First Step Towards Possible Acquisition?

Is this the first step towards an even-larger Delta Air Lines? On Monday, Delta CEO Richard Anderson joined Bill Ayer, CEO of Alaska Airlines, in announcing an agreement "in principle" to expand the marketing agreement between both carriers, to make the airlines preferred alliance partners on the West Coast.

Delta states the amended agreement will benefit customers through supporting the launch of new Delta long-haul trans-Pacific and Latin American routes from the West Coast; expanded connecting opportunities to and from Alaska Airlines and Horizon Air hubs and focus cities; and enhanced worldwide frequent flier and lounge reciprocity agreements between Delta and Alaska.

"Alaska Air Group is a perfect alliance partner for Delta as we pair our expansive international network with Alaska's leading presence across the West Coast to build a platform for international growth from the West," said Delta CEO Richard Anderson. "Building on our existing agreement, Delta, Alaska and Horizon will now be able to offer customers more departures and capacity along the West Coast than any US airline with the enhanced ability to feed Delta's growing global route system."

"Continuing to work with Delta -- the world's largest airline with the broadest global route system of any US carrier -- is a natural fit for Alaska and Horizon," added Ayer. "Our customers will benefit from expanded access to Delta's unmatched domestic and international network and from improved frequent flier and lounge agreements that make it easier to fly with Alaska around the world. All three airlines enjoy similar reputations for excellent service and a quality product, making our alliance even more complementary."

The former Delta had a limited alliance since 2004, while Alaska and its regional subsidiary Horizon Airlines also enjoyed a 20-year partnership with Northwest Airlines. As ANN reported, shareholders in Delta and Northwest formally approved a merger of those two airlines in September, and regulators signed off on the deal last month... creating what is currently the world's largest airline.

The upgraded marketing alliance between Delta and Alaska appears similar to other strategic alliances -- don't say mergers -- announced this year. After being shunned by US Airways and Continental with regards to a merger of its own, United Airlines announced an alliance with the latter in June. Like the Delta/Alaska partnership, that alliance gives fliers on either carrier access to each others' business lounges and frequent flier programs, and also allows increased codesharing.

Airline industry analysts say those alliances offer many of the perks of a full-fledged merger... without the headaches of combining fleets and workforces, or winning approval from regulators.

That said, given Delta's recent history with successfully acquiring another carrier, one must wonder whether Monday's announcement isn't the first step towards Alaska eventually going the way of Northwest, as well. Stay tuned.

FMI: www.delta.com, www.alaskaair.com