US Airways stands firm on bid to acquire Delta
The prospect of imminent airline industry consolidation faded Tuesday as US Airways Group Inc. reported no headway in its bid to take over rival Delta Air Lines Inc.
US Airways Chief Executive Doug Parker said his airline’s nearly $10-billion bid for Delta was firm and he had no intention of extending the Feb. 1 deadline for Delta’s official committee of creditors to respond.
Investors had hoped a US Airways-Delta deal would lead to more takeovers in the sector, which would cut competition and give surviving carriers an opportunity to raise fares.
Airline shares dropped across the board, even after US Airways and discount rival JetBlue Airways Corp. reported quarterly profits as oil prices jumped, heralding higher costs.
Parker dismissed as speculation reports that the airline would increase its $9.7-billion bid for Delta, which is operating under bankruptcy protection.
Delta has resisted US Airways, saying that Delta is worth more as a stand-alone company and that a merger would present antitrust problems. Delta said Tuesday that it had lined up $2.5 billion in financing from six major Wall Street banks when it exits bankruptcy.
Parker made his comments after US Airways reported a quarterly profit, reversing a year-earlier loss. The company also reported a profitable 2006, its first full year since the 2005 combination of US Airways and America West.
Tempe, Ariz.-based US Airways reported fourth-quarter net income of $12 million, or 13 cents a share, compared with a year-earlier loss of $261 million, or $3.27. The loss was made worse by a large fuel-hedge loss and some merger costs.
Forest Hills, N.Y.-based JetBlue also reported a fourth-quarter profit as both airlines benefited from strong travel demand and higher ticket prices.
But shares of both airlines dropped in the face of surging crude oil prices. US Airways’ stock fell $1.33 to $53.10. JetBlue shares fell 65 cents to $13.85.