"Something here looks a little out of whack, to say it politely," he said during an online conference with analysts. Parker responded to the case, which Delta laid out earlier this week, that the US Airways bid is undervalued, unlikely to receive regulatory approval and illegal under its pilot contract.
Parker said Delta's self-valuation of $9.4 billion to $12.2 billion would mean the airline, at the high end, is worth nearly as much as Southwest (LUV) or as United (UAUA) and American (AMR) combined.
The valuation "clearly lacks credibility," he said. For Delta's stock to reach a range implied by the valuation, based on expected 2007 profits, the company would sport a price-to-earnings ratio of 20.6 to 26.3, he said.Parker also disputed Delta's estimates that its earnings will rise gradually from about $500 million in 2007 to $1.2 billion in 2010. "They have a pretty big hockey stick built in that has 2008 and 2009 ramping up much faster than we would," he said. Using the same multiples for shares given to creditors that Delta uses, US Airways' offer is worth $11.6 billion to $14.2 billion, rather than its $8.6 billion current valuation, he said. Meanwhile, Rick Rule, US Airways' antitrust attorney, challenged Delta's assertion that Justice Department regulators would reject or delay US Airways' bid to take over its primary competitor. He said the government would be concerned that competition could decline in some small markets, but at the same time a merged, more efficient company "should give them comfort that there won't be increases in fares." In the end, "lower costs benefit consumers," he said.