US Airways Makes $8 Billion Bid for Delta

[WolfmanNCSU]

Says creditors would get $4 billion in cash and 78 million shares; plans to keep historic Delta name.

NEW YORK (CNNMoney.com) -- US Airways Wednesday made a surprise $8 billion offer to buy its bigger rival Delta Air Lines, a bid that could spark a round of mergers leaving the United States with just a handful of major airlines.

The deal, if completed, would unite two of the oldest and most storied airlines in the United States. Delta started as a crop duster in the 1920s and US Air as a mail carrier in the 1930s.

The current US Air, the nation's No. 7 carrier, is proposing to buy No. 3 Delta for about $4 billion in cash and 78.5 million shares of US Airways stock, also worth $4 billion based on Tuesday's closing price. US Air has proposed keeping the Delta name if the merger is complete.

Source (http://money.cnn.com/2006/11/15/news/companies/us_airways_delta/?postversion=2006111509)

This is probably bad for us, less competition for fares. I hope I can merge my frequent flyer miles. It would definitely keep my Gold Medallion Status with Delta.

Another interesting fact, Google bought YouTube for 1.6 Billion. So a major Transit Airline is worth 4.84 x an internet video site.

[WolfmanNCSU]

And the official word from US Airways in my email today...

Dear Dividend Miles Member,

By now you may have heard that US Airways has made a proposal to merge with Delta Air Lines. Over the coming days there will certainly be much discussion in the media about this proposal, and in advance of that I’d like to make clear our company’s motivation for initiating this process and explain how we believe it would provide enormous benefits for you, one of our frequent flyers.

The merger of America West and US Airways has provided us with a sound platform to grow our business and provide additional opportunities for our customers. We believe a merger with Delta is the right type of opportunity that can positively benefit all of our stakeholders – customers, employees, and investors. The combination will provide an even stronger base from which the merged airline can compete with other domestic and international airlines.

For you, our customer, there will be benefits similar to what you’ve already experienced with the new US Airways:

*A much larger network of routes and frequencies to simplify your travel
*A history of reducing fares and eliminating unfriendly fare rules like Saturday-night stays
*A global frequent flyer program that would combine your Dividend Miles and Delta SkyMiles balances
*Participation in one of the world’s largest airline alliances, opening up even more of the world for your travel
*Peace of mind that you are building a travel rewards investment in a company that will be here for the long term, and that your miles will be here when you’re ready to redeem them

Of course, we don’t overlook the operational challenges inherent with this kind of transaction. Using our experience with the America West/US Airways merger we will work hard to mitigate transition difficulties, particularly with technology online and at the airports. In the short term we know there will be challenges, but in the long run you will be the beneficiary of one of the largest, most convenient airline networks in the United States, designed to make travel as efficient, economical, reliable and comfortable as possible.

This process will undoubtedly take some time to reach its conclusion, but please be assured that in the meantime our current integration processes are moving full speed ahead, including moving to one reservations system scheduled for early second quarter 2007. In addition, should this transaction fail to materialize, please be assured that the new US Airways is in a very good position, competitively and financially, to continue to build the best full-service, low-fare airline in the world.

Thank you again for your support of US Airways. We look forward to the opportunity to serve you again soon.

Sincerely,

Scott Kirby
President