Delta rejects US Air offer; files own recovery plan
19 Dec 2006
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Mumbai: Delta Air Lines Inc, the No 3 US carrier, has rejected an $8.4- billion takeover bid by US Airways Group Inc., saying it intends to emerge on its own from bankruptcy protection. Delta, which is currently under Chapter 11 protection, has also filed its own plan to emerge as an independent airline.
The Atlanta-based airline rejected the US Airways bid outright and said: "We believe the plan ... is superior to the US Airways proposal or anything US Airways could propose with respect to Delta."
Delta said its recovery plan filed with a US bankruptcy court values the company at about $9.4 billion to $12 billion - well above US Airways' offer. The plan would also result in a recovery for Delta's unsecured creditors of about 63 per cent to 80 per cent of their allowed claims, it said.
Delta's five-year business plan projects a return to profitability in 2007 and an increase in net income, after dividends, from about $500 million in 2007 to some $1.2 billion in 2010.
The airline also expects to cut its net long-term debt by over half to about $7.5 billion in 2007 from about $17 billion in 2005.
Under the plan, the airline's unsecured creditors will receive new common stock for their claims while current holders will receive no distribution, and those securities will be canceled.
