Investor pushes airline merger

ATLANTA -- A hedge fund which advocates a combination of Delta Air Lines Inc. and UAL Corp.'s United Airlines took its case Friday to a group of investors in the two airlines.

Gordon Bethune, an adviser to hedge fund Pardus Capital Management LP, said he led an hour-and-one-half presentation for what he called major shareholders in Delta and United.

The former chief executive of Continental Airlines said the discussion included talks on how to save the U.S. airline business, but the focus was on consolidating the Atlanta-based Delta and the Chicago-based United.

He said scenarios were also discussed about combining Delta with Northwest Airlines -- the former company of Delta CEO Richard Anderson -- and Delta with Continental. Bethune said many investors feel United is the most natural fit for Delta.

"Quite frankly there's no reasons not to do it now considering oil is $95 and we are headed for a downward cycle in the airline business," he said.

He declined to identify what investors were at the meeting.

Delta spokeswoman Chris Kelly declined comment on Friday's investors presentation. United spokeswoman Jean Medina said while the company appreciates investors' opinions, "we will participate in business opportunities on our own terms."

Pardus, which holds about 2.5 percent of Delta's outstanding shares and about 4.8 percent in United, has been urging Delta's top management to make a deal with another airline in view of rising fuel prices and what it said are the increased risks of going it alone.