Delta and Northwest to Form World’s Largest Airline

Delta Air Lines and Northwest Airlines can’t agree on how to spell “airlines,” but they have agreed to join together, forming the world’s largest airline, or air line. On Monday, both companies’ boards approved the merger, and now, it is up to the government’s anti-trust guys (they’ll go along) and the unions (who will agree if they get the right price).

When both companies filed for bankruptcy on September 14, 2005, they were hemorrhaging cash. Just over a year and a half later, they came out of bankruptcy, and proceeded to lose even more money, but at a much slower rate. Aviation fuel prices have reached debilitating levels, so there is pressure to find greater economies of scale.

The good news for both air carriers is the almost total absence of route overlap. Delta is very strong in the eastern US, with strong links to Latin America and to Europe. Northwest, on the other hand, has what some would call a formidable position in the Midwest and a significant presence in Japan and other Asian cities. Among US carriers, only Northwest and United are permitted to pick up passengers in Japan and fly them farther into Asia. Without significant overlap, the feds have little reason to block the merger.

The unions represent a tougher nut to crack. Dave Stevens, chairman of the Northwest branch of the Air Line Pilots Association, issued a statement that said, “The risk to Northwest Airlines and to the Northwest pilot group from letting this merger proceed, as it is now structured, is simply too great.” Northwest didn’t consult with the International Association of Machinists and Aerospace Workers which represents its baggage handlers, ramp workers and ticket agents. Its spokesman Joseph Tiberi said, “If the airline wanted the support of their employees they should have brought us in and discussed it with us earlier.”

However, the key will be the pilots at Delta. The pilots need to combine their seniority lists, and they haven’t managed to do that, but Delta’s pilots seem determined to pull it off. Lee Moak, head of Delta’s pilots union, said, “We don’t see a fight here. We see a cooperative relationship with the Northwest pilots to bring everybody to parity as soon as possible.” It would seem that he’s prepared to give a bit, Mr. Stevens can say he did his members proud, and the rest of the unions will follow along. The problem is that aviation fuel will continue to rise in price, and America has too many air carries. So, will the deal strengthen the two, or will it just make one big weak airline, or air line?

© Copyright 2008 by The Kensington Review, Jeff Myhre, PhD, Editor. No part of this publication may be reproduced without written consent. Produced using Fedora Linux.

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