Delta Faces Congressional Scrutiny and Impatient Debtors

Includes: AAL, DAL
by: Jonathan Liss

After months of hostile bidding from competitor US Airways Group, merger proposals from fellow bankrupt airline Northwest Airlines, and its own proposals to make it as a stand-alone company, Delta Airlines is no closer to reaching any certainty on what its future will The possible acquisition of Delta by US Airways, whose upped bid of more than $10 billion for Delta expires February 1, will soon be reviewed by Congressional lawmakers who are concerned a merger will likely hurt consumers by reducing service and increasing fares, especially if it is followed by other deals within the airline industry. Congress is also sensitive to more industry job losses and pension cuts if the merger goes forward. In the meantime, Delta's plan to exit Chapter 11 protection in April of this year is coming under criticism by the company's creditors. In several behind-the-scenes meetings over the past week, representatives from the creditors' committee and Delta have been trying to iron out a variety of including how an Delta board will be selected, to what degree senior management will receive compensation for senior management, and how to compensate nonunion front-line Delta employees.

• Sources: Wall Street Journal, Reuters, Reuters II
• Related commentary: US Airways Ups Ante for Delta to $10.2 Billion, War of Words Between Delta and US Airways Intensifies, Northwest and Delta Flirt with Merger
• Potentially impacted stocks and ETFs: Delta Air Lines, Inc. (DALRQ.PK), US Airways Group Inc. (LCC), Northwest Airlines Corp. (NWACQ.PK). Competitors: AMR Corporation (AMR), Southwest Airlines Co. (NYSE:LUV), UAL Corp. (UAUA), Continental (NYSE:CAL), JetBlue (NASDAQ:JBLU)

Seeking Alpha's news summaries are combined into a pre-market briefing called Wall Street Breakfast. Get Wall Street Breakfast by email -- it's free and takes only a few seconds to sign up.