15 November 2006

US Airways Bids $8 Billion for Delta Air Lines

This week the US Airways Group made a hostile takeover bid for cash strapped Delta Air Lines, despite Delta's repeated assurances it isn't interested. If the deal does go ahead, the resulting group would be one of the largest air carriers in the world.

The offer to buy is timed for mid 2007, when Delta gets out of its bankruptcy protection. It dangles $4 billion cash and almost $80 million shares in US Airways stock to Delta's unsecured creditors.

At the moment, Delta Air Lines' common shares will likely end up worthless when the airline gets out of bankruptcy. Normally when bankruptcies end, the debt holders end up with new shares in the company.

If the deal goes ahead, Delta would serve more than 350 destinations on five continents, and would continue to operate under its old name.

The merged company would divest itself of some assets, including a shuttle service that operates in the Northeast US. It would also streamline some flights at its hubs.

Shares of US Airways rose $2.90 or nearly 6 percent on the New York Stock Exchange when the news broke.