Delta Could Offer New Shares in May

Later during the same call, CFO Ed Bastian pointed out the 2005 merger between US Airways(LCC Quote) and America West, which occurred just as the recovering airline industry was gathering steam. "Timing was a big part of the success of the US Airways/America West deal," Bastian said.

Morningstar airline analyst Brian Nelson said that now is a good time for Delta to emerge, but not the best time.

"We are still in the early stages of the airline industry cycle, and 2007 is still going to be a good year for the legacy guys, and I think Delta will get a fair shake from the market," he said. "But this isn't the middle of 2005."

In September 2005, the Amex Airline Index traded at $38.22, a two-and-a-half-year low. It rose fitfully to $66.92 in January but has since fallen back. The index traded Wednesday afternoon at $52.53.

January marked a recent peak for airline stocks, as consolidation chatter fueled the market. At the time, "valuations for the legacy guys were far above what the fundamentals warranted," Nelson said. The chatter largely ended when US Airways withdrew its hostile bid for Delta on Jan. 31.

US Airways CEO Doug Parker remains skeptical about Delta's chances. "Those guys are going to come out [of bankruptcy], and they're going to make United look good," he said two weeks ago, at US Airways media day.

Industry observers generally felt that United failed to sufficiently reduce costs in bankruptcy. Its shares traded Wednesday afternoon at $38.11, below their opening price of $40 on the first day of trading in February 2006.

"Delta looks better than United did, because its costs are lower," King said.