If Deal Not Done By Mid-Month, Delta May Walk

It just wouldn't be a normal day in the aviation biz lately, without some kind of 'update' on a rumored merger between Delta Air Lines and Northwest. So, here's the latest.

According to several people close to the purported talks, if a deal is going to happen it had better be soon, reports The Atlanta Journal-Constitution. If a deal doesn't come to fruition within the next two weeks, Delta may walk away from the table, and concentrate on making it as a standalone carrier.

"I think this thing will be resolved one way or another by February 15," airline consultant Terry Trippler told the paper. "I think that by then they would even say, 'Hey, we tried, and it did not work.'"

Trippler adds both sides are working to iron out a deal that would pass muster with the Department of Justice as soon as possible... presumably, while still under the lame-duck administration of outgoing President George W. Bush. If successful, a Delta/NWA joining would result in the nation's largest single airline. The concern is a new administration would object to such a deal, citing anti-trust concerns, more vehemently than Bush-appointed DOJ officials.

It's worth noting there has been a scarcity of real news from either party regarding the status of a potential union; in fact, neither Delta nor Northwest has confirmed publicly such talks are underway in the first place. There is consensus within the industry, however, both sides are rushing to iron out the details of a merger.

"There may be a finite window where they get to a point and find out it's not going to happen the way they want it to happen," said analyst Mike Boyd. "The longer it goes on, the greater the indications are that this ain't no slam dunk."

Boyd -- for one -- cautions everyone involved to not get overly-excited about the prospects of a Delta/Northwest super-airline., saying even if such an airline receives DOJ approval, the combined airline would still face potential labor, booking, and other implementation issues... a la the 2005 merger of US Airways and America West.

"There's this fantasy that if you mate two plow horses you'll end up with a thoroughbred," Boyd said. "They might come to the realization that might not happen."

Analyst Robert Mann counters the realities of today's airline industry -- high fuel prices, and a slumping economy -- will drive both sides to strike deal as soon as possible, more than any perceived need to rush a deal through the Justice Department.

"There's a lot of pressure to make this happen," Mann said, "There's pressure from investors. There's pressure to do it first. There's pressure from the people who gave them bridge loans out of restructuring... The longer it goes, the less likely it is to get done. You strike while the iron is hot, or you end up without an iron in the fire."

Trippler remains bullish on the prospects of a Delta/NWA merger, saying the deal would result in "truly... a world-class global airline."

He also believes the deal would trigger a new round of "merger-mania" among other airlines. "If Delta and Northwest announce by Feb. 15, we'll hear another one by March 1," he said. "I think the second one is right behind the first one."

FMI: www.delta.com, www.nwa.com