Could Come Next Week; United, CO Talks Speed Up
Oh, what twisted webs
the airlines weave... and we're just not talking about departure
schedules at JFK. The Wall Street Journal reports the formal
announcement of a merger between Delta Air Lines and Northwest
Airlines could come sometime next week... while executives at
United Airlines, apparently all-but shut out of a merger with
Delta, appear to be stepping up preliminary talks for a union with
Continental Airlines.
Reports of a breakdown in talks between Delta and NWA appear
unfounded, as people close to the talks tell the WSJ disagreements
were resolved earlier this week, over whether Northwest CEO Doug
Steenland and his management team would be given top management
roles in the merged carrier.
However, several key issues remain unresolved... and both sides
still stress it all could be for naught, if either side balks over
the realities of a merger. There is a chance, albeit a slim one,
Delta CEO Richard Anderson could recommend to the board the airline
remain independent.
As ANN reported, Delta
executives were given approval by the board to initiate merger
talks with both Northwest and United in January. It soon became
evident Northwest was the favored party in those talks, and in
recent weeks discussions of a Delta merger have all-but ignored
reference to the Chicago-based airline, though exploratory talks
between the two sides are still technically underway.
A person familiar with the situation says United since moved on
to talks with Continental. The two parties reportedly want to
announce their own merger close to the time Delta and Northwest
announce a deal, so both combinations could undergo regulatory
scrutiny at the same time, ahead of the November presidential
elections.
In this scenario,
there's another reason Continental wants a Delta/NWA announcement
to happen... as Northwest holds a so-called "golden share" in
Continental, allowing the Eagan, MN-based airline to block any
potential merger with another airline.
If Northwest agrees to enter talks with Delta (or any other
airline,) however, Continental may buy out Northwest's interest for
the grand total of $100, regardless of whether Northwest goes
through with its own merger plans. That would then free Continental
to entertain whatever merger options come its way.
Continental CEO Larry Kellner recently stated he would
prefer his airline remain independent... but would also do what's
best for his airline, in the face of what many believe is an
imminent downturn in the US economy. The carrier has rebuffed
United's advances once before.
Of course, any merger announcements would be just the
beginning... as in addition to passing anti-trust muster with the
Justice Department and DOT, potential merger candidates would also
have to reconcile their decision with their respective labor
groups, and other code-sharing partners.
Stay tuned. It looks like the month of February should be an
interesting one, to say the least.