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Will Delta Air Lines acquire US Airways?

As many Texas residents may know, many airlines have been consolidating to form much larger air carriers. According to a recent article, Delta Air Lines is considering acquiring US Airways Group. Delta is working with financial advice from Goldman Sachs Group and Blackstone Group. The airline has not approached US Airways with an offer and is still deciding which acquisition deal would have the best chances of success.

US Airways is open to being a buyer or a seller in the process. However, US Airways also is looking at a potential deal with American Airlines' parent company, AMR Corporation. A union of US Airways and AMR would form a company as big as Delta or United.

The recent mergers have formed larger airlines and reduced the number of carriers. Twenty years ago, we had three times as many airlines. The consolidation has helped the surviving airlines raise ticket prices and tighten management over some airports. Delta acquired Northwest Airlines in 2008, and that step undoubtedly gave the airline more control over air traffic.

US Airways has looked for partners in the past. In 2010, US Airways considered United Airlines; however, this airline ended up merging with Continental Airlines. Furthermore, in 2006, US Airways made a bid for Delta when that company was in bankruptcy proceedings, but that attempt fell through.

There are many parts to an acquisition. The process requires various steps including developing the criteria of an acquisition, structuring a proposal, drafting the purchase agreement and identifying financial support options. For this reason, the potential airline attainment plan is in its early stages, and sources say that no formal actions will be executed for at least a year.

Source: The Wall Street Journal, "Delta weighs a US Air deal," Gina Chon, Anupreeta Das and Susan Carey, Jan. 28, 2012