But Lawmakers May Be Concerned About Anti-Trust Violations

The Delta Air Lines merger story may get very exciting, very quickly. Less than a year ago, Delta was campaigning against a hostile takeover attempt by US Airways. Now, there are reports Delta could announce a merger with another airline within a few weeks.

As ANN reported, last week -- amid analyst suggestions that US airlines must consolidate or die -- Delta CEO Richard Anderson asked his board of directors for permission to talk with United and Northwest about a possible merger. After days without official word from Delta, the Wall Street Journal now reports he got that permission on Friday, has already begun talks, and could have a merger announcement by mid-February.

Calyon Securities analyst Raymond Neidl told Forbes the decision will depend entirely on whether or not Delta believes such a merger is likely to pass antitrust standards. "Delta’s serious about wanting to begin talks, and Northwest and United both like to be wooed, but we need a sign from Washington that they’d give their blessing," he said.

Neidl maintains Delta’s hiring of consolidation proponent -- and former Northwest chief -- Richard Anderson as CEO, and the promotion of Chief Financial Officer Ed Bastian to president, indicate the airline was preparing for a merger.

In November, hedge fund Pardus Capital Management attempted to convince Delta, of which it owns 1.3 percent, and United, in which it has a five percent stake, that a merger was imperative to deal with rising fuel costs.

In a possible attempt to demonstrate the positive effect on stock prices a merger could have, Pardus is believed to have planted a story with the Associated Press to the effect the two airlines were engaged in urgent merger talks in mid-November.

Though many industry analysts think Northwest is a more likely candidate for a merger due to several factors -- including compatible route networks, and the fact both airlines belong to the SkyTeam alliance -- part of the Pardus rumor might still prove true.

It's likely the two sides would try to get the deal done before the presidential elections, to enter the regulatory approval process under the lame-duck Bush administration.

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