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Delta 'cautious' over $8bn merger | Delta 'cautious' over $8bn merger |
(about 4 hours later) | |
Delta Air Lines has responded coolly to a proposed $8bn (£4.2bn) merger with rival US Airways. | Delta Air Lines has responded coolly to a proposed $8bn (£4.2bn) merger with rival US Airways. |
Delta said it would study the terms of the proposed deal, which would create one of the world's largest airlines. | Delta said it would study the terms of the proposed deal, which would create one of the world's largest airlines. |
But it said it planned to emerge from bankruptcy protection next year as a "strong, stand-alone carrier". | But it said it planned to emerge from bankruptcy protection next year as a "strong, stand-alone carrier". |
Shares in the two airlines, which have suffered severe financial difficulties in recent years, both rose sharply after the news emerged. | Shares in the two airlines, which have suffered severe financial difficulties in recent years, both rose sharply after the news emerged. |
Different objectives? | Different objectives? |
Under the terms of the proposed deal, both airlines would combine once Delta emerged from bankruptcy protection in February. | Under the terms of the proposed deal, both airlines would combine once Delta emerged from bankruptcy protection in February. |
The cash and stock offer would give Delta's unsecured creditors $4bn in cash and 78.5 million shares of US Airways stock. | The cash and stock offer would give Delta's unsecured creditors $4bn in cash and 78.5 million shares of US Airways stock. |
We received a letter from US Airways this morning and will, of course, review it Gerald Grinstein, Delta chief executive | We received a letter from US Airways this morning and will, of course, review it Gerald Grinstein, Delta chief executive |
If the deal goes ahead, the airline will operate under the Delta name. | If the deal goes ahead, the airline will operate under the Delta name. |
But Delta said its priority was emerging from bankruptcy protection as a stronger, more competitive airline. | But Delta said its priority was emerging from bankruptcy protection as a stronger, more competitive airline. |
"We received a letter from US Airways this morning and will, of course, review it," said Delta chief executive Gerald Grinstein. | "We received a letter from US Airways this morning and will, of course, review it," said Delta chief executive Gerald Grinstein. |
"Our (reorganization) plan is working and we are proud of the progress Delta people are making to achieve this objective." | "Our (reorganization) plan is working and we are proud of the progress Delta people are making to achieve this objective." |
Troubled past | Troubled past |
A merged airline would serve more than 350 destinations across five continents and, according to US Airways, be the biggest carrier across the Atlantic. | A merged airline would serve more than 350 destinations across five continents and, according to US Airways, be the biggest carrier across the Atlantic. |
US Airways said it hoped the combined airline would generate annual synergies of at least $1.65bn. | US Airways said it hoped the combined airline would generate annual synergies of at least $1.65bn. |
US Airways recently joined forces with American West | US Airways recently joined forces with American West |
"This appears to be sort of a hostile takeover," Roger King, a CreditSights analyst, said. | "This appears to be sort of a hostile takeover," Roger King, a CreditSights analyst, said. |
"US Airways is appealing directly to the creditors." | "US Airways is appealing directly to the creditors." |
Delta Air Lines filed for Chapter 11 bankruptcy protection in 2005, amid high fuel prices and cut-throat competition. | Delta Air Lines filed for Chapter 11 bankruptcy protection in 2005, amid high fuel prices and cut-throat competition. |
In December, pilots at Delta voted to approve a 14% pay cut to help keep the firm trading. | In December, pilots at Delta voted to approve a 14% pay cut to help keep the firm trading. |
US Airways was itself formed from the merger last year of the struggling airline of the same name and smaller rival America West. |