US Airways proposes $8 bln merger with Delta

US Airways proposes $8 bln merger with Delta

US Airways Group Inc. (NYSE:LCC - news) on Wednesday said it had proposed an $8 billion merger with bankrupt Delta Air Lines Inc. (Other OTC:DALRQ - news) to create the No. 1 trans-Atlantic carrier.

The proposal, which would take effect upon Delta's emergence from bankruptcy, would provide about $8 billion of value in cash and stock to the company's unsecured creditors, US Airways said.

Delta creditors would receive $4 billion in cash and 78.5 million shares of US Airways stock with an aggregate value of around $4 billion based on Tuesday's closing stock price.

US Airways said its proposal represented a 25 percent premium over the current trading price of Delta's prepetition unsecured claims as of November 14, assuming there will ultimately be $16 billion of unsecured claims.

The company said the offer also represented a 40 percent premium over the average trading price for Delta unsecured claims over the last thirty days.

US Airways believes that the combination will generate at least $1.65 billion in annual synergies.

The merger would create one of the world's largest airlines. The combined company, which would operate under the Delta name, would be the No. 1 carrier across the Atlantic and the second-largest to the Caribbean, US Airways said.

Separately, US Airways said that Richard Schifter, of private equity firm Texas Pacific Group, resigned from its board....