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Most jobs likely to survive a Delta-NWA deal - Star Tribune
By LIZ FEDOR
February 6, 2008
If Delta Air Lines and Northwest Airlines merge, the vast majority of their
employees would be expected to keep their jobs while the executive ranks of
the combined company would be thinned.
Delta's leaders envision a merger as a way to build their route network, so
they are not contemplating wholesale job cuts, people familiar with Delta's
thinking said Tuesday.
Northwest now employs about 32,000 people -- including 12,000 in
Minnesota -- while Delta has about 55,000 employees.
Delta also understands the importance of keeping a significant presence in
the headquarters city of its merger partner, the sources indicated.
The fate of airline employees could be crucial to helping a merger succeed.
Part of the reason the last major consolidation attempt -- US Airways'
hostile bid for Delta in late 2006 -- failed was that it came with the
threat of major job losses. Then-Delta CEO Gerald Grinstein estimated that
US Airways' plan would have cost 10,000 Delta jobs, and that aspect of the
deal galvanized opposition within the airline and Congress.
Atlanta-based Delta is attempting to construct a merger that could win
support from employees on both sides of the deal. In particular, Delta
believes a merger that paired Delta's strong transatlantic routes with a
carrier that is strong in the Pacific would limit the number of overlapping
routes and allow both partners to form a huge global airline. Consequently,
it could be characterized as a merger by addition rather than subtraction,
when viewed by seat capacity and workforce size.
Delta has approached both Northwest and United Airlines for merger talks,
but is thought to view Northwest as its first choice. Northwest and United
Airlines are the top two U.S. carriers that serve Asia and they both have
major hubs in the Midwest.
Officials from Northwest and Delta have declined to comment on their merger
talks, which continue. In a Jan. 11 message to employees, Northwest CEO
Doug Steenland said the airline's leaders would carefully consider merger
deals. "Doing nothing could be our worst alternative," he said. "If we wait
to react to what others do we could be left with options that are
undesirable or with no options at all."
Pilot groups at Delta and Northwest , both represented by the Air Line
Pilots Association, have said they could support a merger, if it allowed
them to get stock in the new company as well as contract improvements.
"There must be a significant economic benefit to both pilot groups to
provide the incentive to make the hard decisions necessary to integrate
seniority and contracts expeditiously," Northwest pilots chairman Dave
Stevens said in a recent memo to union members.
Northwest pilots spokesman Greg Rizzuto said in an interview that both
pilot groups share the goal of benefiting from a fair merger that would give
them greater job security by forging a stronger carrier.
In a Friday message to employees, Delta CEO Richard Anderson said any merger
would have to serve the "best interests of all Delta stakeholders, including
employees, customers, our shareholders and the communities we serve."
Anderson was Northwest 's chief executive from 2001 to 2004.
One tough issue is the location of the merged company's headquarters. In
mid-November, Anderson said he would only enter into a deal that retained
the Delta name and its Atlanta headquarters.
Northwest has legal agreements with the Metropolitan Airports Commission
that would financially penalize the airline if it fails to maintain a hub
and headquarters in the Twin Cities. "We are pretty darn confident in a
Northwest -Delta merger that the hub plays a strong role," said MAC Chairman
Jack Lanners. However, he added that if Northwest fails to maintain its
headquarters in Minnesota, then the MAC could require it to immediately pay
$245 million in bond debt.
Delta's leaders don't support operating dual headquarters, according to
people with knowledge of Delta's plans. However, if Delta does a deal with
Northwest or another carrier, Delta recognizes that a substantive
commitment should be made to the community that loses its headquarters,
those sources said.
In mid-January, Gov. Tim Pawlenty wrote to Steenland and Anderson to urge
them to "ensure continued operations and presence in Minnesota at a high
level." Pawlenty spokesman Brian McClung said Tuesday that the governor
spoke with Steenland "a couple of times over the past few weeks and we
anticipate discussions may continue as needed." In addition, McClung said
the governor recently talked with Anderson.
U.S. Sen. Amy Klobuchar, D-Minn., said Tuesday that she spoke with Steenland
on Monday about her desire to preserve airline jobs at Minnesota airports,
the Eagan headquarters and Chisholm call center. "He reiterated how
important the [Twin Cities] hub is," Klobuchar said.
Klobuchar reported that Steenland did not brief her on the status of merger
talks, but told her "there was a limited timeline where this could get
done."
In December, Dave Davis, Northwest 's chief financial officer, said that an
airline merger probably would need to take shape by this month to receive a
regulatory decision before the end of the Bush administration.
