US Airways Launches $8 Billion Bid for Delta

November 16, 2006 – The latest shock wave to roil a beleaguered airline industry is yesterday’s announcement that US Airways is launching an $8 billion effort to acquire bankrupt Delta Airlines.

The proposed merger, which would create the world’s largest airline, is far from a done deal. Delta remains mired in bankruptcy proceedings and other parties could come forward with offers to buy the Atlanta-based carrier. Also, the proposal by US Airways is being made over the objections of Delta CEO Gerald Grinstein, who told employees yesterday he still plans for Delta to emerge from bankruptcy as an independent carrier.

The announcement by US Airways also confirmed speculation that a new round of consolidation in the airline industry is at hand. Despite opposition by government regulators to earlier merger proposals, the massive financial losses since September 11 and the rise of low-cost carriers has changed the industry dramatically. In a statement released following yesterday’s announcement, Transportation GVP Robert Roach, Jr., warned of a bumpy road ahead. “The IAM is prepared for additional airline mergers and a US Airways-Delta pairing is just one of many being evaluated by our Transportation Merger Team,” said Roach, who advised US Airways to conclude its negotiations with the IAM over the integration of America West employees before embarking on another merger attempt.

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