[Congressional Record (Bound Edition), Volume 152 (2006), Part 18]
[House]
[Pages 22904-22907]
[From the U.S. Government Publishing Office, www.gpo.gov]




                   PROPOSED DELTA/U.S. AIRWAYS MERGER

  The SPEAKER pro tempore. Under the Speaker's announced policy of 
January 4, 2005, the gentleman from Georgia (Mr. Lewis) is recognized 
for 28 minutes as the designee of the minority leader.
  Mr. LEWIS of Georgia. Madam Speaker, joining me tonight are Mr. Scott 
and Mr. Bishop from Georgia.
  Madam Speaker, I rise tonight to tell you about a bad deal, a very 
bad deal. You may have read about the recent unwanted, unsolicited and 
unnecessary bid from U.S. Airways to take over a strong, proud, Georgia 
company named Delta Airlines.
  But Americans have learned the hard way that bigger is not always 
better, and in this case, Delta's takeover by U.S. Airways will have a 
devastating impact on the people of Atlanta, on the east coast of this 
country, and it will rob the American travelers of the economic 
advantages that competition creates.
  Mr. Speaker, today I represent thousands of Delta employees all over 
Georgia, hundreds of Delta pilots, and the executive leadership of that 
organization. Delta employees and its executive are working through 
some difficult problems right now as they reshape the company, but when 
it comes to this merger, they speak with one strong and mighty voice.
  Management and employees agree on this. None of them are for this 
deal. I think that speaks volumes, Madam Speaker. It demonstrates how 
deeply they believe this takeover will impair the quality of airline 
transportation in our country.
  You may have heard that Delta had run into some problems and was 
going through bankruptcy proceedings, but it is about to emerge from 
this bankruptcy a stronger, better airline, with a renewed commitment 
to serve the American people, American travelers and world travelers.
  Delta had problems but it was not a failing company. They have used 
the hardship of bankruptcy to make tremendous progress. In spite of its 
challenges, it has created 70 new international destinations. It offers 
service to all 50 States. Employee morale has improved. Pensions for 
90,000 employees and retirees were saved, and 2,500 pilots, machinists 
and other employees have been called back to work.
  It is because of the sacrifice of Delta employees and executives to 
make good on its commitments to its creditors that it became a prime 
target for this hostile merger. It is because Delta was able to win the 
uphill battle of bankruptcy and is poised to emerge transformed that 
U.S. Airways want to take it over against its will. That is not right, 
that is not fair, and that is not just.
  This is not a case of the survival of the fittest. U.S. Airways is in 
trouble. It has already gone through two bankruptcies and cannot seem 
to bring its merger with America West to a close.
  In 2004, U.S. Airways was on death's doorstep. It had no choice but 
to merge with America West. It would have had to liquidate all its 
assets if it had not merged with another company, but 2 years later, 
the integration of U.S. Airways and America West is still not complete. 
The majority of its labor groups are still working under separate 
contracts. It still has two IT systems. U.S. Airways has not even 
repainted all of its aircraft.
  Madam Speaker, even though U.S. Airways cannot seem to manage its own 
merger, it is hoping and praying that it can take advantage of the hard 
work and tough sacrifices the good people of Delta have already made so 
that it can survive. This is not a win-win situation. It is a win for 
U.S. Airways and an incredible risk for Delta Airlines and for all of 
its customers.
  It is a risk for the people of Atlanta, a risk for Hartsfeld-Jackson 
Airport, the largest commercial airport in the world. It is a risk for 
the State of Georgia and thousands of American citizens.
  At this time, Madam Speaker, I want to yield to my colleague and 
friend from the State of Georgia (Mr. Scott).
  Mr. SCOTT of Georgia. Madam Speaker, I thank very much my colleague 
Mr. Lewis.
  This is indeed an extraordinary moment in the history of this country 
and history of American business. Let us see if we cannot set the stage 
properly so we understand exactly what is going on.
  As my colleague Mr. Lewis has stated and given history of Delta 
Airlines' brilliant and hard fought effort to come out of bankruptcy, 
this is a great American story. It is perhaps one of the greatest 
business recovery stories in American history.
  Delta Airlines was at the bottom, but that company came together. It 
made the sacrifices. Its pilots' union gave and gave. Its employees 
gave back raises. They combined their efforts. That company, under 
brilliant management and leadership, brought itself together.
  We owe it to Delta to have their bankruptcy plan now go into effect, 
and they have a plan to come out of bankruptcy, which they will have 
and they will come out of bankruptcy within the next 6 months. Do we 
not owe it to Delta to give them that opportunity to make it work?
  Meanwhile, lurching on the sidelines, almost like a vulture, is U.S. 
Airways. Let me take a moment to describe U.S. Airways at this point. 
Here is a company that is just coming out of bankruptcy itself, a 
company that has just gone through a merger, that is now problematic, a 
company that has a merger in which it is now dealing with two sets of 
pilots' unions, two sets of flight attendants' unions, two reservation 
systems and two scheduling systems. How in the world can we, in effect, 
for a creditor who has an indebtedness with Delta feel that that 
investment can best be met by investing in a company, an airline 
company that is beset with a ton of labor problems?
  I want to deal with the other issue. Not only is it bad for the 
creditors, it is bad in terms of our own antitrust practices. In a 
previous case in which there was a United Airlines merger, the Justice 
Department's antitrust division ruled that that could not merge,

