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US Airways on Wednesday abandoned its quest to take over bankrupt rival Delta Air Lines after a three-month campaign that shook the US airline industry and raised hopes of consolidation among the largest carriers.
The decision was prompted by the refusal of Delta’s creditors committee to allow US Airways access to the company’s books, a decision sharply criticised by Doug Parker, US Airways chief executive.
“We are disappointed the committee is…ignoring its fiduciary obligation to those creditors…We would have created a better, more financially stable airline that offered choice to consumers and increased job security to employees,” Mr Parker said.
The collapse of US Airways’ bid – which is unlikely to be revived – could delay consolidation. America’s airlines have struggled with high fuel prices, declining passenger numbers and increased competition.
A flurry of deal conversations in the sector, involving Northwest, United Airlines and Continental Airlines, were sparked by the offer.
The hostile bid for Delta was closely watched by the industry to gauge whether antitrust regulators would oppose a tie-up between the nation’s third and fifth largest airlines.
At a congressional hearing last month, the plan was met with scepticism from several senior lawmakers. US Airways offered $5bn in cash and 89.5m shares for Delta, valuing it at about $10bn.
Delta’s standalone plan, which would give creditors new equity in the company but no cash, values the airline at between $9.4bn and $12bn.
The biggest obstacle to the Delta plan had been securing adequate financing to emerge from bankruptcy.
But on Tuesday Delta moved closer to that goal by agreeing a $2.5bn package from a consortium of banks to repay a $2.1bn bankruptcy loan and expenses.
The rejection of the bid by creditors is a victory for Delta’s management, led by Jerry Grinstein, chairman and chief executive, who said a union with US Airways was flawed and would cause regulatory problems.
He said on Wednesday: “This is a proud day for the thousands of Delta people, customers, communities, civic leaders and others who stood up for our standalone plan and said, emphatically, ‘Keep Delta My Delta.’ ”
Delta has rejected the possibility of inviting a “white knight” bid from another airline.
Shares in US Airways were up 0.5 per cent to $53.38.