Delta Air Lines Inc. has rejected a report that was in merger talks with UAL Corp.'s United Airlines.
"There have been no talks with United regarding any type of consolidation transaction and there are no such ongoing discussions," Delta CEO Richard Anderson said in a release Wednesday afternoon.
Earlier in the day, the Associated Press said the companies were discussing a combination that would link the second- and third-largest U.S. carriers.
AP, citing an unnamed official with knowledge of the talks, reported discussions had been going on for some time and continued as recently as a week or so ago.
"They want to get something done before a new administration gets in, and so they get the clock ticking on" federal regulatory approval, the official said.
Shares of both airlines gained Wednesday. Delta stock rose 77 cents to $19.56 US. UAL shares gained 67 cents to end at $44.17 US.
Hedge fund pushing merger
Delta has been under pressure from a hedge fund that owns seven million of its shares.
Pardus Capital Management LP said in a letter to Delta's top management on Tuesday that it is "imperative" that the company undertake a merger transaction with another airline in view of soaring fuel prices and what it described as the increased risks of going it alone.
"Consolidation is needed to de-risk the industry, and time is of the essence as now is the right regulatory environment," said Karim Samii, president of Pardus, and Shane Larson, a principal.
Anderson said that "the right consolidation transaction could generate significant value for our shareholders and employees and that strategic options should be evaluated."
The hedge fund executives said they had determined since making a similar recommendation in a Sept. 7 letter that "the most attractive and practical combination would be a Delta and United Airlines combination."
It cited figures from a consulting firm estimating that the benefits of such a pairing would be about $585 million US and said a combined Delta-United would boast a broader network than any other combination.
Pardus also owned 5.6 million shares in UAL as of Sept. 30.
With files from the Associated PressMore Money Headlines »
- U.S. cash registers ring on 'Black Friday'
- U.S. stores ushered in the start of the holiday shopping season Friday with midnight openings and a blitz of door busters.
- Federal surplus keeps on growing
- The federal budget surplus rose by $700 million in September as the treasury continued to bring in more money than it paid out.
- ATB Financial takes $79.6M in credit crunch charges
- ATB Financial — an Alberta Crown corporation — revealed Friday that its second-quarter profits plunged by 91 per cent because of a $79.6 million charge for writedowns related to the credit crunch.
- $620M for Quebec manufacturers hit by loonie rise
- Quebec's Liberal government has announced a $620 million aid package for the province's bruised manufacturing sector.
- Flaherty mulls budget help for manufacturers
- Finance Minister Jim Flaherty said Friday he may be preparing some relief for the country's hard-hit manufacturing sector in the next federal budget.
Blog Watch
Most Blogged about CBC.ca Articles
Note: CBC does not endorse and is not responsible for the content of external sites - link will open in new window