[[Page 22905]]

and they did not nearly have the overlapping that this does.
  So now we have a case here that with Delta in bankruptcy, even if 
this merger does proceed to a point, then it goes into bankruptcy, then 
the antitrust division of the Justice Department must rule.
  That is why it is important for us in Congress to make this bold 
statement and urge the Justice Department and urge that we have 
hearings and do everything we can to stop this merger from going 
through on the grounds that it is anti-competitiveness, it is anti-
consumer and it is anti-American for this important reason.
  Another thing about U.S. Airways, they buy their airplanes from 
foreign governments, whereas Delta buys theirs from American 
governments.
  Mr. LEWIS of Georgia. Mr. Scott should know we have two more Bishops 
waiting to speak. We have Bishop of Georgia and Bishop of Utah, and 
they both live in cities that are served by Delta. Bishop of Georgia 
from Albany, Georgia, and Bishop of Utah in Salt Lake City.
  Madam Speaker, I now yield to Mr. Bishop, my colleague from Georgia.
  Mr. BISHOP of Georgia. Madam Speaker, I thank my colleague for 
yielding.
  I rise tonight to discuss Delta Airline's tremendous progress since 
it entered bankruptcy in September 2005 toward its long-planned goal 
toward emerging in the first part of next year as a financially strong, 
stand-alone, independent airline.
  This is a very positive story that has involved difficult decisions 
by Delta's management, sacrifices from its employees and strong support 
from its creditors, from the home State of Georgia and other 
communities it serves.
  This is also an important story to tell tonight because U.S. Airways' 
unsolicited merger proposal would jeopardize the progress and saddle 
Delta with a huge debt that would put it at a competitive disadvantage.
  On November 15, when U.S. Airways went public with this unsolicited 
merger proposal, Delta's CEO Gerald Grinstein wrote to Delta's 45,000 
employees and said, Delta people have participated in the hard work and 
tough choices driving our company's already remarkable restructuring 
progress. I know you care deeply about what this means for our airline.
  Less than a week later, Mr. Grinstein wrote again to Delta's 
employees to share how the outpouring of support for Delta's future as 
a profitable, strong, stand-alone airline and for you, the people who 
have been fighting hard to reach that goal, has been overwhelming.
  So what is the story behind this remarkable restructuring progress 
since Delta entered bankruptcy in September 2005? In short, Delta has 
reduced costs, increased revenue, improved customer service, launched 
new domestic and international air services and achieved tangible 
progress on other major fronts.
  As Business Week recently put it, Delta's senior management has 
worked around-the-clock renegotiating thousands of contracts, bucking 
up demoralized employees, imploring bankers to provide financing and 
wrangling with creditors to keep them from picking all the meat off 
Delta's bones.
  To give just a few examples of Delta's tremendous progress over the 
last year, Delta has overhauled its vast domestic and international 
network, shifting as much as 20 percent of its domestic capacity and 
its largest aircraft to international service, all while expanding to 
all 50 States and serving 70 new international cities.

