Fri, Jan 11, 2008
United, Northwest Likely Candidates
Executives with Delta Air Lines went before the carrier's board
of directors Friday, seeking approval to enter into merger talks
with United Airlines and Northwest Airlines.
Delta CEO Richard Anderson wants the board's permission to start
detailed talks with those carriers, an anonymous source told USA
Today, as those airlines each offer route networks that would
compliment Delta's current flight schedule. Delta's board formed a
special committee to look at merger possibilities last year.
Investors responded to the news Thursday by driving stock prices
in all three airlines up. United closed the day up 23.7 percent,
while Northwest shares increased 30 percent, Delta's stock rose
18.2 percent.
While both carriers are seen as
potential choices for a Delta merger, many believe Northwest holds
an edge over United... if only because Anderson is the former CEO
of that airline. Northwest's network also overlaps less with
Delta's current routes, though both NWA and United would offer
Delta a much-needed foothold across the Pacific. Northwest and
Delta are also members of the SkyTeam alliance.
Fleet commonalities are a wash; both Northwest and United fly a
mix of Boeing and Airbus planes, while Delta's mainline fleet is
solely Boeing (and McDonnell Douglas).
Perhaps tellingly, United and Delta each fly Boeing 767s and 777s
on long-haul routes, while Northwest utilizes the Airbus A330.
United and Delta also use the Boeing 737 on domestic flights;
Northwest, a mix of AARP-eligible Douglas DC-9s and Airbus A319s
and A320s.
Calyon Securities' Ray Neidl cautioned investors and other
industry analysts to not get too excited, even if the Delta board
does grant permission for talks to begin.
"[I]t's just permission to start formal talks," he said. "Nothing
may come of it and they still would have to get regulatory
blessing."
The latter would pose a significant challenge... as a merger
between Delta with either United or Northwest would create the
largest domestic airline, surpassing American Airlines for that
title.
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