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Keith McCord Reporting How's this for a turnaround story? Delta Airlines, which is in bankruptcy, and for a time was barely hanging on for its business life, now could become the largest airline in the world! Today, US Airways offered 8-billion dollars to merge with Delta, when Delta comes out of bankruptcy!
There are many hurdles to clear yet; it will take months to get this done if it happens at all. And in terms of how these airlines are currently operating, nothing will change in the near future. In other words, don't worry about your holiday travel plans, but there's certainly a buzz going on right now.
Delta is the nation's third largest airline and since seeking bankruptcy protection, has slowed down the financial bleeding a bit. US Airways is the sixth largest. Combined, they would become one of the most powerful airlines in the world, offering service to at least 350 destinations on five continents.
Doug Parker, US Airways CEO: "It's a very, very compelling transaction, one that we believe that is in best interests of US Airways shareholders, but also in the best interests of Delta's creditors. "
Currently, the two companies don't compete head to head in too many cities so their combined service area would definitely create a strong synergy, and perhaps, lower ticket prices!
Terry Tripler, Airline Analyst: "Absolutely fares would fall,US Airways has done an amazing job in absolutely lowering fares in the markets that they serve. They have said they're gonna cut it and they have done it."
But first Delta-- and more importantly the bankruptcy court and creditors-- has to say "yes". And if the past is any indication, they may not. US Air approached Delta last spring and got turned down.
Today, Delta's CEO Gerald Grinstein issued this statement:
"We received a letter from U.S. Airways this morning, and will of course review it. Delta's plan has always been to emerge from bankruptcy in the first half of 2007 as a strong, stand-alone carrier."
Airline stocks jumped dramatically at the news today. Shares of US Air were up 13% at one point and Delta's was up 11.
Governor Huntsman says he received a call from US Airways executives first thing this morning.
Gov. Huntsman: "It was mostly a calming gesture, and that is, ‘We know you're going to be reading about this, but we want you to know that if everything works out and this transaction goes through, that we fully anticipate that things will remain as they are.'"
KSL spoke with several economists today, and one here in Salt Lake told me he's concerned that other airlines might also want to get in on the bidding for Delta. He said if United did so, with their huge hub in Denver, that could spell bad news for Salt Lake's hub.
We also checked with some business reporters in Atlanta, who cover Delta all the time and they believe Delta won't budge. They have 4-billion bucks in the bank and actually turned a profit last quarter. Delta's game plan has been to increase the number of the more profitable international routes-- in fact, today is launching its first non-stop from JFK to London.
Delta still aims to emerge from bankruptcy, perhaps as early as February, and go it alone.
