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http://www.forbes.com/feeds/ap/2008/06/03/ap5075053.html
Associated Press
Delta exec says no 2nd thoughts on Northwest deal
By HARRY R. WEBER 06.03.08, 10:40 AM
NEW YORK - A Delta Air Lines executive said Tuesday he understands why other carriers are hesitant to combine in the current economic and high fuel price environment, but he insists his company has no plans to walk away from its proposed acquisition of Northwest Airlines.
The executive also said that Delta likely will be forced to announce more domestic capacity cuts in the future to deal with record fuel prices, but it doesn't plan on announcing any further job cuts.
Following the Atlanta-based carrier's sparsely attended annual meeting of shareholders, Ed Bastian, Delta's president and chief financial officer, said his company would make the same decision today as it did in mid-April, when it announced its deal to combine with Northwest.
"As oil continues its rise, I'm not surprised people are pausing," Bastian said of other carriers' recent decisions not to proceed with combination talks.
But asked if Delta plans to pause and perhaps walk away from the Northwest deal in order to preserve cash, Bastian said, "I don't see that happening. No."
UAL Corp.'s United Airlines and US Airways Group Inc. recently told employees that they have no plans to combine at this time. Continental Airlines Inc. previously announced that it would remain a standalone carrier.
Delta officials insist the cost savings, productivity improvements and network enhancements anticipated from acquiring Eagan, Minn.-based Northwest provides more than enough incentive to complete the deal.
Bastian suggested that Delta wants to "move quicker" to complete its acquisition of Northwest. However, he did not provide an updated timeframe, saying that Delta's previous statement that it expects to complete the deal by the end of the year stands.
On the operations side, Bastian said "there will be more pruning" in terms of domestic capacity cuts. He did not provide a new goal, though he said further capacity cuts would be smaller than those previously announced.
Asked if there would be further job cuts beyond the 3,000 Delta recently said it will shed, Bastian said bluntly, "No. That's not the plan."
At the annual meeting, Delta shareholders approved the election of the company's board of directors for the next year and ratified the appointment of Ernst & Young as Delta's independent auditors for the year ending Dec. 31.
Delta Air Lines Inc.'s request that shareholders approve issuing new shares as part of the airline's planned acquisition of Northwest Airlines Corp. was not on the agenda. That will likely be taken up at a special meeting later this year.
One shareholder at the meeting questioned the company's management in light of the massive decline in Delta's stock price since the company emerged from bankruptcy last year. Delta's pre-bankruptcy shares were canceled when it emerged from Chapter 11 protection.
Delta Chief Executive Richard Anderson told shareholders that he believes the company has the best long-term plan for the airline and its investors to benefit.
"We ask for your patience," Anderson said. "It's been tough to be a shareholder in this business over the last year."
But, Anderson added, "We're managing the business for the long-term."
Delta shares rose 9 cents to $5.94 in morning trading. They have traded in a 52-week range of $5.37 to $21.80. Northwest shares were up 15 cents to $6.86.
Copyright 2008 Associated Press. All rights reserved. This material may not be published broadcast, rewritten, or redistributed
Associated Press
Delta exec says no 2nd thoughts on Northwest deal
By HARRY R. WEBER 06.03.08, 10:40 AM
NEW YORK - A Delta Air Lines executive said Tuesday he understands why other carriers are hesitant to combine in the current economic and high fuel price environment, but he insists his company has no plans to walk away from its proposed acquisition of Northwest Airlines.
The executive also said that Delta likely will be forced to announce more domestic capacity cuts in the future to deal with record fuel prices, but it doesn't plan on announcing any further job cuts.
Following the Atlanta-based carrier's sparsely attended annual meeting of shareholders, Ed Bastian, Delta's president and chief financial officer, said his company would make the same decision today as it did in mid-April, when it announced its deal to combine with Northwest.
"As oil continues its rise, I'm not surprised people are pausing," Bastian said of other carriers' recent decisions not to proceed with combination talks.
But asked if Delta plans to pause and perhaps walk away from the Northwest deal in order to preserve cash, Bastian said, "I don't see that happening. No."
UAL Corp.'s United Airlines and US Airways Group Inc. recently told employees that they have no plans to combine at this time. Continental Airlines Inc. previously announced that it would remain a standalone carrier.
Delta officials insist the cost savings, productivity improvements and network enhancements anticipated from acquiring Eagan, Minn.-based Northwest provides more than enough incentive to complete the deal.
Bastian suggested that Delta wants to "move quicker" to complete its acquisition of Northwest. However, he did not provide an updated timeframe, saying that Delta's previous statement that it expects to complete the deal by the end of the year stands.
On the operations side, Bastian said "there will be more pruning" in terms of domestic capacity cuts. He did not provide a new goal, though he said further capacity cuts would be smaller than those previously announced.
Asked if there would be further job cuts beyond the 3,000 Delta recently said it will shed, Bastian said bluntly, "No. That's not the plan."
At the annual meeting, Delta shareholders approved the election of the company's board of directors for the next year and ratified the appointment of Ernst & Young as Delta's independent auditors for the year ending Dec. 31.
Delta Air Lines Inc.'s request that shareholders approve issuing new shares as part of the airline's planned acquisition of Northwest Airlines Corp. was not on the agenda. That will likely be taken up at a special meeting later this year.
One shareholder at the meeting questioned the company's management in light of the massive decline in Delta's stock price since the company emerged from bankruptcy last year. Delta's pre-bankruptcy shares were canceled when it emerged from Chapter 11 protection.
Delta Chief Executive Richard Anderson told shareholders that he believes the company has the best long-term plan for the airline and its investors to benefit.
"We ask for your patience," Anderson said. "It's been tough to be a shareholder in this business over the last year."
But, Anderson added, "We're managing the business for the long-term."
Delta shares rose 9 cents to $5.94 in morning trading. They have traded in a 52-week range of $5.37 to $21.80. Northwest shares were up 15 cents to $6.86.
Copyright 2008 Associated Press. All rights reserved. This material may not be published broadcast, rewritten, or redistributed
