Steenland: Fuel costs may shrink merged Delta/Northwest
Minneapolis-St. Paul will retain a "vibrant" hub and a substantial number of jobs if a Delta-Northwest merger moves forward, Northwest Airlines Corp. CEO Doug Steenland told business leaders Monday. But he said that soaring fuel costs may ultimately shrink local operations.
Speaking at a meeting of the St. Paul Area Chamber of Commerce, Steenland said the combined carrier will keep its reservation offices, data center and flight-training facility open following the close of the deal. Overall, he expects the deal to have a similar impact on the Twin Cities as the 1998 merger between Minneapolis-based Norwest Corp. and San Francisco-based Wells Fargo; In that deal, Minneapolis lost a corporate headquarters, but ultimately gained more jobs.
But Steenland cautioned that with the price of oil soaring, it's hard to predict how many workers the carrier will employ into the future. "This can only go on so long," Steenland said, of airlines absorbing the high price of fuel. "Fuel costs will have to be passed onto consumers. That will mean higher fares, so we'll see demand come down, and the airline will have to shrink."
Atlanta-based Delta Air Lines Inc. (NYSE: DAL) and Northwest (NYSE: NWA) last week began crafting a plan for integrating the carriers, Steenland said. The companies expect the merger to close by the end of the year. Northwest may operate as a standalone airline for a full year after the deal wraps up, he said.
While the combined airline's headquarters will be based in Atlanta, the merged company will continue to have a big presence in the Twin Cities. "What won't be different is that Minneapolis-St. Paul will continue to be a vibrant, robust hub," Steenland said.
The airline also will continue to support Twin Cities cultural institutions and non-profits, he said.
Minneapolis-St. Paul will retain a "vibrant" hub and a substantial number of jobs if a Delta-Northwest merger moves forward, Northwest Airlines Corp. CEO Doug Steenland told business leaders Monday. But he said that soaring fuel costs may ultimately shrink local operations.
Speaking at a meeting of the St. Paul Area Chamber of Commerce, Steenland said the combined carrier will keep its reservation offices, data center and flight-training facility open following the close of the deal. Overall, he expects the deal to have a similar impact on the Twin Cities as the 1998 merger between Minneapolis-based Norwest Corp. and San Francisco-based Wells Fargo; In that deal, Minneapolis lost a corporate headquarters, but ultimately gained more jobs.
But Steenland cautioned that with the price of oil soaring, it's hard to predict how many workers the carrier will employ into the future. "This can only go on so long," Steenland said, of airlines absorbing the high price of fuel. "Fuel costs will have to be passed onto consumers. That will mean higher fares, so we'll see demand come down, and the airline will have to shrink."
Atlanta-based Delta Air Lines Inc. (NYSE: DAL) and Northwest (NYSE: NWA) last week began crafting a plan for integrating the carriers, Steenland said. The companies expect the merger to close by the end of the year. Northwest may operate as a standalone airline for a full year after the deal wraps up, he said.
While the combined airline's headquarters will be based in Atlanta, the merged company will continue to have a big presence in the Twin Cities. "What won't be different is that Minneapolis-St. Paul will continue to be a vibrant, robust hub," Steenland said.
The airline also will continue to support Twin Cities cultural institutions and non-profits, he said.