                              {time}  2315

  Delta recently announced the recall in the coming months of hundreds 
of furloughed employees, pilots, flight attendants, mechanics, and 
others. Most recently, Delta announced that it will recall another 200 
pilots beyond the 130 pilots already recalled this year. Similarly, 
Delta recently brought back 1,250 flight attendants and 900 mechanics 
and maintenance workers. This brings to nearly 2,500 the number of 
employees recalled in just the recent months.
  This week, in a move critical to its ability to emerge from 
bankruptcy, Delta agreed with the Pension Benefit Guaranty Corporation 
to terminate Delta's pension plan for its pilots. Retired Delta pilots 
will receive more than $800 million in allowed claims. A group 
representing most of Delta's retired pilots agreed not to fight this 
agreement. Further, and perhaps of greatest significance, at the time 
of this announcement Delta also reconfirmed that it will preserve its 
non-pilot retirement plan for 90,000 active and retired ground 
employees and flight attendants.
  Based on this tremendous progress, Delta plans to file a plan of 
reorganization with the bankruptcy court in the coming weeks, and 
expects to emerge as a strong, competitive, stand-alone airline during 
the first part of next year. Such a result will be good for 
competition, good for the flying public in Georgia and throughout the 
U.S., and good for Delta employees, for their customers, and for their 
creditors.
  In contrast, Mr. Speaker, US Airways' proposal would be bad for 
competition because of the monopoly it would create, bad for the flying 
public in Georgia and throughout the U.S. because of its potential rate 
increases, and terrible for Delta's employees, customers, and creditors 
because of the jobs that would be lost.
  In short, US Airways' proposal would jeopardize all that Delta, with 
strong support from its employees, creditors, and local communities and 
others, has worked towards for more than a year now. We sincerely hope 
that it will be soundly rejected.
  Mr. SCOTT of Georgia. If the gentleman would yield for a moment, you 
hit on a very good point. But not only in Georgia is this significant, 
but this is a national issue. And we have our distinguished gentleman, 
Mr. Bishop from Utah, who will tell how this impacts the Nation as a 
whole.
  Mr. BISHOP of Utah. I appreciate yielding from the three 
distinguished gentlemen from Georgia, including my namesake who has 
preceded me here as well as on the voting list every time we look up 
there on the board.
  Indeed, Delta has an impact in the State of Utah as well. Delta and 
its feeder services have about 7,000 employees; they fly 350 flights 
out of Salt Lake City every day; they have added 30 nonstop flights 
since their recovery process is going through. It is significant not 
just to the consumers of Utah but the entire Intermountain West and 
indeed the West, as we now have a situation of competition that exists.
  US Air had a hub in Las Vegas. It merged with America West with a hub 
in Phoenix. Delta has a hub in Salt Lake. That has a competitive 
overlap which gives the consumers of the West a choice in where their 
air travel goes and the kinds of air fare in a free market environment.
  The southeast of this Nation has basically the same situation, with a 
hub already for US Air in Charlotte as well as Delta in Atlanta. Those 
are very close hubs geographically. It makes no sense, especially in 
the West, of a company, even though they have said they would, to 
maintain a hub in Las Vegas and Phoenix and Salt Lake at the same time. 
Business sense would say something would have to close. And if that 
happens, the net result is that there are fewer air travel 
opportunities and less competition for consumers in our area of the 
Nation. In fact, and the concern I also have is the merger between 
America West and US Air I am told resulted in four times as many fare 
increases in cities as it did in fare decreases. Now, I am also told 
that if this merger would go through, there would be near monopolistic 
competition, as some of you have already mentioned. Twenty-three States 
would be in a near monopoly situation; 71 cities, including those in 
the East, would have almost monopolistic situations, with 57 percent of 
the slots and 44 percent of the gates controlled by simply one company. 
That does not lead to better economic situations and better choices for 
our customers and our citizens.
  If this was a willing merger, I would not be so upset, but it is not. 
Delta does not wish to enter into this arrangement. They wish to stay a 
stand-alone strong company, and I would suggest that is significantly 
and fundamentally a different situation than

[[Page 22906]]

