ATLANTA, Jan. 24, 2007 – Gerald Grinstein, Chief Executive Officer of Delta Air Lines (Other OTC: DALRQ), today appeared before the U.S. Senate Committee on Commerce, Science and Transportation to provide testimony to the full committee about the state of the airline industry and the potential impact of airline mergers and industry consolidation. In his remarks, Grinstein discussed the enormous progress Delta people have achieved over the past 16 months in transforming the airline into a strong, healthy and vibrant competitor. He noted that the company is poised to exit bankruptcy this spring as one of the best positioned airlines in the country based on financial strength, profit potential and a cost structure among the lowest of any traditional network carrier.
In his testimony, Grinstein also addressed the unsolicited takeover proposal made by US Airways. As previously stated, Delta’s Board of Directors rejected the initial proposal made by US Airways on Nov. 15, 2006 and concluded that the company’s standalone Plan of Reorganization will provide creditors with superior value as well as a faster recovery and much greater certainty of execution. The Delta Board will review the revised proposal made by US Airways earlier this month.
“The stage is set for Delta to emerge as a powerful, competitive force to be reckoned with – unless US Airways’ takeover bid is allowed to derail our momentum and jeopardize our hard-won gains,” Grinstein told the Senate committee.
Grinstein said that a primary reason for Congress to examine the competitive impact of the US Airways proposal deal is that if the merger were to go forward, it would trigger broad industry consolidation. He said, “Almost every day brings a new media report on potential mergers in the airline industry, most of which are stated openly as direct reactions to US Airways’ bid. And if this anticompetitive proposed merger gains approval despite its substantial adverse impacts on competition, consumers, communities and employees, virtually any other airline merger would likely pass regulatory muster. In our view, the likely outcome of follow-on consolidation would be to leave the combined Delta and US Airways as the weakest carrier, with little West Coast and Asian presence and a staggering debt load.”
In his remarks, Grinstein made the following observations:
- Delta is poised to emerge from bankruptcy as a strong airline. While many companies use the bankruptcy process simply to shore up their balance sheet and reduce debt, Delta undertook a top-to-bottom transformation that touched every aspect of how it does business. It is using the bankruptcy process to improve and strengthen the airline.
- Delta people deserve to determine their own destiny. Delta people are united in their strong opposition to US Airways’ proposal, representing as it does the worst possible combination with the most negative impact on virtually all constituencies.
- US Airways’ proposal fails absolutely to meet antitrust standards and would reduce competition and harm consumers. US Airways’ principal goal in its hostile takeover attempt is to eliminate its key competitor. Delta is the airline with which US Airways’ network overlaps most, with the highest number of overlapping markets and hubs. No merger with anywhere near this degree of network redundancy has ever been approved by the Department of Justice in the history of this industry.
- The proposed merger would make Delta a weaker and less competitive carrier. The combined company would have a staggering debt burden of $24 billion, which would place the merged US Airways-Delta one crisis away from financial collapse.
Grinstein concluded, “We believe US Airways’ unsolicited and anticompetitive proposal does not meet antitrust standards, and would harm employees, consumers and communities. It would create a much weaker combined carrier that would threaten the future stability of our nation’s air transportation industry. It would reverse the remarkable progress Delta has made. Let me be clear – this is a hostile takeover bid; not a consensual merger.”
A copy of Grinstein’s prepared remarks for the Senate Commerce, Science and Transportation Committee hearing can be accessed at delta.com/speeches.
Delta Air Lines offers customers service to more destinations than any global airline with Delta and Delta Connection carrier service to 304 destinations in 52 countries. With more than 50 new international routes added in the last year, Delta is America’s fastest growing international airline and is a leader across the Atlantic with flights to 31 trans-Atlantic destinations. To Latin America and the Caribbean, Delta offers more than 600 weekly flights to 58 destinations. Delta's marketing alliances also allow customers to earn and redeem SkyMiles on more than 14,000 flights offered by SkyTeam and other partners. Delta is a founding member of SkyTeam, a global airline alliance that provides customers with extensive worldwide destinations, flights and services. Including its SkyTeam and worldwide codeshare partners, Delta offers flights to 457 worldwide destinations in 97 countries. Customers can check in for flights, print boarding passes and check flight status at delta.com.
Statements in this news release that are not historical facts, including statements regarding our estimates, expectations, beliefs, intentions, projections or strategies for the future, may be “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. All forward-looking statements involve a number of risks and uncertainties that could cause actual results to differ materially from the estimates, expectations, beliefs, intentions, projections and strategies reflected in or suggested by the forward-looking statements. These risks and uncertainties include, but are not limited to, the actions and decisions of our creditors and other third parties with interests in our Chapter 11 proceedings; our ability to obtain court approval with respect to motions in the Chapter 11 proceedings prosecuted from time to time; our ability to prosecute, confirm and consummate the plan of reorganization with respect to the Chapter 11 proceedings and to consummate all of the transactions contemplated by the plan of reorganization or upon which consummation of such plan may be conditioned; risks associated with third parties seeking and obtaining court approval to terminate or shorten the exclusivity period for us to propose and confirm one or more plans of reorganization, to appoint a Chapter 11 trustee or to convert the cases to Chapter 7 cases; our ability to obtain and maintain normal terms with vendors and service providers; our ability to maintain contracts that are critical to our operations; our ability to maintain adequate liquidity to fund and execute our business plan during the Chapter 11 proceedings and in the context of the plan of reorganization and thereafter; our ability to comply with financial covenants in our financing agreements; labor issues; our ability to implement our business plan successfully; the cost of aircraft fuel; pension plan funding obligations; interruptions or disruptions in service at one of our hub airports; our increasing dependence on technology in our operations; our ability to retain management and key employees; restructurings by competitors; the effects of terrorist attacks; and competitive conditions in the airline industry. Additional information concerning risks and uncertainties that could cause differences between actual results and forward-looking statements is contained in Delta’s Securities and Exchange Commission filings, including its Form 10-K, filed on March 27, 2006 and its Form 10-Q, filed on November 9, 2006. The risks and uncertainties and the terms of any reorganization plan ultimately confirmed can affect the value of our various pre-petition liabilities, common stock and/or other securities. No assurance can be given as to what values, if any, will be ascribed in the bankruptcy proceedings to each of these liabilities or securities. We believe that our currently outstanding common stock will have no value and will be canceled under the plan of reorganization, and that the value of our various pre-petition liabilities and other securities is highly speculative. Accordingly, we urge that caution be exercised with respect to existing and future investments in any of these liabilities and/or securities. Investors and other interested parties can obtain information about Delta’s Chapter 11 filing on the Internet at delta.com/restructure. Court filings and claims information are available at deltadocket.com. Caution should be taken not to place undue reliance on Delta’s forward-looking statements, which represent Delta’s views only as of January 24, 2007, and which Delta has no current intention to update. None of the statements in this presentation are a solicitation of votes for or against any plan of reorganization. Any such solicitation will only be made through a disclosure statement approved by the Bankruptcy Court pursuant to section 1125 of the Bankruptcy Code