US Airways has made an $8 billion cash and stock bid for Delta Air Lines in a deal that would create one of the world's largest carriers. The move came despite Delta's repeated statements it isn't interested in a merger.
The offer to buy Delta once the Atlanta-based airline emerges from bankruptcy protection by the middle of 2007 would give Delta's unsecured creditors $4 billion in cash and 78.5 million shares of US Airways stock.
As it stands now, Delta's common shares are likely to end up worthless when it exits bankruptcy. In most bankruptcy cases, the debtholders usually end up with new shares of the company.
Doug Parker, chief executive of Tempe, Ariz.-based US Airways, said in a telephone interview that he is aware of the comments made by Delta's management in recent months, but he believes this is a fair offer and that ultimately Delta's creditors will see that.
"Delta is in bankruptcy and bankruptcy is a very open process," Parker said. "The process is designed so that the creditors get the highest possible value for their clients. Given that process, what we have done is gone public with an alternative to a standalone plan."
Delta spokeswoman Thonnia Lee seemed surprised by the announcement Wednesday morning and said she could not yet comment on it in detail. But she said Delta has consistently said that it plans "to emerge from bankruptcy as an independent airline."
Delta's chief, Gerald Grinstein, said as recently as last month that he had received "feelers" from UAL Corp.'s United Airlines about a possible merger 18 months ago, but that he quickly rejected them. He reiterated at the time that Delta has no plans for a merger.
US Airways also had been reported to be interested in Delta months ago, and it released letters Wednesday showing its previous communications with Delta.