US Airways is proposing a merger with Delta to create one of the world’s largest airlines. It believes it can streamline costs, creating a carrier that is more effective and profitable to capitalise on a sector showing signs of recovery. Delta is currently operating under bankruptcy protection and US Airways said its creditors would benefit to the tune of 6.25 billion euros – half in cash and half in shares.
Delta said it has most of the financing in place for such a deal, but the chief executives of the two companies have been in contact about the idea for months and letters from Delta show it is not enthusiastic. It has repeatedly said it plans “to emerge from bankruptcy as an independent airline.”
US Airways chief executive Doug Parker said a combined company would look to reduce flight capacity by 10%. The two together represent a quarter of the flight capacity in the United States and that would have major implications for the industry there, which caused the shares of other US airlines to rise.
Delta is the bigger of the two airlines, serving 295 destinations to its rival’s 225. Its turnover – at 12 billion euros last year – was three times more and it has 55,700 workers compared with US Airways’ 29,500.