US Airways and Delta: Six Months Later It’s a Real Deal on the Table

DeltaI admit. I’m still trying to digest it.

Then again in June, I wrote this in PlaneBusiness Banter in a column on the value of mergers:



“Last week, [
US Airways CEO Doug] Parker kind of made sure everyone was awake at his dinner in New York [at the Merrill Lynch Transportation Conference] when he made the comment that they, US Airways, were looking at any and all opportunities. As he said, “This situation [with two majors in bankruptcy] is a once in a lifetime opportunity.”

So, throw US Airways in the pot as well. Frankly, I like the thought of a Delta/US Airways combination. I think it could work. But it would only work if Delta was completely and totally reconstructed. It would also probably have to be set up more like a “parallel” deal — something akin to a Southwest/ATA arrangement.

Money? US Airways could get it.

For that matter, the old issue of “box of rocks” thinking should no longer be an issue for Continental management and Delta. There are not many “box of rocks” thinkers left at Delta.

Oh boy.

Usair

Fast forward to this morning when it was announced that US Airways (LCC:NYSE) has made an offer to Delta creditors that would involve both equity and cash — for a total of $8 billion. The deal would be a merger, and the resulting entity would be named, “Delta.” (“New” Delta, I suppose would be more technically correct.)

Needless to say this blows the content in-the-works for this week’s issue of PBB.

A few quick things — as we’ll no doubt be talking more about this in the coming days and weeks.

First — strictly from a creditor perspective, the deal is a pretty good one.

Two — given this alternative, will Delta continue to maintain that it wants to remain independent?

Three — yes, it’s a nightmare of logistics. I mean, where do you start?

Four — from a regulatory perspective, this deal would undoubtedly see capacity pulled from the East Coast — and the Shuttle would have to be sold.

Interestingly, because of the new opportunities for other airlines the merger would open up — major competitors might not be that opposed to the deal.

The scope of it boggles my mind.

2 thoughts on “US Airways and Delta: Six Months Later It’s a Real Deal on the Table

  1. flyastrojets

    OK, I admit it. This one caught me off guard. My first thought was that “they must really want out of Philadelphia!”
    It could work I suppose. And I thought USAirways had disparate fleet issues before! I’m going to sit back and watch this one with great interest. This could finally shake loose the “consolidation” that all the pundits have been waiting for. Time will tell.

  2. Holly Hegeman

    Exactly. The fun in this one is going to be trying to figure out just what the new entity would probably be forced to cut loose in order to get the Feds approval.
    Ha! I like the comment about Philly.
    Time will tell is right. This one will certainly give us a lot more to chew on over the holidays besides the usual overcooked turkey.

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