U.S. Airways makes bid on Delta
Wednesday, November 15, 2006
In an unexpected move, US Airways has placed a $8 billion bid for Delta in the morning of November 15, 2006, rallying the Dow Jones Industrial Average, which closed at 12,251.71, a record high.
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. Delta has yet to file its own plan of reorganization.
If completed, the deal would combine two of the oldest and most storied airlines in the United States. Delta started as a crop duster in the 1920s and grew to make its base at Atlanta-Hartsfield the nation's largest airport. US Air started as a mail carrier in the 1930s and has gone through several mergers and two bankruptcies.
"Consumers will have more choice and more reach, and a carrier that has a cost structure of a low-fare carrier," US Air CEO Doug Parker said in a phone interview.
The last airline deal of this magnitude, United Airline's proposed purchase of US Airways, was blocked by the Justice Department on antitrust grounds in 2001, just before the Sept. 11 terrorist attack.
Management of Delta have not endorsed the deal, stating they wish to prevail as independent. On Wall Street, however, US Air (up $6.64 to $57.57) investors welcomed the proposal, sending the carrier's stock soaring more than 12 percent in midday New York Stock Exchange trading. Investors also were pleased with Delta, with shares soaring 19 percent but then going back to modest gains. If the deal is completed the airline would operate under the name of Delta but nothing is set in stone.
Sources
- Harry R. Weber. "US Air makes $8 billion bid for Delta" — Houston Chronicle, November 15, 2006
- Chris Isidore. "U.S. Airways makes $8 billion bid for Delta" — CNN, November 15, 2006
- Tim Paradis. "Stocks Rise on US Airways Bid for Delta" — CBS News, November 15, 2006
