US Airways' chief executive issued a scathing rebuke Thursday of Delta Air Lines' stand-alone reorganization plan and said he is more determined than ever to push ahead with his company's hostile bid to buy Delta.
Delta shot back that it hasn't changed its position that it wants to remain independent, intensifying the war of words that started when Tempe, Ariz.-based US Airways disclosed its $8.4 billion offer to buy Delta on Nov. 15.
As Christmas approached, US Airways CEO Doug Parker made it clear his company isn't going to back down and will drag the process out as long as it takes.
"This is the beginning of a process that we suspect is going to be going on for a while," Parker told analysts and reporters during a conference call.
Parker said Delta's projection that it will be worth as much as $12 billion when it emerges from bankruptcy as a stand-alone airline is "unrealistic."
"We think their valuation is way out of whack," Parker said.
Parker said his company's analysis of Delta's stand-alone plan values Delta at $5.5 billion to $6.9 billion. He also said that while US Airways generally agrees with Delta's profit projections for 2007, his company believes Delta's projections beyond that are too rosy.
Parker also said that his company strongly believes that its offer to buy Atlanta-based Delta will pass regulatory scrutiny.
"We did not go launch this offer without knowing all this," Parker said. "We are not going to let this transaction fail on antitrust issues."
Parker added, regarding regulatory review, "This is not an issue from our perspective. The other side continues to say that it is. All we say is 'Let's go find out.'"
Delta said in a statement Thursday that it stands by the valuation prepared by its financial advisers.
"Delta's plan of reorganization will provide creditors with superior value as well as a faster recovery and much greater certainty of execution," Delta said. "Nothing we heard today explains away the fact that the US Airways proposal provides inferior value to our stand-alone plan, is structurally flawed, and raises overwhelming regulatory and labor issues that — after a lengthy delay — are likely to prevent the proposed merger from being completed."
Parker's comments came as the unsecured creditors committee in Delta's bankruptcy case, which holds a key role in deciding the carrier's fate, said Wednesday it supports Delta's decision to file its stand-alone reorganization plan, but that it also will weigh alternatives.
The committee had been largely silent since US Airways' unsolicited bid was disclosed. The committee did not elaborate on its views.
Delta says in its reorganization plan, which it filed Tuesday, that after bankruptcy it will be worth $9.4 billion to $12 billion. US Airways says the amount it is offering is Delta's true value as a merged entity. Creditors must decide which proposal makes the most sense.
Some observers believe US Airways will raise its offer, while others say to do so now would be premature.
Parker did not address whether US Airways would raise its offer during Thursday's conference call.
Parker did say that he believes Delta employees and members of the public will ultimately embrace US Airways' offer, despite the decision by Delta's board to formally reject the offer and Delta employees' decision to protest the offer.
"The fact of the matter is the proposal is a very labor-friendly proposal," Parker said. "Every employee will be at least as well off as they are today."
He said he's not surprised Delta employees are concerned.
"Pilots, so much of their lifestyle is based on seniority," Parker said. "So, there is anxiety anytime that might change."
Parker added, "The real answer to this is to be able to sit down with people and explain what is going on. We don't have that luxury today."
Parker said that contrary to Delta's stand-alone plan, he believes that a merged US Airways-Delta would be a much stronger company "rather than just one that survives until the next down cycle."
During the conference call, an analyst asked Parker how US Airways gets the process rolling to move its buyout offer ahead and into the bankruptcy court.
For now, Parker said US Airways will continue to talk to Delta's unsecured creditors committee and try to force the issue that way.
"I'd much prefer for this to be where the management team finally comes to grips with this, 'Now we understand'," Parker said of Delta. "I've passed the threshold of believing that's going to happen anytime soon."
But, Parker added, "Management doesn't own the company, the creditors do."