Delta Air Lines formally rejected a bid by smaller rival US Airways Group last night and filed its own long-awaited plan to emerge from bankruptcy that would value the carrier at up to $12 billion.
Delta has said repeatedly it intends to exit bankruptcy as an independent carrier, but this is the first time the Atlanta-based airline rejected the $8.6 billion US Airways bid outright and publicly presented its alternative.
"US Airways would be a poor strategic fit for Delta," Delta chief executive Gerald Grinstein told analysts on a conference call. "It brings with it significant risks."
But later, in response to a question, he said Delta was keeping a close eye on the possibility of mergers in the sector.
"Every carrier is studying every other carrier all the time, and if the process of consolidation starts, you would not want to be left out," Mr Grinstein said. "If the process happens, I would hope that we would be an acquirer rather than an acquiree."
Delta's filing is only the latest twist in a month-long takeover saga, and it is now up to creditors to decide who to support. US Airways could raise the terms of its November 15th offer, while rivals such as United Airlines could jump in with their own bids. Any merger would have to overcome serious antitrust concerns.
US Airways declined to say whether the US airline would raise its bid for Delta but added that it "remained a determined, disciplined bidder."
Delta said its five-year business plan filed with a US bankruptcy court values the company at about $9.4 billion to $12 billion - well above US Airways' offer - and would result in a recovery for Delta's unsecured creditors of about 63 per cent to 80 per cent of their allowed claims. It assumes a total claim pool of about $15 billion.
The company, which has been operating under bankruptcy protection since September 2005, said it intends to exit Chapter 11 in the spring of 2007, hoping to get creditors to vote on the plan around February or March.