Boeing in the Catbird Seat

The aerospace giant heads the creditors' committee for one of its biggest customers, Delta.
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Life just keeps getting better for

Boeing

(BA) - Get Report

.

Not only is the company's stock soaring and its order book full, it now finds itself in an opportune position as chairman of the creditors' committee for bankrupt

Delta Air Lines

(DALRQ.PK)

. In the coming battle over the hostile bid for Delta by

US Airways

(LCC)

, the creditors' committee will likely make the ultimate decision on the airline's future.

For Boeing, "It's Monty Hall and 'Let's Make a Deal,'" said Scott Hamilton, who publishes an online newsletter about Airbus and Boeing. For the longer term, if US Airways succeeds in acquiring Delta through a hostile takeover, a round of aircraft buying could result, further benefiting Boeing as well as rival Airbus.

In the US Airways bankruptcy that preceded a 2005 merger with America West Airlines, Airbus was chairman of the creditors' committee. As part of its effort to gain creditor support for the deal and to get a $250 million loan from Airbus, America West placed an order for 20 of Airbus' A350s.

But that was then. The new US Airways could cancel the A350 order, given the unanticipated delay in filling it, and commit to buying new Boeing aircraft in an effort to gain support for a Delta takeover, Hamilton said.

Boeing Capital, a Boeing subsidiary that arranges financing for aircraft orders, holds $81 million in Delta equipment trust certificates, secured by aircraft, said spokeswoman Donna Mikov. Additionally, the unit holds a claim based on unfilled orders for 57 of its 737-800s and five extended-range 777-200s. Mikov declined to provide a value for the aircraft order.

She also declined to comment on Boeing's role on the creditors' committee, saying, "We have been working with DAL during the restructuring process, and we are hopeful they will emerge from reorganization in a position to help the industry."

Members of a bankruptcy creditors' committee are appointed by the U.S. Trustee, who may seek both large creditors as well as a diversity of creditors, said Ron Peterson, a Chicago attorney who represented creditors in the bankruptcy of

United Airlines

(UAUA)

.

The committee has the right to meet with the debtor and to negotiate a plan of reorganization and, in some cases, to propose its own plan. Once a plan is negotiated, all of the creditors vote; it is approved by a majority vote of the creditors as well as by holders of two-thirds of the claims.

US Airways executives are scheduled to make their initial presentation to the creditors committee and Delta later in New York. Besides Boeing, the committee includes bondholders, Delta's pilots union and vendors.

Hamilton discounted the suggestion that Boeing might be disposed to ally with Delta management, which is fighting the takeover bid, simply because Delta has been a loyal customer. The Delta fleet of 438 aircraft is all Boeing, including 134 McDonnell Douglas MD80s and MD90s. (Boeing merged with McDonnell Douglas in 1997.)

"I think Boeing's inclination will be to favor whoever can give them the highest number of airplane orders going forward," Hamilton said. "I think it will be a cold, hard business decision."

US Airways has a mainline fleet of 359 aircraft, including 196 Airbus narrowbodies from the A320 family as well as nine A330s. Nevertheless, US Airways executives have made the case that they are not bound to Airbus.

"I wouldn't characterize us as being in the Airbus camp today," said President Scott Kirby, during the Nov. 15 analyst conference following the announcement of the takeover bid. "We have a number of the 737s and 757s and in fact are working with Boeing, and they've been extremely helpful in working with us on a replacement aircraft order."

Going forward, airline industry consolidation could trigger more aircraft buying, said aviation analyst Richard Aboulafia of the Teal Group. "The U.S. market is the biggest in the world, and it has been asleep in the current aircraft buying cycle," he said. "Anything that gets them back into shape helps the manufacturers."

Aboulafia said that anyone investing in airlines is likely to envision the purchase of new aircraft as a way to increase operating efficiency. "The financiers behind these deals are likely to enable fleet spending," he said.

If the merger occurs, the combined Delta-US Airways fleet would contain 231 aging 737s from the 200 and 300 series, as well as the McDonnell Douglas planes. "Neither manufacturer can alone offer the merged carriers particularly timely replacement," Hamilton wrote in a recent report that suggested both aircraft manufacturers could benefit from a deal.