Delta CFO prefers firm’s standalone plan

/ Source: The Associated Press

Delta Air Lines Inc. is actively telling its creditors that it believes its standalone plan is “far superior” to US Airways’ $8.7 billion offer to buy the company and create the nation’s largest carrier, Chief Financial Officer Ed Bastian said Friday.

In an interview with The Associated Press, Bastian said he and Chief Executive Gerald Grinstein are telling creditors the company will review US Airways’ bid disclosed Wednesday, but don’t believe it’s the right plan for Delta.

“Jerry and I are on the phone with our creditors literally on a daily basis,” Bastian said. “What we’ve told the creditors is we will consider the offer but we still believe our offer is a far superior one.”

Bastian also said the Atlanta-based airline will “fight to make certain” that the airline emerges from Chapter 11 in the first half of next year as a strong competitor and it believes its standalone plan will be the “winning proposal.”

Bastian said Friday that Delta plans to file its reorganization plan in mid-December, two months earlier than the Feb. 15 deadline. He said that was always Delta’s plan and it hasn’t moved up the date in light of US Airways’ bid.

Bastian declined to say if Delta was considering any legal options to protect its interests.

Meanwhile, US Airways on Friday was still trying to set up a meeting with the official committee of unsecured creditors in Delta’s bankruptcy case to pitch the offer to members, US Airways spokesman Phil Gee said.

The Tempe, Ariz.-based airline hopes to set up a meeting as early as next week, Gee said, adding that no discussions have occurred between the two sides since the offer was made public.

“I think we want to give them a little time to digest the proposal,” Gee said. “We’re extremely optimistic that we’ll definitely be able to have a meeting with them. We feel this deal is in their best interest.”

Senior Delta executives had been largely silent until Friday about the bid, beyond a news release and a memo and audio message Grinstein sent to employees.

Bastian said Delta is trying to answer its employees’ and customers’ questions in light of the developments.

“There is rightfully a significant amount of anxiety that this offer or proposal presents to our employees,” Bastian said.

Also Friday, US Airways said its proposed buyout of Delta won’t hurt competition and shouldn’t trigger a regulatory challenge.

The airline said in a presentation it made to analysts and filed with the Securities and Exchange Commission that the industry is far more competitive than at the beginning of the decade and new low-cost carriers like JetBlue Airways Corp. and AirTran Holdings Inc. have joined Southwest Airlines Co. as competitors.

The airline said even if it succeeds in its buyout of Delta it will control just 18.2 percent of the domestic market after it trims its fleet as part of the merger.

US Airways noted that the U.S. Department of Justice has not challenged a merger in more than 30 years where the combination created less than 30 percent market share.

Moreover, the airline said it would still face significant competition at most of its hubs and that all but 19 percent of travelers at airports it serves will have low-cost carrier choices.

The company also said the takeover was conservatively expected to save $1.65 billion a year in costs, helping it remain cost competitive. That figure assumes it can get approval of the deal before Delta exits bankruptcy.