US Air was in when they merged with America West. It is a company that 
is in economic recovery and very close to being in full economic 
recovery. And as the gentleman has already said, this is a company 
where the morale of their employees is on the upswing.
  As the gentleman from Georgia said, the employees are now coming back 
to this company as they have now turned the economic corner and can 
enter the market a strong, viable, stand-alone company, giving extra 
service, giving extra opportunity, giving consumer choice, which is for 
the betterment of all our constituents. Were this merger to go through, 
the service would be less in the Intermountain West, the choices would 
be less in the Intermountain West, and there would be significant harm 
done to my constituents.
  So I agree with my good friends over here that this is not in the 
best interest of any of our areas; it is not in the best interests of 
the flying public of America. And I also oppose this forced hostile 
takeover.
  Mr. LEWIS of Georgia. Let me thank our colleague from Utah for 
participating in this Special Order. As we said earlier, Madam Speaker, 
this is a bad deal, this is not a good deal, and that is why we are 
speaking out tonight and we will continue to speak out in opposition 
against this proposed takeover bid until this proposal is off the 
table. As it has been said, we want to secure Delta's future as a 
strong stand-alone company. That is in the best interests of the 
American people, not just to people in the Southeast, but to people in 
the West and all over this country.
  Madam Speaker, I rise tonight to tell you about a bad deal. You may 
have read about the recent unwanted, unsolicited, and unnecessary bid 
from US Airways to take over a strong, proud, Georgia company, named 
Delta Airlines.
  But, Americans have learned the hard way that bigger is not always 
better. And in this case, a Delta takeover by US Airways will have a 
devastating impact on the people of Atlanta, on the east coast of this 
country, and it will rob American travelers of the economic advantages 
that competition creates.
  Mr. Speaker, today I represent thousands of Delta employees all over 
Georgia, hundreds of Delta pilots, and the executive leadership of that 
organization. Delta employees and its executives are working through 
some difficult problems right now as they reshape the company, but when 
it comes to this merger, they speak with one voice.
  Management and employees agree on this. None of them are for this 
deal. I think that speaks volumes, Mr. Speaker. It demonstrates how 
deeply they all believe this takeover will impair the quality of 
airline transportation in the United States.
  You may have heard that Delta had run into some problems and was 
going through bankruptcy proceedings. But it is about to emerge from 
this bankruptcy a stronger, better airline, with a renewed commitment 
to serve America's cities. Delta had problems, but it was not a failing 
company.
  It has used the hardship of bankruptcy to make tremendous progress. 
In spite of its challenges, it has created 70 new international 
destinations. It offers service to all 50 states. Employee morale has 
improved. Pensions for 90 thousand employees and retirees were saved. 
And 2,500 pilots, machinists and other employees have been called back 
to work. And it is because of the sacrifice of Delta employees and 
executives to make good on its commitments to its creditors that it 
became a prime target for this hostile merger. It's because Delta was 
able to win the uphill battle of bankruptcy and is poised to emerge 
transformed, that US Airways wants to take it over against its will.
  This merger puts the very successful efforts of an independent 
corporation in jeopardy, . . . and it would leave this important 
transportation resource in the hands of an institution that cannot seem 
to get its own house in order.
  This is not a case of the survival of the fittest. US Airways is in 
trouble. It has already gone through two bankruptcies, and cannot seem 
to bring its merger with America West to a close.
  In 2004, US Airways was on death's door--it had no choice but to 
merge with America West. It would have had to liquidate all its assets 
if it had not merged with another company.
  But two years later, the integration of US Airways and America West 
is still not complete. The majority of its labor groups are still 
working under separate contracts. It still has two I-T systems. US 
Airways hasn't even repainted all its aircraft!
  Madam Speaker, even though US Airways can't seem to manage its own 
