Delta, Northwest may unveil merger
Delta Air Lines Inc and Northwest Airlines Corp may announce a merger to create the world's largest carrier as early as today, following a meeting of Northwest's board yesterday, people familiar with the talks said.
Delta Chief Executive Officer Richard Anderson met on Sunday in Minneapolis with Northwest CEO Doug Steenland to discuss the merger plans, said two of the people, who didn't want to be identified because the discussions are private.
Delta, the third-largest US carrier by traffic, is betting that a combination with No 5 Northwest will boost revenue and lower costs after jet-fuel prices surged 77 percent in the past year. The merged company would surpass AMR Corp's American Airlines as the world's biggest carrier.
"They're going to be, by far, the largest, most dominant force in the industry," Michael Derchin, an analyst with FTN Midwest Research Securities Corp in New York, said last week. "The cost-cutting has to happen with oil at $110 per barrel, and on the margin this helps you do it a little better."
Delta spokeswoman Betsy Talton and Northwest spokeswoman Tammy Lee declined to comment. Delta pilots spokeswoman Kelly Regus didn't return messages seeking comment.
The airlines are forging ahead after failing to get their pilots to draw up a combined seniority list before a merger.
Delta instead has focused on reaching an agreement with its 7,000 pilots. The airline and its pilot leaders came to a preliminary accord on most issues last week and are ironing out differences on the size of pay increases, two people said. Northwest's 5,000 pilots will be asked to join under a single contract later.
Northwest pilot leader Dave Stevens said on Sunday in an e-mailed statement that any merger involving Northwest must be in the best interests of pilots, customers and employees in order to "avoid our vigorous opposition".
The Northwest pilot union's executive council met on Sunday near Minneapolis for an update on the merger talks and a briefing on "changing economic circumstances" of the industry, Stevens said. Delta's pilot leaders convened in a special session in Atlanta on April 11, according to a memo union leaders sent to members.
Delta will keep its name and Atlanta headquarters, and Anderson will run the combined carrier, sources have said previously.
The merged airline would benefit from Delta's trans- Atlantic routes to Europe and its Latin American network, plus Minnesota-based Northwest's Pacific routes, including access to the restricted Narita Airport in Tokyo.
The merger was threatened last month after pilot leaders at Delta and Northwest failed to agree on how to combine their seniority lists. The two sides differed over how younger pilots at Delta would move up the list as older Northwest pilots retired.
Seniority is crucial because it determines pay, type of aircraft and routes flown.
Delta management now plans to ask the Northwest pilots to join under a single contract instead, the people said. Negotiations for a combined seniority list may take months to complete, they said.
All of the pilots belong to the Air Line Pilots Association. It's the only major unionized group at Delta.
The merger accord may increase the pressure on other US airlines to pursue their own tie-ups. Continental Airlines Inc, the fourth-largest US carrier, has held talks with UAL Corp's United Airlines and American, a person with knowledge of the matter said on Feb 15.
Delta rose 26 cents, or 2.7 percent, to $10.01 on April 11 in New York Stock Exchange composite trading, while Northwest gained 9 cents to $10.96.
Agencies
(China Daily 04/15/2008 page16)
