US Airways Raises Offer for Delta Air Lines
Wednesday January 10, 6:45 am ET Offer Valued at $12.7 to 15.4 Billion and Set to Expire on February 1, 2007 Absent Creditor Support
TEMPE, Ariz., Jan. 10 /PRNewswire-FirstCall/ -- US Airways Group, Inc. (NYSE:
LCC -
News) today announced that it has increased its offer to merge with Delta Air Lines, Inc. (OTC:
DALRQ -
News). Under the revised proposal:
* Delta's unsecured creditors would receive $5.0 billion in cash and 89.5 million shares of US Airways stock. * When applying the same valuation methodology and assumptions as described in Delta's Disclosure Statement, US Airways' advisor Citigroup estimates this new proposal will provide between $12.7 and 15.4 billion in value to Delta's unsecured creditors, which represents a significant premium over the $9.4 to 12.0 billion valuation that Delta places on its stand-alone plan. * Based on the closing price of US Airways stock as of Tuesday, Jan. 9, 2007, the new proposal has a current market value of approximately $10.2 billion.
The merger is expected to be accretive to US Airways' earnings per share in the first full year after completion of the merger.
The increased offer is set to expire on Feb. 1, 2007 unless there is affirmative creditor support 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 has committed financing from Citigroup and Morgan Stanley for the proposed transaction for $8.2 billion, representing $5.0 billion to fund the cash portion of the offer and $3.2 billion in refinancing existing obligations at both US Airways and Delta.
US Airways Chairman and Chief Executive Officer Doug Parker stated, "While our original proposal offered substantially more value to Delta's unsecured creditors than the Delta stand-alone plan, we are making this revised offer to eliminate any doubt that a merger with US Airways offers Delta's unsecured creditors significantly more value. Without the support of the creditors, our offer is set to expire on Feb. 1. It is time for this process to move forward. We continue to believe that this is the right time to create a better airline that provides more choice to consumers, increased job security for both airlines' employees and generates more value for all of our stakeholders."
Consumers across the nation will benefit from greater choice and lower fares from the "New" Delta. Since the combination of America West and US Airways in 2005, US Airways has lowered leisure and business fares by up to 83 percent in about 1,000 markets. Every domestic destination served today by either US Airways or Delta will continue to be served by the New Delta, which will provide consumers across the nation access to a larger network that connects them to more people and places.
Employees also will benefit from working for a larger and more competitive airline. As US Airways has already announced, frontline employees of the New Delta will move to the higher cost structure of the combined airlines, and there will be no furloughs of frontline employees of either Delta or US Airways. The combination of US Airways and America West, which was accomplished without any involuntary mainline furloughs despite capacity reductions of 15 percent, demonstrates that a merger can be in the best interests of employees, not just shareholders.
"This is a transaction that makes sense for US Airways stockholders, Delta creditors, the employees and customers of both companies, and the communities that we serve," said Parker.
The revised US Airways proposal retains the same conditions as the original offer and is conditioned on satisfactory completion of a due diligence investigation, which the Company believes can be completed expeditiously, approval by Delta's Bankruptcy Court of a mutually agreeable plan of reorganization that would be predicated upon the merger, regulatory approvals, and the approval of the shareholders of US Airways.
Citigroup Corporate and Investment Banking is acting as financial advisor to US Airways, and Skadden, Arps, Slate, Meagher & Flom LLP is acting as primary legal counsel, with Fried, Frank, Harris, Shriver & Jacobson LLP as lead antitrust counsel to US Airways.
US Airways executives will be discussing the proposal with analysts and investors on a conference call at 9:00 a.m. ET / 7:00 a.m. MT today, Jan. 10, 2007. To access the conference call, please dial (866) 290-0880 (U.S. dial-in) or (913) 312-1229 (international dial-in) beginning at 8:45 a.m. ET / 6:45 a.m. MT and ask to be connected to the US Airways conference call (conference ID# 4318844). A replay of the call will be available until Jan. 12, 2007 by dialing 888-203-1112 (U.S. dial-in) or 719-457-0820 (international dial-in) (replay passcode # 4318844). Accompanying slides will be available on US Airways' website,
www.usairways.com. The Company will also webcast the call to all interested parties through its website at
www.usairways.com. Click "About US>>Investor Relations>>Webcasts/Presentations/Updates." US Airways is the fifth largest domestic airline employing nearly 35,000 aviation professionals worldwide. US Airways, US Airways Shuttle and US Airways Express operate approximately 3,800 flights per day and serve more than 230 communities in the U.S., Canada, Europe, the Caribbean and Latin America. The new US Airways -- the product of a merger between America West and US Airways in September 2005 -- is a member of the Star Alliance, which provides connections for our customers to 841 destinations in 157 countries worldwide. This press release and additional information on US Airways can be found at
www.usairways.com and
www.buildingabetterairline.com. (LCCG)
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