Delta may merge, after fending off US Airways

Delta Air Lines Inc has assured creditors that it won’t rule out the possibility of merging with another airline after exiting from bankruptcy if it defeats a hostile takeover offer from US Airways, the Wall Street Journal reported, citing people familiar with the situation. To build support for its plan to remain independent, Delta appears close to agreeing with its official creditors committee on several provisions designed to clear a path toward an eventual tie-up, the report said.

The parties are moving toward an accord to exclude from Delta’s new corporate charter and bylaws any so-called poison pill that could pose an insurmountable hurdle to future mergers, according to one person familiar with the discussions.

The report said, in addition, the committee would have a strong hand in selecting Delta’s post-bankruptcy board, according to knowledgeable people. The creditors committee wants a board that favors consolidation as a strategic option, people close to the board have said.

Delta had been reluctant to grant some of the concessions, the Journal said. But in recent weeks the committee made it clear that it required them as a condition for approving Delta’s standalone plan over the US Airways merger, it added.

Delta’s apparent willingness to consider a future deal could breathe life back into widespread hopes for an industry consolidation wave, which airline observers thought could be dashed if the US Airways-Delta merger failed. Airlines are looking for partners in an effort to reduce the number of seats in the air, lower operating costs and gain greater pricing power.
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