Boards Meeting To Consider Deal

An oft-reported union between Delta Air Lines and Northwest Airlines could see its first official announcement this week, as the board of directors at the Atlanta-based carrier is expected to meet Wednesday to consider the plan.

That news comes from the Atlanta Journal-Constitution. Similar meetings are planned at Northwest, as well, according to other news reports. If true, those meetings would mark the first definitive news of a merger that nearly the entire US aviation industry considers a near-certainty.

Less certain, however, is whether such a deal would pass muster with the US Department of Justice, as well as lawmakers and politicians vying for votes in a hotly-contested election year. There's some question whether a Delta/NWA merger -- which could be the first of many others within the airline industry -- would result in higher air fares, due to decreased competition.

Also of concern to lawmakers, and union leaders, are the inevitable layoffs that result from such mergers. That's one reason Delta and Northwest are reportedly eager to announce a deal sooner rather than later... in hopes the merger would clear regulatory approval this year, under the pro-business Bush administration.

It appears one potential sticking point has been resolved, at least for now. According to the Atlanta paper, pilots unions at Delta and Northwest have reportedly agreed to a 'conceptual plan of integration,' on how to merge both carriers' seniority lists, if the deal goes through. As ANN reported, talks have been on hold for the past week, as the two different chapters of the Air Line Pilots Association met to hammer out details.

That agreement, in theory, will allow a merger announcement to go forward... but several potential conflicts still remain. In a letter to pilots last week, Captain Lee Moak -- chairman of the Delta chapter of ALPA -- cautioned any negotiation to integrate seniority lists "often turns out to be a protracted and very contentious process that almost always ends in binding arbitration."

Conversely, pilots on both sides may end up supporting the merger anyway, in hopes of gaining stock in the combined airline, and possibly recouping past pay and benefits cuts.

"I think of it [Moak's letter] as a reassurance letter to tell us they are working on the deal and have all the bases covered," said an unnamed Delta pilot to the AJC. "They are trying to address the seniority issue in the middle of the negotiations instead of waiting until the end."

Even with that hurdle cleared, analysts caution, the complicated deal could still fall apart -- before or after a formal merger announcement. Which, pretty much, brings us back to the starting point.

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