US Airways proposes merger to Delta

US Airways has proposed an $8 billion merger to the bankrupt carrier Delta. The potential merger would fly under Delta's name, and would create the biggest carrier to Europe, and the second-biggest to the Caribbean, and could generate at least "$1.65 billion in annual synergies," according to US Airways.

While US Airways has been open to mergers for some time (see my article from early July), reports today say Delta was surprised by the offer. "The focus of this management team is getting out of bankruptcy, not mergers,'' USAToday.com quotes a Delta executive as saying. "We'll have to discuss the US Air offer internally before saying anything more. It's always difficult to see the value of mergers before they actually happen.''

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"What you're hearing right now is reaction from people who haven't yet been able to digest the offer," says Doug Parker, US Airways' CEO, in a CNN.com report. Parker is confident Delta will eventually see the value of the merger, and believes it would allow the combined carrier to offer lower fares to more cities.

US Airways merged with America West in 2005 to create the nation's fifth-largest airline. Delta is currently operating under bankruptcy protection, and is projected to emerge in the middle of 2007.

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