US Airways yesterday announced an unsolicited $8 billion (€6.2 billion) offer for Delta Air Lines, a move that is expected to trigger a round of consolidation in America's airline industry.
The announcement marks the second time in 18 months that Doug Parker, US Airways' chairman and chief executive, has sought to acquire an airline out of bankruptcy and to transform his existing operation.
Mr Parker's America West led the acquisition of the old US Airways last year. Adding Delta would form the biggest US airline, overtaking American Airlines. The merged US Airways/Delta would have forecast 2006 revenues of nearly $29 billion.
Delta said it wanted to remain a stand-alone carrier and to exit bankruptcy in mid-2007, when US Airways would like to complete a deal if it secures backing from unsecured creditors.
US Airways believed there would be no antitrust problems with the proposed combination, which would use the Delta brand.
The US justice department blocked an attempt by United to acquire the old US Airways in 2000 on competition grounds, scuppering another proposed combination between American and Northwest. Industry executives such as Glenn Tilton, United's chief executive, have suggested the regulatory climate has now changed to permit mergers that would allow a financially sustainable US airline industry.
The chief US airlines have lost nearly $50 billion and 200,000 jobs since 2001 as competition, costs and debt pushed United, Delta, Northwest and US Airways - twice - into bankruptcy protection.
Intense cost-cutting and other restructuring will see the biggest carriers rebound with net profits of more than $1 billion this year if fuel prices continue to fall - the sector's first surplus in six years.
This fragile recovery may be threatened by discontent of labour unions about earnings distribution.
The new chief of the US pilots' union has called for a tougher labour stance.
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