Delta Air, Northwest may announce merger tomorrow
Delta Air Lines Inc. and Northwest Airlines Corp. may announce a merger to create the world's largest carrier as early as tomorrow, following a meeting of Northwest's board today, people familiar with the talks said.
Delta Chief Executive Richard Anderson met yesterday 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 U.S. 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 and the slowing U.S. economy crimped travel demand. The merged company would surpass AMR Corp.'s American Airlines as the world's biggest carrier.
"The pressure to consolidate is mounting, and mergers could be enough to ensure survival in the downturn," Brian Nelson, an analyst with Morningstar Inc. in Chicago, said in a phone interview.
Delta spokeswoman Betsy Talton and Northwest spokeswoman Tammy Lee declined to comment. Delta pilots spokeswoman Kelly Regus didn't return messages seeking comment.
Northwest rose 31 cents, or 2.8 percent, to $11.27 at 10:41 a.m. in New York Stock Exchange composite trading. Delta gained 34 cents, or 3.4 percent, to $10.35.
Failed Plans
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.
"They do have some kind of agreement with the pilots, not a complete seniority agreement, but enough to get by," Ray Neidl, an analyst at Calyon Securities Inc. in New York, said today in an interview on Bloomberg Radio. He recommends buying Delta shares, and he rates Northwest "neutral."
Northwest pilot leader Dave Stevens said yesterday 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."
'Economic Circumstances'
