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Delta Airlines' exit from bankruptcy-court protection may not be a solo flight after all.

On Wednesday US Airways Group (nyse: LCC - news - people ) increased its bid for its rival by 20%, or $1.7 billion, to $10.2 billion, in an attempt to convince Delta's creditors to agree to a merger between the two airlines.

In making the offer, Doug Parker, the US Airways chief executive, said the deal would expire by Feb. 1 unless Delta's creditors open the airline's books to his company. Parker also wants the beleaguered company to delay a court hearing pertaining to its reorganization plan, scheduled for Feb. 7.

"There's an offer on the table now and it would expire," said Parker.

"We would very much like to see Delta's management begin to work with us and support this transaction, but that's not what this proposal is about."

The new offer includes 89.5 million shares of US Airways stock and $5 billion in cash, as opposed to original offer, which was for 78.5 million in stock and $4 billion in cash. The value of the deal can increase, depending on how US Airways' stock changes on Wednesday.

The move comes less than a month after Delta Airlines (other-otc: DALRQ - news - people ) management released a five-year reorganization plan it says will allow it emerge from Chapter 11 bankruptcy protection. Delta's plan foresees a return to profitability in 2007, when it expects to earn $500 million, rising to approximately $1.2 billion in 2010.

Post-reorganization, the company's financial advisers predict Delta will have a consolidated equity value of $9.4 billion to $12.0 billion. That means the return for the airline's creditors would be 63% to 80% of what they are owned, though the percentage of cash and stock remains unclear.

Based on Delta's method of valuation, US Airways said its newest bid may be worth $12.7 billion to $15.4 billion.

Often, when a company emerges from bankruptcy, ownership ends up in the hands of junior creditors. Senior creditors generally receive cash and sometimes stock, while the original stockholders typically lose their investments.

Ray Neidl, an analyst for Calyon Securities said Delta's own reorganization plan appeared more favorable to its creditors than US Airways' initial bid in November .

Yet US Airways' newest bid "on the surface looks very attractive," he said.

While some analysts are concerned about complications inherent in a big airline merger, Neidl said Delta's creditors may not be because the offer includes a considerable amount of cash.

Ultimately, however, it may not be up to the creditors.

"The factor that could hold up the deal is the regulatory environment," said Neidl.

Indeed, it still remains to be seen if the Department of Justice will approve a merger of the airlines. Neidl said whatever the body decides will have a major impact on the rest of the industry.

In a report on Wednesday the analyst upgraded US Airways to "buy" from "add." "We are raising our rating," Neidl wrote, "based on encouraging industry fundamentals characterized by strong demand, favorable seasonality and increasing yields.

"If merger and acquisition activity or the expectation of it were to move ahead, we believe that it would add momentum to our expected airline stock price rally since investors would perceive it as being positive for the industry."

- The Associated Press contributed to this article.

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