This is the strangest news in a while from a very strange industry.
US Airways offered today to acquire Delta Air Lines, now under bankruptcy-court protection, for $8 billion.
The combined company would carry more passengers each year than any other airline in the world, eclipsing American Airlines, the current leader.
The offer, extended to Delta’s bankruptcy lenders, is an attempt by the chief executive of US Airways, W. Douglas Parker, to circumvent Delta’s top management, who rebuffed two earlier approaches from Mr. Parker about merging the two airlines.
In a letter today addressed to Delta’s chief executive, Gerald Grinstein, Mr. Parker said he was disappointed that the two executives could not reach an agreement.
US Airways said today that it is offering $4 billion in cash, plus US Airways stock that was valued at $4 billion at the close on Tuesday. That price would represent a substantial premium for Delta’s creditors over what the airline’s unsecured debts now trade for. The creditors would own about 45 percent of the combined company.
Today, shares of US Airways jumped $8.57, or 16.8 percent, to close at $59.50 on the New York Stock Exchange. Other airline stocks including Continental and Airtran Holdings also rose.
Let's see. US Airways doesn't have it and Delta isn't worth it. Other than that, a lovely idea. I would expect Delta creditors to leap at the offer and US Airways stockholders to pocket these gains (which I cannot really explain) and run.