Delta Gains Financing For Chapter 11 Exit
Delta today secured $2.5 billion in exit financing to emerge as a stand-alone carrier, "marking a significant step forward for the company's plan to exit bankruptcy in spring 2007," the airline said in a statement.
US Airways, however, remains adamant about merging with Delta while it is under bankruptcy protection. US Airways acknowledged that Delta's equity value could hover below its offer following an exit from Chapter 11, but the company said rationalizing a merged fleet with a bankruptcy-protected Delta would create more value. As such, US Airways CEO Doug Parker today during the carrier's earnings call said US Airways is not interested in a merger with Delta post-Chapter 11 and is holding firm to its Feb. 1 deadline for Delta creditors to approve the deal.
Parker said Delta's securing of $2.5 billion "doesn't change anything" about US Airways' offer. Parker also would not comment on whether US Airways would once again increase its offer for Delta if creditors do not give the nod by the Thursday's deadline—as sources have suggested the carrier would do. "There's been speculation from an educated group of bondholders that there might be a higher bid than that. We're not commenting on that speculation," Parker said. "If indeed we do have a different offer, we're required to inform the SEC of that and we would plan to do so immediately," Parker said. "We haven't done that yet."
Parker said of creditors facing Thursday's deadline, "The official committee has an offer, they know what it is, they know what they need to do." Parker noted that the Delta creditors committee is expected to meet Wednesday, and it has not asked US Airways for an extension on the deadline. If creditors support the deal and a merger goes forward, the companies would close within four to six months, Parker said.
US Airways, meanwhile, during its conference call said it continues to integrate America West. Parker plans to convert America West and US Airways to a single reservation system in March and is working with labor unions on contracts that roll up to the merged carrier. Because integration remains an ongoing process, US Airways has drawn criticism for seeking to take on yet another carrier.