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"Delta makes plans to go it alone"


 
Wednesday, December 20, 2006

Delta makes plans to go it alone
Airline's board rejects US Airways
The Associated Press


ATLANTA - Delta Air Lines filed a reorganization plan Tuesday that calls for
it to emerge from bankruptcy next spring as a stand-alone company worth as
much as $12 billion, or slightly more than the combined market value of the
nation's two biggest carriers.

The Atlanta-based company also said that its board has formally rejected US
Airways' $8.5 billion hostile takeover bid, and its executives joined
rank-and-file employees on a full-scale public relations assault against the
merger proposal.

"US Airways is the worst of all potential merger partners," Delta Chief
Executive Gerald Grinstein said during a conference call with analysts.

Grinstein didn't completely dismiss the idea of a merger with a company
other than US Airways, saying later Tuesday that Delta would review any
other bids. But he said Delta would not put out a "for sale" sign.

Delta's chief financial officer, Ed Bastian, said in a conference call with
reporters Tuesday that Delta so far has not received any other offers.

Delta outlined a five-year business plan. Its advisers estimated that a
reorganized Delta will have a consolidated equity value of $9.4 billion to
$12 billion and that Delta's unsecured creditors would recover roughly 63
percent to 80 percent of their allowed claims.

The high end of the equity value Delta is projecting would be more than the
$11.9 billion in combined market value of AMR Corp.'s American Airlines and
UAL Corp.'s United Airlines.

Delta's existing stock would be wiped out under the plan and creditors
generally would receive distributions of new Delta common stock to settle
their claims. Delta so far has not decided whether to give creditors any
cash.

US Airways' offer included $4 billion in cash and 78.5 million shares of US
Airways stock.

Tempe, Ariz.-based US Airways Group Inc. issued a statement saying it
remains committed to its merger proposal, and it added it believes its
proposal, including $1.65 billion in anticipated cost savings, provides more
value than Delta's plan.

"We remain a disciplined and determined bidder for Delta," US Airways Chief
Executive Doug Parker said.

An official with knowledge of US Airways' plans who spoke on condition of
anonymity because of the sensitivity of the talks said Monday that US
Airways was willing to increase its offer if Delta could justify it is worth
more.

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