A US Airways bid to buy Delta has been rejected. In this file photo US Airways planes are seen at Philadelphia airport in May. ((George Widman/Associated Press) )

Delta Air Lines Inc. filed a reorganization plan Tuesday that calls for it to emerge from Chapter 11 bankruptcy protection next spring as a stand-alone company. It also said that its board has formally rejected US Airways' $8.4-billion US hostile bid to buy Delta and createthe largest airline in the United States.

The Atlanta-based carrier outlined a five-year business plan, and said that its advisers have determined that a reorganized Delta will have a consolidated equity value of roughly $9.4 to $12 billion US.It said the plan would result in a recovery by Delta's unsecured creditors of roughly 63 per cent to 80 per cent of their allowed claims.

Delta's existing stock would be wiped out under the plan and creditors generally will receive distributions of new Delta common stock to settle their claims.

Delta also said Tuesday that its board has unanimously rejected US Airways' unsolicited offer, which was first disclosed Nov. 15.

It had repeatedly indicated it wasn't interested in the offer.

"The board concluded that Delta's stand-alone plan will provide the company's creditors with superior value and greater certainty on a much faster timetable than the US Airways proposal," Delta said in a statement.

There was no immediate comment by Tempe, Ariz.-based US Airways, but an official with knowledge of that company's plans who spoke on condition of anonymity because of the sensitivity of the talks said Monday that US Airways was willing to increase its offer if Delta could justify it is worth more.

Flying solo

But Delta said Tuesday that it believes flying solo is the best proposal for everyone involved.

Delta said the US Airways deal is not likely to gain regulatory approval. It also cited as obstacles overwhelming labour issues and "flawed economic assumptions."

Ultimately, it will be the unsecured creditors committee in the bankruptcy case that will play the decisive role. The committee has not said whether it will support Delta's plan, US Airways' plan or any other offer to buy Delta that may come in.

Delta said US Airways continues to experience significant integration problems and has not completed its prior, smaller merger with America West. It believes US Airways is not equipped to simultaneously integrate a substantially larger company like Delta.

Delta said its business plan projects, among other things, a 50 per cent reduction in net long-term debt, a return to profitability in 2007 and an increase in net income, after profit-sharing, from roughly $500 million US next year to roughly $1.2 billion US in 2010.

Delta filed for Chapter 11 in New York in September 2005.

Delta said its reorganization plan calls for rolling its bankruptcy financing of $2.1 billion US into a new package that would go into effect when it emerges from Chapter 11, and it said it has received several proposals with competitive terms to help it do that.