Delta Remains Wary of Merger

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By Ted Reed
TheStreet.com Staff Report=

Delta Remains Wary of Merger =0A=0ABy Ted Reed=0ATheStreet.com Staff Report=
er=0A1/8/2007 5:20 PM EST=0AClick here for more stories by Ted Reed=0A=0A=
=0A=0ADelta Air Lines (DALRQ - commentary - Cramer's Take) has told its cre=
ditors that it will suffer if a takeover bid by US Airways (LCC - commentar=
y - Cramer's Take - Rating) succeeds and then triggers a new round of airli=
ne consolidation. =0AThe suggestion is part of Delta's continuing battle ag=
ainst the hostile merger proposal unveiled Nov. 15 by US Air, which has off=
ered to pay Delta's bankruptcy creditors about $8.6 billion in cash and sto=
ck for their claims. =0ADelta has said a more appropriate value is between =
$9.4 billion and $12 billion, a range US Airways maintains is excessive. =
=0AThe management team at Delta is resisting the deal on various fronts. It=
's lobbying politicians in Washington, working with its pilots union and ot=
her employees and, like US Airways, it's trying to convince creditors to ba=
ck its plan of reorganization. A Delta spokeswoman declined to comment on t=
he specifics of the discussions between the airline and its creditors. =0AP=
art of Delta's argument is that a combination with US Airways could set off=
 a consolidation wave that would leave the Atlanta-based airline in a weake=
r position, according to a creditor with knowledge of the carrier's efforts=
. =0AFor instance, in theory a Delta takeover could convince United (UAUA -=
 commentary - Cramer's Take) and Continental (CAL - commentary - Cramer's T=
ake - Rating) to merge. That could, in turn, make American (AMR - commentar=
y - Cramer's Take - Rating) go after Northwest (NWACQ - commentary - Cramer=
's Take). =0ABoth of those potential mergers, if they were to occur, would =
produce airlines with a higher number of strong domestic hubs and with bett=
er international routes, particularly in Asia and Latin America, than a joi=
ned Delta and US Airways. =0APlus, if the Justice Department allowed a Delt=
a and US Airways merger despite the considerable overlap between the two ca=
rriers, it would hardly be in a position to deny similar advantages to othe=
r airlines. =0APage 1 2 3 NEXT PAGE >

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