| Standing firm
New York, Dec. 19 (Reuters): Delta Air Lines Inc said on Tuesday its board has rejected an $8.4 billion bid from US Airways Group Inc and filed its own plan to emerge from bankruptcy as an independent airline.
Delta has repeatedly said that it intends to emerge from Chapter 11 protection as a stand-alone carrier, but this is the first time the Atlanta-based airline has rejected outright the US Airways bid, which was made last month.
Delta, the No 3 US carrier, said its five-year business plan filed with a US bankruptcy court values the company at about $9.4 billion to $12 billion, and would result in a recovery for Delta’s unsecured creditors of about 63 per cent to 80 per cent of their allowed claims.
Atlanta-based Delta said its board had concluded that its plan would provide the company’s creditors with better value, greater certainty and a much faster timetable than the US Airways proposal.
“We will emerge as a thoroughly new Delta that will be a strong global carrier with a solid foundation for profitable growth in a highly competitive environment,” chief executive Gerald Grinstein said in a statement.
The airline, which has been operating under bankruptcy protection since September 2005, said it intends to emerge from Chapter 11 in the spring of 2007.
The business plan projects a return to profitability in 2007 and an increase in net income, after profit sharing, 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 more than half to about $7.5 billion in 2007 from about $17 billion in 2005.