"Business Combination" Sought To Halt US Airways Takeover

How close did Delta Air Lines come to merging with partner-in-bankruptcy Northwest Airlines? According to the Atlanta-based carrier's filing in US Bankruptcy Court Monday... possibly closer than was previously hinted.

The Associated Press reports Delta executives considered a merger with Northwest last month, in order to stave off a hostile takeover bid by US Airways.

"[M]anagement and Delta’s Board of Directors, with the assistance of their financial advisors, duly considered US Airways' proposal," Delta wrote in its filing. "In doing so, they also considered various restructuring alternatives, including a possible business combination with Northwest."

"While no merger negotiations are currently underway or planned between Northwest and Delta, such negotiations are possible in the future," the filing goes on to state.

As Aero-News reported last month, there were strong indications Delta's creditors spoke with Northwest management about a possible merger -- just as US Airways was putting pressure on the creditor's committee at Delta to show their support of its $10 billion merger bid.

Delta issued a statement Tuesday to discount any remaining rumors, now that US Airways has withdrawn its takeover bid, that the carrier is still looking for a partner.

"As stated in the filing, in fulfilling our fiduciary duty to maximize value for all of stakeholders, Delta has considered various restructuring alternatives," said a prepared statement by the airline. "Delta continues to focus on our standalone plan of reorganization."

The statements were made in court documents Delta filed in opposition to a subpoena issued by the Owl Creek hedge fund, which is going after Northwest to claim some percentage of value in its shares in that bankrupt carrier. The fund states talks of a possible merger means Northwest is worth more than the airline has claimed.

Both Delta and Northwest have said they expect to be out of bankruptcy before the end of the year.

FMI: www.delta.com, www.nwa.com