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DEL.ICIO.USNorthwest is trying to revive Delta merger deal
The Atlanta Journal Constitution
Published on: 03/28/08
Northwest Airlines appears to be trying to refuel its proposed merger with Delta Air Lines -- perhaps without as many perks to win support from pilots feuding over seniority.
This time around, the airlines also may be less likely to commit to saving redundant jobs and operational hubs because higher fuel costs have dimmed the industry's prospects, a person with knowledge of the negotiations said Friday.
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Delta management is considering Northwest's overture but may not respond until next week, this person said.
Atlanta-based Delta won't verify the latest in what has become months of on-again, off-again merger reports.
"We can't confirm any details of our board's process," said Delta spokesman Kent Landers, referring to an effort initiated late last year to consider a merger or other strategic options. "We support industry consolidation as a vehicle to ensure Delta remains an industry leader."
But changes in upcoming travel plans for Delta's two top executives may indicate something is in the works.
Delta confirmed Friday that Delta Chief Executive Richard Anderson and President Ed Bastian had dropped their long-held and highly publicized plans to take two key inaugural flights this weekend, but declined to say why.
Anderson had planned to take Delta's first flight Saturday to London's Heathrow airport; that route is becoming available as the result of an open skies agreement that takes effect Sunday between the European Union and the United States. Delta has been seeking the route for decades.
Meanwhile, Bastian canceled plans to go along with Gov. Sonny Perdue on Delta's first flight Sunday between Atlanta and Shanghai, China -- another route Delta has long lobbied to get.
Delta and Northwest, which never publicly confirmed that they were in talks, had been close to announcing a deal last month. However, the agreement stalled while the pilots unions at the two carriers tried unsuccessfully to hammer out a related agreement on how to merge the two pilot group's seniority lists.
The airlines wanted their pilots to work out such differences ahead of time to avoid later delays or operational problems stemming from political and employee opposition. US Airways and AmericaWest did not get pre-merger agreements from their pilots before they combined in 2005. Today, those pilots still are working under separate seniority lists and contracts, weighing down operational integration.
The leader of Northwest's pilots union said any deal between the two carriers still will need the support of the union.
"In order for any airline merger to be successful, the pilots of both groups must be involved and agree to the terms," Northwest union Chairman Dave Stevens said in a statement. "We will reserve our judgement and support until the economic and contractual elements of an agreement have been negotiated."
He said any merger also must be in the interests of customers and employees, "not just the shareholders."
Executives at Delta and Eagan, Minn.-based Northwest could move ahead without consulting their pilots, noted Colorado-based airlines consultant Mike Boyd.
But proceeding without the pilots' OK, Boyd said, could cause major problems down the road, especially if both companies' pilots blame each other for lost benefits.
"You could end up with Hatfields and McCoys in the cockpit," Boyd said. "The question is: Just how much warfare will there be?"
One senior Delta pilot, who asked not to be named, forecast a rough future for a combined airline. Angry pilots who are bypassed will sue, he predicted.
"You get people in the cockpit trying to work together, and you find out they have filed a lawsuit against your parent company," he said. "It's not the best of situations."
Many Delta pilots have become increasingly frustrated with the Northwest pilots' refusal to compromise, the Delta pilot said.
"If they can work it out, fine. If they can't, fine," he said. "We don't mind standing alone right now."
Delta CEO Anderson has repeatedly promised Delta employees he would not agree to any merger that failed to protect their seniority.
Boyd described Anderson as "a man of his word."
"I think he wants to do what's right for Delta's employees," Boyd said. "If he said that, he'll stick with that unless there's some over-arching issue, like the board puts a gun to his head."
Both carriers do not need to merge to survive, Boyd said: Both are relative strong in a financially battered industry, and Delta's recent decision to trim jobs and cut unprofitable domestic routes should improve its position with or without a merger.
The person with knowledge of Northwest's overture said the airlines may move forward with merger talks without a pilot agreement in place, and may offer pilots less generous terms. Before the pilots got crosswise on seniority, the airlines had offered their combined 11,000 work group pay raises and a stake in the deal.
He also said the airlines may back down on previous commitments to preserve jobs because of the steep rise in jet fuel prices since the talks were initiated late last year.
The spot price of jet fuel -- both airlines' biggest expense -- closed at $3.14 a gallon Friday, up 15 percent year-to-date.
Citing soaring fuel costs and the threat of slowing travel demand due to the economic slowdown, Delta announced earlier this month that it plans to cut 2,000 jobs and to reduce capacity of its domestic flight operations by 10 percent this year.
More on ajc.com
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Comments
By veronica
Apr 14, 2008 11:20 AM | Link to this
this news of a merger is too bad. We are frequent travellers to Hawaii and have used both Delta and Northwest... I have to tell you, the customer service you receive from Delta is far superior to the lack of customer service from NorthWest.
Husband and I were contemplating which airline to use for our trip next year because we have racked up enough Skymiles and Perks to have a free ticket on each.
