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US Airways drops $9.8B Delta takeover attempt

By ASSOCIATED PRESS
Published February 1, 2007

ATLANTA - US Airways Group Inc. dropped its $9.8-billion hostile bid for Delta Air Lines Inc. on Wednesday after a key group of the bankrupt carrier's creditors said Delta would be better off emerging from Chapter 11 on its own.

With the dual decisions, Atlanta-based Delta cleared a big hurdle in its effort to exit bankruptcy by the middle of this year as a standalone company.

But it isn't out of the woods yet. Smaller creditors could ultimately vote not to approve Delta's reorganization plan, and some have already filed objections to the disclosure statement to the Delta plan.

A hearing set for Wednesday in bankruptcy court in New York is scheduled to discuss the disclosure statement. If the statement related to Delta's operations is approved, Delta could begin soliciting votes for approval of its reorganization plan. Delta hopes to hold a confirmation hearing on its plan in April.

US Airways disclosed its initial hostile bid for Delta on Nov. 15. US Airways later raised its bid by nearly 20 percent in hopes of swaying Delta's official committee of unsecured creditors.

"Using the bankruptcy process the right way, Delta people have transformed their company's business model," Delta chief executive Gerald Grinstein said in a statement. "Our focus now is on the work still before us to emerge from Chapter 11 this spring as a strong, healthy, and vibrant global competitor."

In his own statement, Doug Parker, chief executive of US Airways of Tempe, Ariz., said he was disappointed by the decision of the creditors committee. .

Parker said the committee "is ignoring its fiduciary obligation" to the creditors it represents.

"Our proposal would have provided substantially more value to Delta's unsecured creditors than the Delta standalone plan," Parker said.

[Last modified February 1, 2007, 00:19:57]