Delta Fights Back--US Airways May Abandon Takeover
Dec. 6, 2006. Two articles in major newspapers today indicate that the controversial attempt by Us Airways to take over its much larger rival Delta may not succeed. The US Air move on Delta has met with great concern by some consumers and in Congress because it would create less competition in many routes in the Eastern US. In the case of many smaller cites it would leave travelers almost totally at the mercy of one airline.
An article in today’s Washington Post quotes Delta Chief Executive Gerald Grinstein extensively as he attacks the Us Air takeover plan:
"Whenever you go from having two carriers to one, or three carriers to two, that is going to have a consumer impact," he said. "There will be a loss of service in some smaller communities. There will be an increase in fares. . . . There is no question that there are antitrust issues that won't be quickly or easily resolved."
"I think the track record of good mergers is hard to find" in the airline industry, Grinstein said.
Another article in USA TODAY quotes Us Airways CEO Doug Parker as saying
US Airways will give up its proposed takeover of Delta Air Lines if management there can't be persuaded of the benefits. Parker said he's not prepared to fight Delta's management in bankruptcy court by submitting a merger plan to the judge without the backing of Delta officials.
It appears from Grinstein’s remarks, as reported today, that US Airways is not going to be successful in convincing Delta’s management, so the deal will die. However, stranger things have happened in corporate finance. Stay tuned.