I guess there won't be a decision to make, but I wonder what happens to our accumulated points now.
I sure hope the Delta spirit rubs off on Northwest staff, but I won't hold my breath.
By FFlyerWorld
Apr 7, 2008 6:36 PM | Link to this
Nope Middleman -
I don't operate in a dream world - just a real one! Sorry for those who do and apparently - many on here do!
By middleman
Apr 6, 2008 8:21 PM | Link to this
FFlyerWorld, would you please keep facts, figures, and common sense off this blog. You make it harder for us to post our facts and figures as we make them up.
Thank you, The Shoot From The Hip Boys.
By FFlyerWorld
Apr 1, 2008 8:15 AM | Link to this
Sam,
Just stick to the facts of the story and all will be fine! Additionally, I have alot vested in what happens here since I am Platinum in both Skymiles and Worldperks and such support you and your airline. Does that help?
By Sam
Apr 1, 2008 2:33 AM | Link to this
FflyerWord, pretentious is the sound of what "Facts" are and what they mean to NWA,DAL, or their employees involved in a merger. 10k filings didn't factulize 747-400 freighters and consequences of lost DHL business. No, you got enough info to argue something...but it is really illrelevant... From your response, I've seem to have it your "hot button" it appears. ???? Sounds like you have something vested in this issue of merger. ???? hmmmm..
By Rick
Mar 31, 2008 9:14 PM | Link to this
I wish the person who called Anderson a man of his word would ask him how the employee stock for pay deal went down at NW.
By FFlyerWorld
Mar 31, 2008 11:38 AM | Link to this
Oh Sammy , I meant Sam,
By the way, this is not about a pretentious debate about who's bigger and laughable as you state. It is about REAL FACTS not myths, misconceptions, one's opinions. Facts are facts. Again - check our each airlines OWN websites and information that THEY provide. If you continue to deny the truth I cannot help you.
By FFlyerWorld
Mar 31, 2008 11:31 AM | Link to this
Sammy,
Read what I wrote before spewing off your opinion NOT based on factual information. My information regarding NWA's fleet is take directly from NWA's 10k filing so unless NWA is lying about their own fleet - fact remains fact! You can also go directly to their website for current fleet information where you will find that NWA operates a total of 16 B747-400 currently. I never said they had been retired - what I did say in fact is that their plan is to transition them to the cargo/freighter division IF they have it left with the loss of DHL. Now - you mention the A330's - well true - NWA is the largest operator of THIS aircraft type and they total 32 aircraft. Hardly a huge amount of widebodies including the 16 B747-400s. 32 plus 16 = 48 current wide bodies operating in NWA's passenger fleet. So factually NWA operates much fewer widebodies compared to Delta. Not even close really! And then you add a comment regarding NWA's order for 68 B787's. Factually speaking, NWA has only 18 FIRM orders for this aircraft. The remaining 50 are considered options (they may or may not keep that option). The only reason Delta has not placed a HUGE order for additional aircraft is due to the fact that IF this merger plays out - they will have those 18 B787's in the new "airline". If the merger does not conclude - you can expect Delta to place a large order for widebody aircraft and who knows which one at this point although my prediction would be Boeing jets since they have a long standing mutually beneficial relationship with them. Hope this clears up your misconceptions. Like I said, go visit the websites of both airlines to get their fleet facts and also you can go to http://en.wikipedia.org/wiki/Northwest_Airlines for more detailed information on NWA fleet.
By Sam
Mar 31, 2008 10:06 AM | Link to this
Factual?, not based on speculation? wishful thinking? FflyerWorld- you'd better call the WSJ back after you get both the facts & put away pretentious characterizations of facts disguised as the unqualified opinions that they are.
Who do you think reads & believes you?
Northwest has an order in for 68 Boeing Dreamliners, the 747-400's are not retired, they have the largest and newest A330 fleet in the world, and a large narrowbody fleet which includes newer B757's & Airbus 319/320's which you must not appreciate either. Northwest & Delta both have vintage DC9/MD80 series products. IF the two companies merge,
EVERYONE better appreciate ALL the employees equally for what THEY bring to the table as pretentious debates about who's is bigger is laughable!
By As a fired NWA employee
Mar 31, 2008 9:12 AM | Link to this
In 1999 for just being late by 7 minutes and an ex Delta Flyer due to and ignorant employee who is a bag smasher, it feels good to know the industry I am in now, the Natural Gas and Pipeline based in Houston and exists in 16 states including Minneapolis where I am at and work, is causing so much pain to both of you airlines and will cause one of you to fold or both. I just got a 1700 bonus check also just to let you know. It took me 10 yrs to saythis to Northwest and 2 years to Delta since encountering your ugly ignorant rude bag smasher, CHECKMATE!! Hopefullly we in gas industry continuing raising prices causing you people pain like YOU tried to do me back then NWA!!!
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