Merging Of Seniority Lists Key
We may be getting closer to the
oft-rumored joining of Delta Air Lines and Northwest Airlines in
the state of merged operations. According to two sources close to
the talks, both sides shared details of a proposed merger agreement
this weekend to their respective pilots unions.
Bloomberg reports union leaders with each carrier's chapter of
the Air Line Pilots Association will study the proposals on how to
merge both airlines' seniority lists -- a bone of contention with
the last merger of two domestic airlines, the 2005 joining of US
Airways and America West.
"The pilots' receptiveness to a merger is key," said Howard
Wheeldon, senior strategist at BCG Partners LP in London. "If
they're prepared to support a deal, it can go forward, and I think
the sooner it happens the better. The markets want to see a merger
between Northwest and Delta."
As ANN reported last week,
some believe a formal announcement of a Delta/NWA merger could come
as early as this week... although its unlikely ALPA executives
would reach an agreement to support the merger in such a short
time, given the stakes involved.
Labor support is seen as critical to the deal going forward.
Pilots may be willing to support the deal, if it appears they'd be
able to recoup some of the losses they incurred after both airlines
filed for Chapter 11 bankruptcy on the same day in September
"Job losses and seniority issues are labor's chief concerns,"
said FTN Midwest Research Securities analyst Michael Derchin last
week. "In return for support of consolidation, labor would likely
demand stakes in the combined carriers, some job protection and
If a Delta/NWA merger happens, the result would be the largest
US airline by traffic volume... surpassing American Airlines. The
deal would require regulatory approval, and could face anti-trust
questions during that process.
As has become de rigueur throughout the rumored merger
proceedings, neither Delta nor Northwest had any comment on the
latest developments. Pilots union leaders didn't immediately return
Bloomberg's calls for comments, either.