US Airways/Delta merger update

Here’s a mid-day update (done during lunch break) about the possible Delta-US Airways merger. CNN talked to US Airways’ CEO Doug Parker, who said that his airline’s hub in Charlotte, North Carolina would remain if the two airlines were to merge. Delta’s hub in Salt Lake City would also stay, although each hub is rather close to an existing one: Delta’s in Atlanta and US Airways’ in Phoenix, respectively.

Delta has stated that it wants to remain independent, at least during its stay in bankruptcy. Delta’s CEO said that his airline’s plan “has always been to emerge from bankruptcy in the first half of 2007 as a strong, stand-alone carrier. Our plan is working and we are proud of the progress."

It increasingly looks like any takeover (or merger) of Delta by US Airways will be a hostile bid. Yet Parker thinks that he will convince Delta’s bosses and creditors that the deal is a good one: "What you're hearing right now is reaction from people who haven't yet been able to digest the offer.”

Analysts have said that in addition to US Airways, United and American could potentially be bidders for Delta as well, or at least play a part in the consolidation of the industry.

So will the merger go through? Delta says no, and the fact that it’s in Chapter 11 bankruptcy certainly complicates things. Antitrust laws are another thing to consider; an example of this is the fact that Delta and US Airways are the only two airlines flying the New York-Washington shuttle route. But if the two are merged, it would create the nation’s (and perhaps the world’s) largest airline, beating American for the number one spot.