GogglesPisano
Pawn, in game of life
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Senators Cool to U.S. Airline Merger
Wednesday January 24, 2:14 pm ET
By Alan Zibel, AP Business Writer
Senators Voice Skepticism Toward US Airways' Offer to Buy Delta
WASHINGTON (AP) -- The chief executive of US Airways Group Inc. faced tough questioning at a Senate hearing Wednesday as lawmakers fretted that his company's proposed hostile takeover of Delta Airlines Inc. would harm consumers, particularly those in rural areas.
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Doug Parker, chief executive of Tempe, Ariz-based US Airways, argued that the nearly $9.8 billion acquisition of Atlanta-based Delta would create a larger but more efficiently run carrier that could offer low fares to fliers. He urged lawmakers to "let the market work."
Several senators said their constituents are concerned that a merger would result in cutbacks to service in small communities, where the per-passenger costs of running an airline tend to be more expensive than in big cities with lots of passenger traffic.
"You're an aggressive suitor, but the lady from the South doesn't want to be forced into this shotgun wedding," said Sen. Trent Lott, R-Miss, a reference to Delta's Atlanta headquarters.
On Jan. 10, US Airways increased its bid for Delta by nearly 20 percent, but Delta's CEO remains cool to the offer.
Delta's official committee of unsecured creditors, which will play a key role in deciding whether any merger agreement would move forward, has has not issued a statement about its position since US Airways increased its offer. Delta's board could vote on US Airways' most recent offer this week.
"The surest, safest bet from the creditors' point of view is to go ahead with our stand-alone business plan," Delta Chief Executive Gerald Grinstein told reporters Wednesday.
Grinstein, in testimony before the committee, called US Airways' hostile bid "blatantly anti-compettive," and a "poster child of the worst kind of merger," estimating that 10,000 jobs would likely be eliminated. Parker disputed that figure, saying any job losses would be gradual and through attrition, rather than layoffs.
Despite his position on the US Airways offer, Grinstein said in a newsletter sent to employees Tuesday that a merger can't be ruled out for Delta after it exits bankruptcy.
In afternoon trading, shares of US Airways fell 14 cents to $53.13 on the New York Stock Exchange.
Wednesday January 24, 2:14 pm ET
By Alan Zibel, AP Business Writer
Senators Voice Skepticism Toward US Airways' Offer to Buy Delta
WASHINGTON (AP) -- The chief executive of US Airways Group Inc. faced tough questioning at a Senate hearing Wednesday as lawmakers fretted that his company's proposed hostile takeover of Delta Airlines Inc. would harm consumers, particularly those in rural areas.
ADVERTISEMENT
Doug Parker, chief executive of Tempe, Ariz-based US Airways, argued that the nearly $9.8 billion acquisition of Atlanta-based Delta would create a larger but more efficiently run carrier that could offer low fares to fliers. He urged lawmakers to "let the market work."
Several senators said their constituents are concerned that a merger would result in cutbacks to service in small communities, where the per-passenger costs of running an airline tend to be more expensive than in big cities with lots of passenger traffic.
"You're an aggressive suitor, but the lady from the South doesn't want to be forced into this shotgun wedding," said Sen. Trent Lott, R-Miss, a reference to Delta's Atlanta headquarters.
On Jan. 10, US Airways increased its bid for Delta by nearly 20 percent, but Delta's CEO remains cool to the offer.
Delta's official committee of unsecured creditors, which will play a key role in deciding whether any merger agreement would move forward, has has not issued a statement about its position since US Airways increased its offer. Delta's board could vote on US Airways' most recent offer this week.
"The surest, safest bet from the creditors' point of view is to go ahead with our stand-alone business plan," Delta Chief Executive Gerald Grinstein told reporters Wednesday.
Grinstein, in testimony before the committee, called US Airways' hostile bid "blatantly anti-compettive," and a "poster child of the worst kind of merger," estimating that 10,000 jobs would likely be eliminated. Parker disputed that figure, saying any job losses would be gradual and through attrition, rather than layoffs.
Despite his position on the US Airways offer, Grinstein said in a newsletter sent to employees Tuesday that a merger can't be ruled out for Delta after it exits bankruptcy.
In afternoon trading, shares of US Airways fell 14 cents to $53.13 on the New York Stock Exchange.
