a meeting that will likely result in one of two outcomes.

"If they [vote their support for the bid], I think the process will move very quickly," said Parker. "Management can continue to fight. But they'd be fighting against their creditors' committee."

The second possible outcome would be for Delta's creditors to pass on the deal... which Parker says would not only be a final sign for him to pull the Delta offer once and for all, but also a sign the domestic airline industry as a whole may not be ready for the level of consolidation many expected would come.

"It's my own view that if both Delta and Northwest emerge as stand alone, I don't think you'll see consolidation in this airline industry -- not until next down cycle," he said.

Management at Delta has rejected both of USAG's bids for the carrier, and has actively lobbied its creditors to support Delta emerging from Chapter 11 as a stand-alone carrier... and allowing it to remain that way.

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