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Delta Files Stand-Alone Chapter 11 Plan

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The Associated Press
Tuesday, December 19, 2006; 11:11 PM

ATLANTA -- Delta Air Lines filed a reorganization plan Tuesday that calls for it to emerge from bankruptcy next spring as a stand-alone company worth as much as $12 billion, or slightly more than the combined market value of the nation's two biggest carriers.

The Atlanta-based company also said that its board has formally rejected US Airways' $8.5 billion hostile takeover bid, and its executives joined rank-and-file employees on a full-scale public relations assault against the proposal.

"US Airways is the worst of all potential merger partners," Delta Chief Executive Gerald Grinstein said during a conference call with analysts.

US Airways responded several hours later, saying it will continue to fight for its proposal.

"We will not be distracted by emotional or irrational arguments; there is simply too much at stake to lose sight of what is really important," US Airways Chief Executive Doug Parker said in a memo to his employees.

Grinstein didn't completely dismiss the idea of a merger with a company other than US Airways, saying Delta would review any other bids. But he said Delta would not put out a "for sale" sign.

Delta's chief financial officer, Ed Bastian, said the company so far has not received any other offers.

Delta outlined a five-year business plan. Its advisers estimated that a reorganized Delta will have a consolidated equity value of $9.4 billion to $12 billion and that Delta's unsecured creditors would recover roughly 63 percent to 80 percent of their allowed claims.

The high end of the equity value Delta is projecting would be more than the $11.9 billion in combined market value of AMR Corp.'s American Airlines and UAL Corp.'s United Airlines.

Delta's existing stock would be wiped out under the plan and creditors generally would receive distributions of new Delta common stock to settle their claims. Delta so far has not decided whether to give creditors any cash.

US Airways' offer included $4 billion in cash and 78.5 million shares of US Airways stock.

Tempe, Ariz.-based US Airways Group Inc. issued a statement saying it believes its proposal, including $1.65 billion in anticipated cost savings, provides more value than Delta's plan.

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© 2006 The Associated Press

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