Delta-Northwest Merger Could Be Imminent
By: Sierra Henderson
Issue date: 2/14/08 Section: Nation/World
Like couples on the promenade, some of the largest airlines in the country insist they are 'just talking.' Yet, nuptials between Atlanta-based Delta and Minnesota-based Northwest Airlines are presumed to be in the works.
Any merger would have to be approved by the Transportation and Justice Departments to make sure it does not violate any anti-trust laws. But even if they get the green light, the union between the two carriers could have significant affects for the airline industry and the economies in their headquarter cities.
Experts predict airfares will rise in the event of incorporation because a major competitor will have been removed from the running. Many also expect layoffs in order to eliminate overlapping positions within the joint operations. The chief concern is relocation of the airlines' command centers. Some estimates propose that if Delta were to relocate, two additional Atlanta jobs would be lost for every Delta job cut.
Despite the gloomy forecast, mass media majors Danielle Stubbs and Lashondra Beasley are not particularly worried. Like many communication students competing for precious positions in a major media hub, both CAU seniors plan on starting their careers in cities other than Atlanta.
Stubbs still sympathizes with her CAU colleagues. "That's a serious projection, but to say that I'm [going to be] directly affected is a stretch."
Conversely, political leaders are already testing their jabs in the fight over which city the surviving airline will call home. U.S. Rep. Johnny Isakson (R-GA) said Delta's CEO assured him if Delta merged it would remain at its headquarters in Atlanta. Rep. James Oberstar (D-MN) has basically said the same about Northwest, which is headquartered in his home state.
With both sides making such assurances, it looks like there would be a stalemate. But eminent losses and rising gas prices make the pressure to consolidate undeniable. Delta, after coming out of bankruptcy last spring was expected to acquire Northwest at first. However, posting a $70 million loss for the fourth quarter weakened its bargaining power. Still CEO Richard Anderson has some tricks up his sleeve including continued negotiations with Air France KLM and United airlines.
Anderson, who has only been in office for five months, is charged with ensuring a future for the ailing company. Teaming up with Northwest could be his best bet. Northwest has a large presence in places Delta does not such as Detroit, Minneapolis and Asia, whereas Delta dominates Atlanta and Latin America.
Mark Chen, a computer information systems major from Washington DC, predicts it will be easier to catch a convenient flight once the two companies come together. He said he usually flies Air Jamaica with his family, but admits once he starts making that IT money, he will use whatever airline is paid for by his company.
Delta is typically not first on the list for students seeking the cheapest flights back home, but some who have patronized Delta admit to their superior service.
Danielle Stubbs emphasizes consistency when trying to get the most for your travel dollars. She flies American Airlines when returning to the Bahamas for the vantage program rewards.
Any merger would have to be approved by the Transportation and Justice Departments to make sure it does not violate any anti-trust laws. But even if they get the green light, the union between the two carriers could have significant affects for the airline industry and the economies in their headquarter cities.
Experts predict airfares will rise in the event of incorporation because a major competitor will have been removed from the running. Many also expect layoffs in order to eliminate overlapping positions within the joint operations. The chief concern is relocation of the airlines' command centers. Some estimates propose that if Delta were to relocate, two additional Atlanta jobs would be lost for every Delta job cut.
Despite the gloomy forecast, mass media majors Danielle Stubbs and Lashondra Beasley are not particularly worried. Like many communication students competing for precious positions in a major media hub, both CAU seniors plan on starting their careers in cities other than Atlanta.
Stubbs still sympathizes with her CAU colleagues. "That's a serious projection, but to say that I'm [going to be] directly affected is a stretch."
Conversely, political leaders are already testing their jabs in the fight over which city the surviving airline will call home. U.S. Rep. Johnny Isakson (R-GA) said Delta's CEO assured him if Delta merged it would remain at its headquarters in Atlanta. Rep. James Oberstar (D-MN) has basically said the same about Northwest, which is headquartered in his home state.
With both sides making such assurances, it looks like there would be a stalemate. But eminent losses and rising gas prices make the pressure to consolidate undeniable. Delta, after coming out of bankruptcy last spring was expected to acquire Northwest at first. However, posting a $70 million loss for the fourth quarter weakened its bargaining power. Still CEO Richard Anderson has some tricks up his sleeve including continued negotiations with Air France KLM and United airlines.
Anderson, who has only been in office for five months, is charged with ensuring a future for the ailing company. Teaming up with Northwest could be his best bet. Northwest has a large presence in places Delta does not such as Detroit, Minneapolis and Asia, whereas Delta dominates Atlanta and Latin America.
Mark Chen, a computer information systems major from Washington DC, predicts it will be easier to catch a convenient flight once the two companies come together. He said he usually flies Air Jamaica with his family, but admits once he starts making that IT money, he will use whatever airline is paid for by his company.
Delta is typically not first on the list for students seeking the cheapest flights back home, but some who have patronized Delta admit to their superior service.
Danielle Stubbs emphasizes consistency when trying to get the most for your travel dollars. She flies American Airlines when returning to the Bahamas for the vantage program rewards.