By LIZ FEDOR
February 6, 2008
If Delta Air Lines and Northwest Airlines merge, the vast majority of their
employees would be expected to keep their jobs while the executive ranks of
the combined company would be thinned.
Delta's leaders envision a merger as a way to build their route network, so
they are not contemplating wholesale job cuts, people familiar with Delta's
thinking said Tuesday.
Northwest now employs about 32,000 people -- including 12,000 in
Minnesota -- while Delta has about 55,000 employees.
Delta also understands the importance of keeping a significant presence in
the headquarters city of its merger partner, the sources indicated.
The fate of airline employees could be crucial to helping a merger succeed.
Part of the reason the last major consolidation attempt -- US Airways'
hostile bid for Delta in late 2006 -- failed was that it came with the
threat of major job losses. Then-Delta CEO Gerald Grinstein estimated that
US Airways' plan would have cost 10,000 Delta jobs, and that aspect of the
deal galvanized opposition within the airline and Congress.
Atlanta-based Delta is attempting to construct a merger that could win
support from employees on both sides of the deal. In particular, Delta
believes a merger that paired Delta's strong transatlantic routes with a
carrier that is strong in the Pacific would limit the number of overlapping
routes and allow both partners to form a huge global airline. Consequently,
it could be characterized as a merger by addition rather than subtraction,
when viewed by seat capacity and workforce size.
Delta has approached both Northwest and United Airlines for merger talks,
but is thought to view Northwest as its first choice. Northwest and United
Airlines are the top two U.S. carriers that serve Asia and they both have
major hubs in the Midwest.
Officials from Northwest and Delta have declined to comment on their merger
talks, which continue. In a Jan. 11 message to employees, Northwest CEO
Doug Steenland said the airline's leaders would carefully consider merger
deals. "Doing nothing could be our worst alternative," he said. "If we wait
to react to what others do we could be left with options that are
undesirable or with no options at all."
Pilot groups at Delta and Northwest , both represented by the Air Line
Pilots Association, have said they could support a merger, if it allowed
them to get stock in the new company as well as contract improvements.
"There must be a significant economic benefit to both pilot groups to
provide the incentive to make the hard decisions necessary to integrate
seniority and contracts expeditiously," Northwest pilots chairman Dave
Stevens said in a recent memo to union members.
Northwest pilots spokesman Greg Rizzuto said in an interview that both
pilot groups share the goal of benefiting from a fair merger that would give
them greater job security by forging a stronger carrier.
In a Friday message to employees, Delta CEO Richard Anderson said any merger
would have to serve the "best interests of all Delta stakeholders, including
employees, customers, our shareholders and the communities we serve."
Anderson was Northwest 's chief executive from 2001 to 2004.
One tough issue is the location of the merged company's headquarters. In
mid-November, Anderson said he would only enter into a deal that retained
the Delta name and its Atlanta headquarters.
Northwest has legal agreements with the Metropolitan Airports Commission
that would financially penalize the airline if it fails to maintain a hub
and headquarters in the Twin Cities. "We are pretty darn confident in a
Northwest -Delta merger that the hub plays a strong role," said MAC Chairman
Jack Lanners. However, he added that if Northwest fails to maintain its
headquarters in Minnesota, then the MAC could require it to immediately pay
$245 million in bond debt.
Delta's leaders don't support operating dual headquarters, according to
people with knowledge of Delta's plans. However, if Delta does a deal with
Northwest or another carrier, Delta recognizes that a substantive
commitment should be made to the community that loses its headquarters,
those sources said.
In mid-January, Gov. Tim Pawlenty wrote to Steenland and Anderson to urge
them to "ensure continued operations and presence in Minnesota at a high
level." Pawlenty spokesman Brian McClung said Tuesday that the governor
spoke with Steenland "a couple of times over the past few weeks and we
anticipate discussions may continue as needed." In addition, McClung said
the governor recently talked with Anderson.
U.S. Sen. Amy Klobuchar, D-Minn., said Tuesday that she spoke with Steenland
on Monday about her desire to preserve airline jobs at Minnesota airports,
the Eagan headquarters and Chisholm call center. "He reiterated how
important the [Twin Cities] hub is," Klobuchar said.
Klobuchar reported that Steenland did not brief her on the status of merger
talks, but told her "there was a limited timeline where this could get
done."
In December, Dave Davis, Northwest 's chief financial officer, said that an
airline merger probably would need to take shape by this month to receive a
regulatory decision before the end of the Bush administration.
