Senators grill CEOs of Delta, US Airways

WASHINGTON — Senators on Wednesday questioned Delta Air Lines Chief Executive Officer Gerald Grinstein and Doug Parker, chairman and CEO of US Airways, about how a potential hostile takeover of Delta would affect smaller cities and the airline industry overall.

Senators said they were concerned routes would be eliminated and jobs would be lost, even though US Airways says this would not happen. US Airways, based in Tempe, Ariz., is waiting to see if Atlanta-based Delta's creditors will accept its nearly $10 billion bid.

Grinstein and Parker sat one person apart at a Senate Commerce, Science and Transportation hearing Wednesday that focused on airline mergers and industry consolidation. Uniformed pilots of Delta, which operates a hub at Salt Lake City International Airport, lined the back of the overflowing hearing room along with other spectators wearing bright red "Keep Delta My Delta" buttons.

Grinstein called the proposed takeover "the poster child of an anticompetitive merger," and said that if approved it "will trigger broad industry consolidation."

"We believe US Airways' unsolicited and anticompetitive proposal does not meet antitrust standards and would harm employees, consumers and communities," Grinstein said. "It would create a much weaker combined carrier that would threaten the future stability of our nation's air transportation industry."

But Parker said no community would lose air service and there are no plans for layoffs if the deal goes through. Instead, the new company would wait for people to leave and then just not replace them, he said.

He said the merger would allow the bigger company to offer better fares for passengers, helping it to compete with low-cost carriers.

Parker highlighted the success of the merger between America West and US Airways, including repayment of loans and turning a profit in 2006. But he said he owes it to the shareholders and employees "to constantly look for ways to make our company even more competitive in order to face the future and all that it may hold," which led to the Delta offer last November.

Sen. Bryon Dorgan, D-N.D., said he is a "big fan of the marketplace" and "not a fan of mergers," although he noted that the marketplace sometimes needs a "referee."

Other potential deals in the airline industry — possibly involving United Airlines and Continental or American Airlines and Northwest Airlines — could follow the Delta merger, creating even less choice for consumers, Dorgan said.

"Other network carriers are going to decide they want to merge, which gives consumers less choice and creates less competition," Dorgan said.

Delta has until Feb. 1 to accept the offer or the bid from US Airways expires.

The House Transportation and Infrastructure Committee's Aviation Subcommittee has a hearing scheduled for Feb. 15 focusing on the same topic.

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