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."
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