US Airways has withdrawn its offer to merge with Delta Air Lines after the airline was informed earlier that the Official Unsecured Creditors’ Committee would not meet its demands by the airline’s established deadline of Feb. 1, 2007.As previously announced, US Airways’ offer of $5.0 billion in cash and 89.5 million shares of US Airways stock would have expired on Feb. 1, 2007, unless there was affirmative support from the Official Unsecured Creditors’ Committee for commencement of due diligence, making the required filings under Hart-Scott-Rodino, as well as the postponement of Delta’s hearing on its Disclosure Statement scheduled for Feb. 7, 2007.
US Airways Chairman and Chief Executive Officer Doug Parker stated, “We are disappointed that the Committee, which has been chosen to act on behalf of all Delta creditors, is ignoring its fiduciary obligation to those creditors. Our proposal would have provided substantially more value to Delta’s unsecured creditors than the Delta stand-alone plan. We would have created a better and more financially stable airline that offered more choice to consumers and increased job security to its employees. Our merger would have been able to be consummated in a reasonable time-frame and we would have been able to obtain all requisite regulatory approvals.
“The publicly traded bonds of Delta have fallen precipitously since rumors of this Committee decision were leaked last week, reducing the implied market valuation of what Delta’s unsecured creditors can expect to recover in these cases by over $1.5 billion. We empathize with the investors who purchased Delta bonds at increasingly higher prices since our offer was announced last November and thank them for their support of our proposal and their confidence in our team. It is now clear that there will not be an opportunity with the Committee to move forward in a timely or productive manner and as a result, we have withdrawn our offer.”
Mr. Parker added, “At US Airways, we are extremely confident in our own stand-alone plan. Earlier this week, we announced a 2006 profit (excluding charges) of over $500 million, far and away the best performance by a network airline. Our employees will share $59 million of well-deserved profit sharing payments as a result. Looking forward, we expect even higher earnings and a higher profit sharing pool in 2007. Our 35,000 employees are doing a wonderful job of transforming US Airways and we are committed to building the best airline we can for them. I can’t thank them enough for their support, encouragement, and professionalism during this process. I am very proud of how our entire team performed.”