Delta-NW merger would axe 1,000 headquarters jobs

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UPDATED: 6:07 p.m. April 24, 2008
Delta-NW merger would axe 1,000 headquarters jobs

By MARILYN GEEWAX
The Atlanta Journal-Constitution
Published on: 04/24/08

WASHINGTON — Delta Air Lines chief executive Richard Anderson told Congress on Thursday that a merger with Northwest Airlines would mean the loss of nearly 1,000 additional jobs at the blended headquarters.

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Rick McKay/Washington Bureau

Northwest Airlines CEO Doug Steenland (left) and Delta's Richard Anderson testify Thursday in Washington.

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Those layoffs, along with other cost savings, would be needed to help offset fast-rising fuel costs, Anderson told one committee in the House and another in the Senate. "Oil is the game-changer," he said. "We've had oil double in price in about a year."

A few lawmakers, worried about the loss of jobs or air service, gave Anderson and his Northwest counterpart Doug Steenland a cool reception. But many expressed sympathy for the airlines' plight, and appeared friendly toward the proposed transaction.

"My preliminary review of this merger is that it's a good one," Sen. Charles Schumer, D-N.Y, said at the Senate Judiciary Committee hearing on the antitrust implications of the proposed consolidation. "There is very little overlap" in the routes of the two carriers, he said.

Unlike previous major airline mergers, "the negatives seem more benign, and the positives seem more real," Schumer said. Echoing Anderson, he said, "fuel costs really are a game-changer."

Sen. Amy Klobuchar, D-Minn., whose state stands to lose Eagan-based Northwest's headquarters if the merger takes place, was more skeptical.

She noted that the airlines have promised not to cut any hub operations or front-line workers as part of the merger's cost-saving strategy. But should Congress expect that "you will come back a year or two from now and say your positions have changed?" she asked.

Anderson said that if the combined carrier had to announce layoffs in the future, it would be a result of higher jet fuel costs, not the merger itself.

"Fuel is going to be the determinant," he said.

Anderson said the nearly 1,000 merger-related job losses are just a "guess-timate" that could change. But whatever the figure, it would be separate from the 2,000 job cuts the Atlanta-based carrier already has announced for this year. The additional losses would come after the deal closes, and would be concentrated in the headquarters, Anderson said.

"It's the management jobs, not the front-line jobs," he said. They would involve "finance, accounting -- the functions that are important in the headquarters."

He did not say whether most of the merger-related cuts would affect Northwest or Delta employees. After the hearing, Delta spokeswoman Chris Kelly said that because the consolidated company would be based in Atlanta, more of the people losing jobs may be from Northwest because they may not want to make the move to Georgia.

Next month, Delta and Northwest face additional hearings, including one before Rep. James Oberstar, D-Minn., who has harshly condemned the merger plan. But compared to a Senate hearing last year when US Airways discussed a hostile takeover of Delta, the tone at Thursday's sessions was mild.

For example, Sen. Orrin Hatch, R-Utah, said that with fuel prices rising the way they are, Americans may have to accept a broad restructuring of the airline industry to reduce overlapping routes and cut costs.

"This is a reality we're going to have to face in the future," Hatch said. "This may be in the best interests of transportation."

Steenland promised the lawmakers that the two carriers would be stronger together than they are as separate companies, especially when competing with large foreign carriers. The executives say the combination would save roughly $1 billion in costs each year.

At a morning session before the House Judiciary Committee's Task Force on Competition Policy and Antitrust Laws, Chairman John Conyers Jr., D-Mich., criticized the Bush administration's merger-friendly policies, but promised to keep an "open mind" about Delta-Northwest. He also said the merger would be represent a "momentous" change in the industry by creating the world's largest carrier, and possibly triggering "a cascade of other mergers."

Plans call for the consolidated airline to be named Delta, with headquarters in Atlanta and Anderson at the helm. The Justice Department alone has the power to block the deal on antitrust grounds, but Congress can exert political influence.

After the hearings, Klobuchar said in an interview that she was glad to have gotten the two executives to promise under oath that they won't close any hubs as a direct result of the merger.

"I continue to be concerned," she said. But she agreed the mood in Congress is very different from the US Airways hostile takeover attempt, she said.

"The difference is, these CEOs are working together," she said.

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Comments

By Pago Flyer

Apr 27, 2008 11:28 AM | Link to this

As a DL retiree, I'm looking forward to many non-rev trips to the Orient.