merger, it is hoping and praying that it can take advantage of the hard 
work and tough sacrifices the good people of Delta have already made so 
that it can survive. This is not a win-win situation. It is a win for 
US Airways and an incredible risk for Delta Airlines.
  It is a risk for the people of Atlanta, a risk for Hartsfield-Jackson 
Airport, the largest commercial airport in the world. It is a risk for 
the State of Georgia and thousands of American citizens.
  I think freedom in the marketplace is important, but when a bad 
business deal like this one threatens the economies of so many 
communities and the lives of so many citizens, I think Members of 
Congress must take notice. I think we must step in and take a long hard 
look at the economic impact of this kind of hostile takeover.
  Why must the American people pay, why must the employees pay, why 
must travelers pay when American businesses can't get their house in 
order? This takeover attempt will hurt people in my district, it will 
damage the economy of the State of Georgia, and it will isolate 
communities in the Southeast that have come to depend upon air travel.
  I think the Members who stand with us tonight would encourage the 
Justice Department and the House Judiciary Committee to review this 
takeover with a fine-toothed comb so we can make sure it serves the 
best interests of the American people.
  Madam Speaker, US Airways keeps using the word ``synergy'' to 
describe this takeover. They want to make us feel comfortable about 
this deal. But, synergy is just a codeword for cutting flights and 
eliminating competition. And that means higher prices for American 
consumers.
  ``Synergy'' means two companies working together to accomplish what 
one couldn't, but that's not what will happen in this merger. Delta 
could emerge as an independent company from this bankruptcy in a few 
months.
  That's something US Airways could not do when it was in trouble. An 
independent Delta will continue to serve hundreds of markets that US 
Airways will cut off or cut back. This is not synergy; it is 
exploitation. It is suffocation.
  US Airways wants to take over the strength of a new Delta Airlines 
for its own benefit and raise fares so it can service the huge new debt 
it has to take on to pay for this merger. Meanwhile American travelers 
will have to pay more money for less service.
  If this merger is not stopped, travelers in many American cities will 
only have one air carrier to choose from. If they want to fly, they 
will have to accept monopoly prices or stay home. And if the past is 
any indication, the ``New Delta,'' as US Airways likes to call the 
results of this merger, will take full advantage of their monopoly.
  Using the name, ``New Delta,'' tells us something about which airline 
has real strength and a better reputation. Madam Speaker, it would seem 
that US Airways has more confidence in Delta, than they do in 
themselves.
  If the proposed merger goes as planned, there may be some reduction 
in fares between some big cities, but service to hundreds of small 
cities throughout the northeast region of this country--cities that are 
just beginning to build a new economic life, cities like Asheville, 
Augusta, Birmingham, and Jacksonville. That's what US Airways did when 
it merged with America West. There's no reason to think they won't do 
it again.
  Some analysts say that a merger with Delta would be good for the 
airline industry. But, US Airways will weigh Delta down with $23 
billion in debt. $23 Billion Dollars!
  Delta went into bankruptcy because it had $21 billion in debt. This 
plan will probably send the two airlines right back into bankruptcy!
  The whole purpose of Delta's bankruptcy negotiations was to 
reconfigure its debt load. It was a tough struggle, but Delta did it. 
And now US Airways wants to pile up staggering amounts of new debt in 
hopes that Delta can bear some of the load, hoping that a more 
efficient organization can solve its problems. That's like asking an 
expert swimmer to save one that's drowning. It might work, but there's 
just as much chance that they will both die.
  There is no economic model, except maybe voodoo economics, that 
resolves debt by adding debt. This extra burden would drain the 
competitiveness of the merged airline and threaten the survival of both 
companies.
  This is not a promising plan for Delta's creditors who are taking a 
risk that a company which cannot complete its own merger, could somehow 
juggle a brand new merger at the same time. Practically and 
economically, it doesn't make sense. This is a win for US Airways and 
much too risky for Delta.

