Delta Meets US Airways, Still No Merger Plans

December 1, 2006

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Delta Air Lines said on Thursday it listened to a presentation by US Airways on that company's USD$8.5 billion takeover offer for Delta, but repeated earlier statements that it intends to emerge from bankruptcy as a stand-alone carrier.

US Airways, which pitched its plan to Delta's senior management and creditor committee representatives on Thursday, said in a separate statement that it was pleased to have had the chance to discuss its proposal.

It was US Airways' first opportunity to speak directly to Delta's official committee of unsecured creditors since launching its offer on November 15.

It was not clear whether the parties would meet again to take US Airways' unsolicited bid for its larger rival further. Delta was legally obliged to review the bid.

"While we will fulfill this obligation, we will, as we have stated, continue to progress toward filing our stand-alone plan by the end of the year, which would have us emerge from bankruptcy as a highly competitive, independent and financially sound airline by mid-2007," Delta said in a statement after the meeting.

Delta has been recalling pilots and flight attendants to work this year as it expands internationally and restructures operations. Its monthly loss in October narrowed year-over-year, helped by lower costs.

Delta's pilots' union, represented on the creditor committee, has expressed concerns about the offer.

US Airways has argued that a combined airline would have more benefits than a stand-alone Delta.

"We are confident that our proposal for a 'new' Delta will create more value than a stand-alone plan," said US Airways Chief Executive Doug Parker, in a statement after the meeting.

US Airways has won some backing for its plan from Delta bondholders.

An ad hoc group of bondholders, organized last week, aims to put pressure on Delta to fully consider the US Airways bid, a person familiar with the matter has said.