Seen in today’s Wall Street Journal (subscriber link):
After digging into the details of the US Airways offer — which was sweetened 20% less than two weeks ago — and hiring former Continental Airlines Inc. Chairman Gordon Bethune to help analyze its prospects, the Delta creditors’ committee has grown skeptical of the proposed merger, these people said.
Separately, talks about a possible merger between Delta and Northwest Airlines Corp. have been put on hold, without a framework for a deal and without specific plans for further negotiations, according to people familiar with the thinking of both sides.
The article goes on to mention that a Delta-Northwest merger is still on the table, but wouldn’t happen until both companies were out under Chapter 11, and until Delta had an acceptable business plan to operate on a standalone basis.
Part of the discussion surrounding U.S. Air’s interest in Delta is that it’s easier to achieve some of the consolidation cost-savings sought in a merger when the acquired entity is still under bankruptcy protection, due to the ease in which the law permits protected entities to break lease and labor contracts.
That has me a little surprised that a Delta-Northwest marriage would wait until both entities were out from under BK cover. At first glance, executing such a deal when one company was out but the other was still in would seem to be the savvier deal.