Top > Business > 2007 > February > 2007-02-07

US Airways Pulls Delta Bid

US Airways, the seventh largest airline in the United States, pulled hostile bid for bankrupt Delta Airlines, after creditors rejected the offer. US Airways offered to purchase Delta for $9.8 billion, but the company`s creditors, who are playing a pivotal part in detraining the company`s future, have said they will support Delta`s plans to exit chapter 11 as an independent company.

The committee of Delta`s creditors said they have come to this decision after extensive deliberation with members of Delta and US Airways over the past two months. In an unofficial announcement the members of the committee said they were dismayed with the lack of success of the deal, which could lead to a substantial drop in creditor returns. Industry exports say the collapse of this merger could stop mean the end of consolidation in the extremely competitive US airline sector. Competitors such as United Airlines and Continental Airlines have open preliminary negotiations following the news of US airways bid to purchase Delta. US Airways stock gained 4% following the news. Delta stock, which will continue to be traded until it exists chapter 11, lost 6%, following the news.

British Airways announced it cancelled its controversial plans to give its executives unlimited free first class flights to all of the company`s destinations world-wide. The plans draw fire from the company`s labour unions, which were in the midst of a labour dispute with the company`s management regarding wages and benefits. The employees were supposed to go on strike this week, which were cancelled after an agreement was reached on Monday. A company spokesperson said that the executive flight plan wasn`t discussed by the board of directors after it was disregarded by the company`s management. The spokesperson added that the current arrangements, by which company executives receive high priority on most expensive seats, will remain as is.