Airlines Thinking Ahead

US Airways Withdraws Its $10.2 Billion Offer for Delta

by Micheline Maynard and Michael J. De La Merced



With all the different possible ways to purchase tickets for different airlines, it is more and more difficult for airlines to keep a constant flow of profit. With airlines operating in bankrupcy and filing for Chapter 11, the ailine industry is trying hard to find different operational techniques to pull themselves out of debt.

Delta, the third largest airlines by passenger volume, is considering merging with other airlines companies through licensing to maintain their profitability. Though code-sharing has been a very popular airline alliance technique in the industry, licensing would allow the airlines to completely combine with carriers and business models. Since filing bankruptcy, Delta has formed a code-sharing alliance with Continental Airlines and Northwest Airlines, but they have not been able to be financially successful enough; therefore, they are considering other alternatives. US Airways, the fourth largest airline, had a 10.2 billion offer for Delta to comine their companies, but it withdrew after failing to receive support from Delta's creditors. Though Delta failed to combine with US Airways for trust issues, they are keeping an eye on Northwest Airlines for a possible merge.

With many airline companies currently continueing business through Chapter 11, merging licensing will allow airlines to combine businesses through its business models as well as carriers and passenger volume. Through this technique, not only will airlines be more financially successful and more likely to get out of debt, it will also allow for more sympathy from the Department of Justice against consolidation.

"Someday, the long-predicted wave of consolidation in the airline industry could occur.

But for now it will remain just that — a prediction."


Patrycja Targonski