By John

Apr 26, 2008 7:18 PM | Link to this

M.
J.would like to offer his most humble apology to you and any of your A.L.P.A. friends that I my have offended with my short sighted, ignorant comments about DELTA,s future. I in on way would ever be so foolish as to case aspersions toward the most ELITE of the DELTA TEAM understanding that without their cooperation the company my be facing ROUND TWO of BANKRUPTCY or whats worse EXTINCTION !!
So as a faithful non-union former DELTA employee I,ll end my comments and return to doing what most A.L.P.A. members think we,re best qualified to do "PICKING OUR NOSE" and "BITING OUR TOE NAILS" !!
"WISE UP PILOTS" A.L.P.A. is pimping your membership like so many HIGH DOLLAR CHORES or in todays economy your next job maybe saying "WOULD YOU LIKE FRIES WITH THAT"
Have a Nice Day M.

By M

Apr 26, 2008 12:59 PM | Link to this

J,

It's difficult to hear sarcasm. The pilots are not at all to blame for this.

Great leadership is few and far between. The great ones stay far away from an industry that is the most regulated, deregulated industry in the USA. Get it?

My point in all my post , was that this industry is fluid and extremely volatile. Many,many factors are to blame for what we are experiencing in the airline business and to pin it on one person or group is short sighted and ignorant to the facts.

By John

Apr 25, 2008 8:34 PM | Link to this

I,m a retired DL employee who has been lucky enough to live to the point that Old Mother Nature starts to do what she does to many of us overly mature persons.Arthritis , bad eyes , hearing loss etc. and to all this I worry about this GREAT airlines that employed me more than fairly for so many years may pass into history only to be a fading memory.
I,m sure there are many things and people we could blame for the troubles Delta and its enduring employees are facing , but the fact is they are where they are and the blame game produces non-results .
Today I learned that the possible merger of DL and NW may result in the saddening loss of 1000 employees this is truly the down side of dealing with a HEMORRHAGING industry , but airlines are all facing the same question the captain of a sinking ship must answer when theres on one to rescue he vessel . Does he do the unthinkable and sacrifice a few crew members over the side to save the ship and sail another day or sail on only to loss the ship and all aboard!I surely would not want to make this decision , but I also try to understand the captains predicament or in this case the CEO,s and stockholders of both companies position .
My HOPE is that the combination of these two GREAT companies will lead to the survival of both and the assurance of 1000,s of good job,s for their employees .
GOOD LUCK and STAY POSITIVE !!
THANKS DELTA.

By R MCMURRAY

Apr 25, 2008 12:16 PM | Link to this

It is sickening to me, a 30 year retiree, to see my company go down the tube. We have lost our leadership, both industrially and politically. Where have all the leaders gone? I bet they can be found amoung the retirees!

By Che

Apr 25, 2008 9:54 AM | Link to this

THE FALL OF CAPITALISM I love it. Slow roasted capitalist pig. mm mmmmm

Power to the workers.

By Sky Shark

Apr 25, 2008 9:25 AM | Link to this

Once again, corporate America maintains the time-honored tradition of destruction from within. Tough times, bankruptcies, soaring operating costs...ad nausium...these "leaders" (a term allowed with much latitude) of Corp America will always allow personal greed to come before anything else. Congratulations, fellas!

By Northeast/Delta Brat

Apr 25, 2008 8:35 AM | Link to this

This is one time that I am happy my Father is in his grave. Why? He retired with 40+ years at Delta having started with Northeast and transitioning to Delta through that merger. That merger made Delta into an airline to be reckoned with and put Delta on the map!!! My Father would not be pleased with the state of Delta over the past several years. I am not pleased with the state of Delta either. I and I'm sure my Father wish the employees well.

By don

Apr 25, 2008 6:53 AM | Link to this

WOW!! Deja vu. Wasn't one of the causes of DL going bankrupt was Leo and cronies were over compensated. Where is the board of directors?? If DL was making a profit, the $11 million for Anderson, $9 million for Bastian could be justified...BUT has anyone on the board checked out the stock price. Deja Vu, shareholders, employees, passengers are AGAIN the victims of poor management and lack of leadership at once a great company .

By j

Apr 25, 2008 4:59 AM | Link to this

Hey M......yeah the greedy pilots...WAKE UP!!! AJC just reported the DL CEO took home over 11 MILLION last year.....greedy WHO?????? Better smell the coffee....corporate america is screwing the workers.

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