The Wall Street Journal-20080115-Delta Aims for Swift Merger With Northwest or United
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Delta Aims for Swift Merger With Northwest or United
Delta Air Lines Inc. has opened merger negotiations with both UAL Corp.'s United Airlines and Northwest Airlines Corp., and hopes to negotiate a merger agreement with one of the airlines over the next two weeks, according to people familiar with the situation.
Delta's board gave permission to Chief Executive Richard Anderson on Friday to begin simultaneous talks with both carriers, those people said. Either scenario would create the largest airline in the U.S.
Delta executives, who completed a round of preliminary discussions with United and Northwest before seeking board permission for formal talks, plan to move swiftly and present the preferred partner to Delta directors when they next meet in early February. A deal could be announced as early as mid-February, according to those people.
A spokeswoman for Atlanta-based Delta declined to comment.
Of the two other airlines, Northwest, based in Eagan, Minn., is considered the more likely of the two partners, according to people involved in the matter. Mr. Anderson is the former chief executive of Northwest and remains close to Douglas M. Steenland, his successor there. Tammy Lee, a spokeswoman for Northwest, declined to comment.
Also, a combination with Northwest, the fifth-largest U.S. airline by passenger traffic, is less likely to run afoul of regulators, who are certain to judge any merger for its impact on fares and competition. United is the second-largest airline by traffic, and Delta ranks third.
At the same time, UAL CEO Glenn F. Tilton has been among the most outspoken advocates for consolidation in the airline industry. Jean Medina, a United spokeswoman, declined to comment.
Many airline executives believe consolidation in the industry is necessary, especially in light of oil's rapid rise. They also believe merger talks must happen quickly because such deals are more likely to be approved by federal regulators under the current Republican administration, though completing a merger agreement in just two weeks is viewed as unrealistic by some industry analysts. Analysts predict that once one major merger occurs in the U.S., a wave of other tie-ups will quickly follow.
In addition to competitive hurdles, other issues that will be discussed include labor structures, route networks, and the broader airline alliances that already exist among major U.S. and foreign carriers.
