US Airways' Delta takeover proposal battered on Capitol Hill

Delta Air Lines CEO Gerald Grinstein slammed US Airways' $10.2 billion takeover proposal during testimony before the Senate Commerce and Transportation Committee in Washington yesterday, calling it "the poster child for the worst kind of merger" while also flatly denying that DL is in merger talks with Northwest Airlines.

Seated at the same witness table as US Airways Chairman and CEO Doug Parker, Grinstein said a US/DL combination would lead to the loss of 10,000 jobs and reduced service for consumers. "If you believe this merger won't lead to reduced service, you believe in Tinker Bell," he testified (ATWOnline, Jan. 24).

Parker pointed to the merger of the former US Airways and America West Airlines as an example of a successful combination and touted his management team's experience in completing that transaction, noting that "many experts" initially questioned the deal. "I am proud to say that for our employees, our shareholders and our customers, that 'foolish bet' has paid off handsomely," he said, predicting a strong profit when US announces its 2006 results next week.

Grinstein dismissed the comparison, saying DL is poised to emerge from bankruptcy in the second quarter "as a strong, fiercely competitive, standalone airline" while the former US was "in a death spiral" and had "burned all the furniture" in anticipation of collapsing. He was accompanied at the hearing by dozens of uniformed DL pilots sporting Keep Delta My Delta buttons.

Senators were tough in questioning Parker, expressing skepticism about his promise not to furlough any "frontline" DL employees. "How do you cut 10% capacity [as the takeover plan proposes] and not fire one mechanic," Sen. Frank Lautenberg (D-N.J.) asked. Responded Parker, "I want to be clear. Over time we'll need fewer mechanics." But he said reductions would occur through natural attrition.

During a break, Air Line Pilots Assn. Delta MEC Chairman Lee Moak was blunt: "We intend on killing this hostile merger" (ATWOnline, Jan. 15).