US Airways CEO Ready for Long Fight to Win Delta

Don't mistake the relative quiet of the past two weeks for a sign that US Airways' resolve to buy Delta Air Lines is weakening, says Doug Parker, CEO of US Airways.

"We believe our offer is more than fair, and as a result, don't intend on ... backing off," Parker said in a telephone interview last week. "We certainly don't intend on pulling the offer."

Parker made his carrier's $8 billion-plus offer public on Nov. 15, and Delta --- which had already rebuffed his private approaches --- fired back with a volley of objections, employee anti-merger rallies and a formal plan to emerge from Chapter 11 on its own. The dust settled during the holidays.

Parker says he expects things to soon heat up again, pointing out that Delta's creditors recently hired retired Continental Airlines Chief Executive Gordon Bethune to evaluate the rivals' proposals or other potential alternatives for Delta.

"Gordon is a decisive, extremely knowledgeable individual who ... they clearly didn't bring in just to look at the stand-alone plan. They brought him in to look at strategic alternatives," said Parker.

Another potential flash point: Delta has asked for a bankruptcy court hearing Feb. 7 to begin pitching its stand-alone plan to creditors. They will ultimately vote on whatever reorganization plan Delta uses. Delta's plan values the company at $12 billion when it comes out of bankruptcy and would pay creditors with stock. US Airways argues its cash-stock offer is better for creditors and that a merger will create a stronger airline.

"I think you'll start seeing more urgency this month," said Parker during the interview from US Airways' headquarters in Tempe, Ariz. The conversation has been edited for clarity and length.

Q: Have you gotten any indication as to how the unsecured creditors committee views the US Airways offer?

A: We've met with the committee a couple of times. Their advisers have come back and asked us a number of questions. My own personal view is I think they appreciate the value of the synergies, and I believe they're doing their work now. They've just hired Gordon Bethune, which we think is a positive development --- not because we have any idea what Gordon's views are, but just because I know Gordon is a decisive, independent person who knows the airline business very, very well.

Q: What has the committee asked the most questions about?

A: It doesn't seem to be one area of focus. They've spent a lot of time going through the synergy analysis, the $1.65 billion a year [in estimated annual savings from a merger], with our team. I know they've hired their own antitrust counsel to come up with their own views of the antitrust issues, which you know we feel very sanguine about and Delta feels very differently about. They obviously need to get their own views on that. ... So most of the time with us has been on our proposal and synergies.

Q: How soon do you expect the unsecured creditors committee to take some sort of position?

A: I don't know. It's really up to them. ... The process only becomes urgent to the extent that the Delta stand-alone plan is moving in a way that is inconsistent with our merger proposal. ... So long as Delta remains in bankruptcy and there aren't things being approved or disapproved by the bankruptcy court that are inconsistent with our plan, there's no urgency.

Q: There's the Feb. 7 hearing about the disclosure statement on Delta's reorganization plan. [If the statement is approved by the bankruptcy judge, Delta would be allowed to start seeking creditors' votes backing its proposal.] What does that hearing mean to the US Airways deal?

A: Right now there's a request for a hearing. If indeed that hearing took place on that date, yeah, that would drive some urgency around this process, and I think it will. ... My guess is if the creditor committee wants to support that date, they have a lot of work to get done before that date.