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Delta denies merger talks with UAL

11/20/2007| 10:09:00 AM| 中文

Monday, 19 November 2007:Reuters has revealed that Delta Air Lines has set up a special committee and hired financial and legal help to review its merger options. Despite this, the airline has dismissed reports that it is finalising a merger with UAL, the parent of United Airlines.

Monday, 19 November 2007:Reuters has revealed that Delta Air Lines has set up a special committee and hired financial and legal help to review its merger options. Despite this, the airline has dismissed reports that it is finalising a merger with UAL, the parent of United Airlines.

An insider source told media this week that a UAL-Delta deal was very likely. This sent the airline’s shares soaring, with Delta shares jumping nearly 12 percent during early trading.

"We do not respond to wholly inaccurate statements made by people who claim to have knowledge when they clearly do not," said UAL spokeswoman Jean Medina.

If it were to actualise, the deal would be the largest airline merger in history, worth some US$10 billion. The newly merged airline would also become the world´s largest airline based on passenger traffic.

According to Hedge fund Pardus Capital Management, which holds 7 million Delta shares and 5.6 million UAL shares, a Delta-United merger would be "the most attractive and practical combination”. This is because United’s key hubs in Los Angeles, San Francisco and London Heathrow complements well with Delta’s network. The cooperation would allow greater service breadth to attract more business.

Meanwhile, Delta Chief Executive Richard Anderson revealed in a company statement that the right consolidation transaction could generate significant value for our shareholders and employees, “With oil at over USD$90 a barrel, this analysis [of consolidation options] takes on a heightened importance as we factor those prices into our long-term planning process.”

That said, Delta faces tough opposition from its employees, which saved the airline from a hostile US Airways acquisition earlier this year. Delta’s pilots union has also indicated that any consolidating event would not happen without its active participation and consent.
TAGS: Delta | UAL | United Airlines | Hedge fund Pardus Capital Management | US Airways
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