- The Washington Times - Wednesday, January 10, 2007

ATLANTA (AP) — US Airways raised its bid for Delta Air Lines nearly 20 percent to $10.3 billion yesterday, increasing the pressure on the bankrupt airline’s unsecured creditors to take its buyout offer.

Whether the deal would survive regulatory scrutiny may be the deciding factor.

The Tempe, Ariz., company also set a Feb. 1 deadline for certain conditions to be met or its bid would be revoked.

The immediate question is whether creditors want to take the money US Airways is offering and run the risk of a long regulatory fight, or stick with Delta’s plan to emerge from bankruptcy by the middle of this year as a stand-alone company worth $9.4 billion to $12 billion.

Daniel Golden, a lawyer for Delta’s unsecured creditors committee, did not return several phone calls yesterday seeking comment. Most of the large creditors on the committee have refused to discuss their position publicly, except Delta’s pilots union, which opposes the bid.

Delta management has argued that the combination of US Airways and Delta would not receive regulatory approval because of the overlap of the two carriers’ routes. US Airways says there wouldn’t be any regulatory holdup.

A Jan. 24 hearing has been scheduled by the Senate Commerce, Science and Transportation Committee on the state of the airline industry and the potential effect of airline mergers.

Ray Neidl, an airline analyst with Calyon Securities in New York, said the increased offer will be more attractive to Delta’s creditors, but the question is whether regulators would approve the deal.

“In my opinion, that’s going to be the main thing,” Mr. Neidl said, adding that he gives the US Airways bid a 50-50 chance of being successful.

US Airways Group Inc. Chief Executive Officer Doug Parker told analysts there’s an easy way to know who is right on the regulatory issues.

“Let’s just go ask them and find out,” said Mr. Parker, who was in Washington yesterday to talk to lawmakers.

Delta said yesterday that its board will do its duty to review the revised offer by US Airways. But, the Atlanta airline added, “On its face, the revised proposal does not address significant concerns that have been raised about the initial US Airways proposal and, in fact, would increase the debt burden of the combined company by yet another $1 billion.”

Added Kelly Collins, a spokeswoman for Delta’s pilots union, “We remain entirely committed to defending our airline from this hostile merger attempt.”

US Airways said it would raise its offer by $1.7 billion from its Nov. 15 bid that is currently valued at $8.6 billion.

The decision to increase the offer was reached over the weekend after US Airways officials met to discuss it. On Monday, the carrier’s executives met with Gordon Bethune, the former Continental Airlines chief who is working as a consultant to Delta’s creditors committee. Mr. Bethune urged US Airways to put its best offer forward, according to an official with knowledge of the meeting who spoke on the condition of anonymity because of the sensitivity of the talks.

US Airways shares rose $1.03, or 1.8 percent, to close at $58.93 on the New York Stock Exchange, boosting the value of the revised offer.

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