Reinvigorated by its merger last year with a low-cost rival, US Airways Group Inc. yesterday announced an $8-billion offer for bankrupt Delta Air Lines Inc. that would create the largest carrier on the East Coast and bring together the second- and sixth-largest airlines at T.F. Green Airport in Warwick.

Delta, which rebuffed an earlier overture from US Airways, said it would review the bid but highlighted its original plan to emerge from bankruptcy as an independent airline.

Citing lower fares following its merger last year with America West, US Airways said customers would benefit from its offer, but at least one industry observer believes fewer flights and higher prices could be the end result for travelers who use T.F. Green Airport if the deal occurs.

And for T.F. Green, it could mean a dent in revenues if flights are cut and fewer gates are occupied by a combined US Airways-Delta.

Even without a merger, Green is searching for ways to reverse a slide in passenger traffic that saw the total number of travelers using the Warwick airport in September down nearly 12 percent over the previous year.

A Rhode Island Airport Corporation official said it is too early to know what the impact of a US Airways-Delta merger might be or whether the airport, as a Delta creditor, would support the proposed deal.

"We want our airlines healthy and offering good, competitive service," said Patti Goldstein, vice president of public affairs and air service marketing.

Early yesterday, US Airways announced an offer to pay Delta creditors $8 billion in cash and stock to settle Deltas debts and create the largest airline serving the East Coast. The deal would amount to 50 cents on the dollar for debtors owed an estimated $16 billion by Delta.

"The combined company will be a more effective and profitable competitor in the current fragmented marketplace, with the ability to better meet the continuing evolution of the airline," US Airways chairman and chief executive officer Doug Parker said in announcing the $8-billion bid for Delta.

In late September, Parker sent Delta CEO Gerald Grinstein a letter proposing a merger, but Grinstein rejected the offer to negotiate in a letter back to Parker a couple of weeks later.

Grinstein yesterday issued a statement on the US Airways offer saying Delta would "of course review it."

But he added, "Delta's plan has always been to emerge from bankruptcy in the first half of 2007 as a strong, standalone carrier."

Atlanta-based Delta has the exclusive right to file a reorganization plan until Feb. 15.

Delta filed for bankruptcy protection in September 2005. Its creditors include the Rhode Island Airport Corporation, which was owed about $296,000 at the time of the filing.

US Airways, which is based in Tempe, Ariz., said a combined Delta-US Airways would rank as the leading airline crossing the Atlantic as well as number one in the Northeast and along the East Coast. The new entity would use the Delta name and serve more than 350 destinations on five continents. It would rank as the number-one airline at 155 airports, but not at Green, where discount carrier Southwest Airlines would continue to dominate, carrying nearly 60 percent of the passengers that fly out of Green on a major airline.

"Customers would benefit from expanded choice as well as the reach and services of a large-scale provider within the cost structure of a low-fare carrier," US Airways said in a statement announcing the surprise bid for its larger rival.

But an airline industry observer said if the deal goes through, US Airways will be looking to eliminate flights to cut costs and gain the power to raise prices.

"If you've got control of the market, you can raise the fares," said Gerry Fairbairn, professor of aviation and director of the MBA program for aviation professionals at Daniel Webster College in Nashua, N.H.

For a long time, customers have been able to fly at rates below the true costs of airlines because of overcapacity in the airline industry, Fairbairn said. Even with many flights full, he said competition has made it difficult for airlines to raise ticket prices, he said.

The result has been a succession of airline bankruptcies, including Delta, which filed for protection from its creditors last year on the same day as Northwest Airlines.

Parker, who led the America West takeover of the former US Air while it was in bankruptcy, is looking to strike a deal while Delta is still in bankruptcy. He estimates more than half of a potential $1.65 billion worth of efficiencies would be lost if a takeover were to be delayed until after Delta emerges from bankruptcy protection.

In bankruptcy, a company has much greater ability to extricate itself from costly labor, equipment and facility contracts than it otherwise would.

Delta and US Airways are among seven major airlines that serve Green and lease space there. Landing and leasing fees of $18.7 million paid by airlines in the fiscal year ending June 30 accounted for the largest share of the Rhode Island Airport Corporations revenue at nearly 40 percent. And those revenues are critical to paying off the corporations $324 million in long-term debts stemming from major renovations over the past decade.

US Airways said it would look to achieve $1.65 billion in efficiencies by cutting total airline capacity by 10 percent. That would include reducing service to marginal markets and discontinuing unprofitable flights. US Airways said it would maintain some level of service to all existing destinations.

Also, US Airways said it would look to save $100 million in facility costs at U.S. airports where both Delta and US Airways currently operate, such as at Green, by consolidating gates, hangars and other space. Parker told analysts he would look to shed the combined airline of one of the two shuttle services Delta and US Airways operate in the Northeast corridor between Boston, New York and Washington.

Delta has scaled back service at Green over the past year, falling from the third- to sixth-largest carrier there based on the number of passengers served. In September 2005, 46,000 passengers flew to or from Green on Delta or Delta Connection flights. In September of this year, that number was down to 18,433 as it switched from airlines to mostly regional jets for nonstop flights to Atlanta.

Currently, there is no overlap in destinations served by US Airways and Delta from Green, but Fairbairn, the Daniel Webster College aviation professor, said there could still be flight cuts at T.F. Green because of the hub-and-spoke system both airlines use.

For instance, he said, travelers flying to Atlanta or Philadelphia on connecting flights might actually be headed to Florida as a final destination and the number of connecting flights out of Green might be reduced. US Airways said it would be focused particularly on making service to and from LaGuardia Airport in New York City more efficient.

-- With material from the Associated Press.