The management of bankrupt Delta Air Lines will have to work hard to fend off US Airways' unwanted USD$8 billion takeover offer.

Delta's management, led by Chief Executive Gerald Grinstein, will have to persuade creditors that its plan to stay independent is better and more likely to succeed.

"They are going to have to work very hard to convince their constituencies that the standalone offer is better than the US Airways offer," said Fruman Jacobson, of Sonnenschein Nath & Rosenthal, which represented the unsecured creditors committee in UAL's bankruptcy. "The creditors are going to have a menu from which to pick."

The surprise offer from US Airways, launched on Wednesday, is expected to attract other bids for Delta, and may well kick start a series of mergers in the US airline industry.

Delta has said it will review the US Airways bid, but says it is still focused on its original plan to exit bankruptcy in the first half of 2007 as a standalone company and "not as a merged, acquired, or otherwise consolidated airline."

"While Delta is obligated to review this proposal carefully, we remain skeptical that it would make sense to deviate from our plan," Grinstein wrote in a memo to employees after receiving the offer. Delta managers repeated that view to creditors.

Delta has not yet filed its reorganization plan, which it expects to file by the end of the year, but has the exclusive right to do so by February 15. The airline plans to meet US Airways "at some point in the near future."

"We are very comfortable that when (creditors) understand what Delta's standalone plan will provide, they will see significant value there," spokesman Michael Freitag said on Friday.

Chief Financial Officer Ed Bastian considers Delta's standalone plan to be superior.

Grinstein said last month he would retire after Delta emerges from bankruptcy, and has talked about Chief Operating Officer James Whitehurst and CFO Bastian -- both closely involved in the restructuring process -- as possible successors.

US Airways Chief Executive Doug Parker said he would be the CEO of a merged airline, in his takeover proposal, which would scuttle Delta's succession plans and likely cause clashes in the executive suite.

"Certainly it would create a lot of friction for the US Airways team to come in and take control of the company," said Jim Corridore, an equity analyst at Standard's & Poor's.

"On a financial basis, the US Air offer looks pretty compelling to unsecured creditors," said Clark Orsky, a bond analyst with KDP Investment Advisors. "The piece that they would have to emphasize is what the risks are."

Airline mergers are notoriously difficult to consummate, as companies must deal with a range of complex issues such as antitrust concerns, integrating unionized work forces as well as fleet types and sizes.

Delta's management could highlight these problems to make a case for staying independent.

"If (Grinstein) comes back with a USD$6 billion deal for example," said Jacobson, "he's got no problem pitching the fact that there is a standalone plan that makes sense."

Delta spurned similar overtures from Parker earlier this year and did so with the backing of its creditors committee, according to Grinstein's memo.

But now Parker's offer shows creditors the money. Delta's management, which until now had no competition when it came to reorganizing the airline, must now come up with a better plan than the one US Airways has put on the table.

"It's raised investors expectations," Orsky said. "Now the question is, 'Can they meet those expectations through their own plan?'"

Things will only become tougher if US Airways sweetens the deal or if other bidders join the fray, industry-watchers said.

"Now that there is some floor that's been established on what the enterprise value is... the deal is going to get better and better," Jacobson said. "And the standalone plan has to keep up with the third-party plans."