WASHINGTON — The chief executive of US Airways Group Inc. faced tough questioning at a Senate hearing Wednesday as lawmakers fretted that his company's proposed hostile takeover of Delta Air Lines Inc. would harm consumers, particularly those in rural areas.
Doug Parker, CEO of Tempe, Ariz.-based US Airways, contended that the nearly $10-billion acquisition of Atlanta-based Delta would result in an efficiently run carrier that could offer low fares to fliers. He urged lawmakers to "let the market work."
Several senators said their constituents were concerned that a merger would result in cuts to service in small communities, in which the per-unit costs of running an airline tend to be more expensive than in big cities with lots of passenger traffic.
"You're an aggressive suitor, but the lady from the South doesn't want to be forced into this shotgun wedding," said Sen. Trent Lott (R-Miss.), a reference to Delta's Atlanta headquarters.
On Jan. 10, US Airways increased its bid for Delta by nearly 20%, but Delta's CEO remains cool to the offer.
Delta's official committee of unsecured creditors, which will play a key role in deciding whether any merger agreement would move forward, has not issued a statement about its position since US Airways increased its offer.
"The surest, safest bet from the creditors' point of view is to go ahead with our stand-alone business plan," Delta CEO Gerald Grinstein said at the hearing.
Grinstein called US Airways' hostile bid "blatantly anti-competitive" and a "poster child of the worst kind of merger," estimating that 10,000 jobs probably would be eliminated. Parker disputed that figure, saying any job losses would be gradual and through attrition rather than layoffs.