US Air sees competition key to Delta bid

By John Crawley

WASHINGTON (Reuters) - US Airways Group Inc. (LCC.N: Quote, Profile, Research, Stock Buzz) is betting antitrust regulators would look favorably on any merger proposal with Delta Air Lines Inc. DALRQ.PK because low-cost competitors have sharply boosted industry competition, US Airways President Scott Kirby said on Tuesday.

That approach departs from the strategy that helped to create US Airways last year, when America West Airlines successfully pursued a "failing firm" argument to rescue the bigger but severely distressed US Airways from bankruptcy.

"We're not relying on the ailing firm theory at all," Kirby told the Reuters Aerospace & Defense Summit in Washington, D.C. "We're relying on the merits," Kirby said of the attempt to buy another bigger airline.

US Airways has proposed a deal now worth $8.6 billion to buy Delta, which is restructuring in Chapter 11 bankruptcy and still plans to emerge next year as a stand-alone airline.

Legal and other experts say any proposed Delta merger would receive close antitrust scrutiny from the U.S. Justice Department. Congress may hold hearings if lawmakers grow concerned about the potential impact on consumers.

Competition issues, amplified by congressional concern, derailed in 2001 a planned merger of the old US Airways and United Airlines, a unit of UAL Corp. (UAUA.O: Quote, Profile, Research, Stock Buzz).

That proposal foundered on traditional questions over overlapping routes but Kirby said US Airways does not have that problem this time on nonstop routes and can address any concerns about connecting service.

Kirby also said US Airways anticipates having to sell one of the New York shuttles, if the Delta merger takes shape. But he noted that competitors would welcome the move. JetBlue Airways Corp. (JBLU.O: Quote, Profile, Research, Stock Buzz), Southwest Airlines (LUV.N: Quote, Profile, Research, Stock Buzz), and AirTran Holdings (AAI.N: Quote, Profile, Research, Stock Buzz) have said they would be interested in buying shuttle assets, like gates in New York and Washington.  Continued...