Delta leaves turbulence behind to seek merger
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Your support makes all the difference.Delta, the airline based in Atlanta, Georgia, that emerged from bankruptcy earlier this year, said it was actively pursuing a merger deal with a rival in the congested American airline industry.
Its announcement that it had formed a boardroom committee to work out a logical deal came late yesterday in response to pressure from a hedge fund, Pardus Capital, which has built up a stake in several airlines and hopes to bang executive heads together in an industry long thought to have too many players.
Although Delta's chief exec-utive Richard Anderson denied any formal talks were under way, it is understood he has been having informal discussions with rivals in recent weeks.
"We appreciate receiving Pardus's views on the best course for Delta's future," Mr Anderson said. "We have been consistent in our public statements that Delta believes that the right consolidation transaction could generate significant value for our shareholders and employees and that strategic options should be evaluated. With oil at over $90 a barrel, this analysis takes on a heightened importance as we factor those prices into our long-term planning process."
Executives across the industry have long expressed enthusiasm for a new round of consolidation, and rumours of tie-ups periodically sweep Wall Street, but so far deals have been few and far between. As it was about to emerge from bankruptcy earlier this year, Delta shunned a takeover proposal from its smaller rival US Airways.
Yesterday, Pardus had publicly suggested that Delta merge with United Airlines, which is based in Chicago, in a deal that the hedge fund said would create cost-savings of $585m a year.
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