[[Page 22907]]

  US Airways executives have said they will find so-called 
``synergies'' if the merger occurs when Delta is still in bankruptcy. 
Don't be fooled--that just means that the Delta executives and 
employees who have already sacrificed a lot, will be asked to sacrifice 
even more. And it means that all the agreements they worked so hard to 
gain are up for grabs.
  It means US Airways wants to make new agreements that benefit its 
stock price without regard to the harm it would cause Delta's 
employees, Delta's passengers, or Delta's creditors. That's right--
Delta's creditors!
  Gaining ``synergies'' while Delta is still in bankruptcy means 
rejecting contracts and leases Delta has already negotiated. That is a 
win for US Airways and a risk for Delta's creditors.
  There are some who claim that airline mergers are unavoidable and 
good for the industry. In some instances, like the US Airways and 
America West case, end-to-end mergers of that sort can be good and 
competitive if they are executed well. Both of those airlines had very 
little overlapping service.
  But Delta is in a very different position than US Airways was in when 
it received the America West offer. Delta is returning to 
profitability. It will emerge from bankruptcy in a few months. Delta's 
network is strong.
  The morale of Delta's people is good. Delta's revenue picture is 
impressive. In no way does Delta need US Airways to survive. But US 
Airways needs Delta to survive. That's why this is a hostile takeover. 
It knows Delta would have no good reason to participate in this deal, 
except by force.
  Madam Speaker, I am here today to raise the question: Will this 
merger really serve the best interests of the American people?
  Will it benefit travelers and business people in small communities to 
fly at the will of a monopoly? Will the service cuts and hub closures 
benefit business and individual citizens in those cities? Most small 
communities that lose service will never again see a low-cost carrier 
come to town to save the day.
  Just look at Georgia--there are no low cost carriers today in any 
cities other than Atlanta and Savannah.
  Airlines won't take on those routes for the very reason that they 
haven't up to now. They don't believe in that kind of service. There 
are not enough passengers for them.
  Delta is proposing to maintain those routes, and US Airways now has 
to compete with Delta to win in those markets. That competition helps 
keep fares down and provides choices a monopoly carrier will not offer.
  And Madam Speaker, what about justice for Delta's employees? Delta's 
employees have sacrificed a lot to turn the company around.
  They have been through lay offs, pay cuts, and uncertainty about the 
company's future and even their retirement benefits. They deserve to 
reap what they've sown. They have hung in there. They didn't give up in 
hard times. And this is the kind of nation that rewards hard work and 
sacrifice.
  Delta employees should reap the benefits of their sacrifice. They 
don't deserve the risks of a US Airways takeover. They have been 
through the worry of losing their jobs and benefits. They have fought 
hard to win back their security. They don't deserve to lose the 
seniority they've worked so long to achieve.
  And that's why--they don't want US Airways! They don't want to go 
back. They want to move forward with a free and independent Delta 
airlines.
  Madam Speaker, I submit to you that the U.S. Government must look at 
this takeover bid and measure it against our nation's antitrust laws. 
We must begin a rigorous antitrust investigation by the Department of 
Justice. House and Senate Committees must also investigate this merger 
proposal thoroughly.
  It is our duty, it is our obligation, it is our responsibility as 
Members of Congress to represent the best interests of our constituents 
and our nation, and to hold the feet of the responsible agencies of the 
Federal Government to the fire to make sure that their review is 
thorough, careful, and fair.
  I am convinced that, if they look at this deal, they will find that 
it is more anti-competitive than the 2000 United-US Airways merger, 
which the Justice Department opposed. I am convinced that this deal is 
more anti-competitive than almost any other airline combination 
possible.
  Over the years, Delta has been a significant economic engine, fueling 
the region's growth. It has helped to make Atlanta one of the world's 
most important international transportation centers. The potential loss 
of Atlanta as Delta's home would be a tragedy--a real blow to Atlanta, 
to the State of Georgia, and the people of the United States.
  Madam Speaker, this is a bad deal. That is why we are speaking here 
tonight, and we will continue to speak in opposition to this takeover 
bid until it is off the table. We want to secure Delta's future as a 
strong, stand-alone company in the heart of Atlanta.
  Madam Speaker, I yield to Mr. Scott.
  Mr. SCOTT of Georgia. Madam Speaker, I think it is very important for 
us to make sure that we sum up these major points that we have made 
here this evening, and that is this: one, this planned hostile 
takeover, which hopefully we will arrest and stop in the next few days, 
is anti-consumer, it is anti-competitive; it is not in the best 
interests of the American traveling public, it is not in the best 
interests of the creditors to Delta, and it certainly violates, as the 
gentleman from Utah so eloquently stated point by point, it clearly 
violates the antitrust statutes of the Justice Department of this 
country.
  So it is within the spirit of what is good and what is right about 
America, and let me say this to my colleagues and to you, Madam 
Speaker, that this country is grounded on justice. The American people 
are expecting justice. This is not just a case for Delta Airlines; it 
is not just a case for the airline industry. This is a case for the 
American people, and they are looking at this Congress to provide 
leadership, keep the feet to the fire, and make sure that this hostile 
takeover does not take place in the form of any kind of merger, and 
that Delta Airlines is allowed to stand alone and earn the right that 
they deserve to come back full flushed and be the outstanding airline 
that we know that they are.

                          ____________________