Delta Air Lines acknowledged in a bankruptcy filing that it considered a “business combination” with Northwest Airlines at the same time Delta was weighing an offer from US Airways Group Inc.
The Delta filing was made in Northwest’s bankruptcy case late Monday. It did not elaborate on what a “business combination” would have looked like.
In the filing, Delta said its “management and Delta’s Board of Directors, with the assistance of their financial advisors, duly considered US Airways’ proposal. In doing so, they also considered various restructuring alternatives, including a possible business combination with Northwest.”
“While no merger negotiations are currently underway or planned between Northwest and Delta, such negotiations are possible in the future,” the Delta filing said.
On Tuesday, Delta said in a prepared statement: “As stated in the filing, in fulfilling our fiduciary duty to maximize value for all of stakeholders, Delta has considered various restructuring alternatives. Delta continues to focus on our standalone plan of reorganization.”
A Northwest spokesman said the airline had no comment on Delta’s filing.
Northwest Airlines Corp. and Delta Air Lines Inc. are both reorganizing under Chapter 11 protection, and reports circulated last month that they had held talks.
Later in January Delta Chief Executive Gerald Grinstein said in an employee newsletter that Delta had obtained information from Northwest, but that is “a far cry from negotiating a merger with them.”
Both airlines have said they plan to emerge from bankruptcy as standalone carriers.
The Delta filing came in opposition to a subpoena from a hedge fund that has been fighting to get some value out of its Northwest shares. The Owl Creek fund claims that merger possibilities mean Northwest is worth more than it has claimed.
Northwest has said there won’t be enough money to pay shareholders and that its current shares will be canceled. The Owl Creek subpoenas also sought valuation information about Northwest from Continental and United airlines and others.
