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link: http://www.ajc.com/business/content/business/delta/stories/2008/02/03/delta_0204.html
By JIM THARPE
The Atlanta Journal-Constitution
Published on: 02/03/08
It could be a case of now or never as Atlanta-based Delta Air Lines pushes toward a decision on whether to attempt a merger with with Minnesota-based Northwest Airlines, forming the biggest airline in the world.
Some people familiar with the talks believe a deal will be struck soon — possibly within two weeks — or Delta will walk away and concentrate on the standalone plan the carrier devised to emerge from bankruptcy last year.
Delta and Northwest officials have declined to comment publicly on the merger talks or a possible timetable for an announcement. Stock prices for both airlines advanced late last week — Delta was up 10 percent Friday — despite a dearth of news about the potential union.
"I think this thing will be resolved one way or another by Feb. 15," Minneapolis-based airline consultant Terry Trippler said. "I think that by then they would even say, 'Hey, we tried, and it did not work.' "
If a deal is struck, Trippler said, the carriers want to get the proposal to the U.S. Department of Justice as quickly as possible.
Any merger would have to wade through a storm of political posturing, but the final say about whether it flies would come from the Justice Department. Some analysts believe the carriers want to get an agreement soon so the deal will be considered by business-friendly, Bush-appointed regulators.
"There may be a finite window where they get to a point and find out it's not going to happen the way they want it to happen," Colorado-based airlines analyst Mike Boyd said. "The longer it goes on, the greater the indications are that this ain't no slam dunk."
Boyd said he doesn't believe the carriers are bound by a timetable. And he said both carriers could face increasing problems with labor, politicians and economic realities as talks advance.
"There's this fantasy that if you mate two plow horses you'll end up with a thoroughbred," Boyd said. "They might come to the realization that might not happen."
Robert Mann, an airline analyst from New York state, said he thinks economic pressures — soaring fuel costs and a softening business climate — rather than any strategy about Justice Department approval will drive the timing of a merger attempt.
"There's a lot of pressure to make this happen," Mann said, "There's pressure from investors. There's pressure to do it first. There's pressure from the people who gave them bridge loans out of restructuring."
Both Delta and Northwest emerged from Chapter 11 restructurings last year.
Mann has declined to speculate on the possible timing of a merger.
"The longer it goes, the less likely it is to get done," Mann said. "You strike while the iron is hot, or you end up without an iron in the fire."
Delta CEO Richard Anderson has assured Georgia politicians he would only seek a merger in which Delta is the surviving entity and remains headquartered in Atlanta, according to U.S. Sen. Johnny Isakson (R-Ga.).
Delta believes it can combine its extensive domestic presence with Northwest's massive route system in Asia and Europe to create a global carrier with its main hub at Hartsfield-Jackson International Airport, the world's busiest airport. The merger would give Delta hubs in Amsterdam and Tokyo and push Delta's Asia expansion plans ahead by decades.
"This would truly be a world-class global airline," Trippler said.
Trippler also believes a Delta-Northwest deal will trigger a wave of consolidation in the airline industry.
"If Delta and Northwest announce by Feb. 15, we'll hear another one by March 1," he said. "I think the second one is right behind the first one."
By JIM THARPE
The Atlanta Journal-Constitution
Published on: 02/03/08
It could be a case of now or never as Atlanta-based Delta Air Lines pushes toward a decision on whether to attempt a merger with with Minnesota-based Northwest Airlines, forming the biggest airline in the world.
Some people familiar with the talks believe a deal will be struck soon — possibly within two weeks — or Delta will walk away and concentrate on the standalone plan the carrier devised to emerge from bankruptcy last year.
Delta and Northwest officials have declined to comment publicly on the merger talks or a possible timetable for an announcement. Stock prices for both airlines advanced late last week — Delta was up 10 percent Friday — despite a dearth of news about the potential union.
"I think this thing will be resolved one way or another by Feb. 15," Minneapolis-based airline consultant Terry Trippler said. "I think that by then they would even say, 'Hey, we tried, and it did not work.' "
If a deal is struck, Trippler said, the carriers want to get the proposal to the U.S. Department of Justice as quickly as possible.
Any merger would have to wade through a storm of political posturing, but the final say about whether it flies would come from the Justice Department. Some analysts believe the carriers want to get an agreement soon so the deal will be considered by business-friendly, Bush-appointed regulators.
"There may be a finite window where they get to a point and find out it's not going to happen the way they want it to happen," Colorado-based airlines analyst Mike Boyd said. "The longer it goes on, the greater the indications are that this ain't no slam dunk."
Boyd said he doesn't believe the carriers are bound by a timetable. And he said both carriers could face increasing problems with labor, politicians and economic realities as talks advance.
"There's this fantasy that if you mate two plow horses you'll end up with a thoroughbred," Boyd said. "They might come to the realization that might not happen."
Robert Mann, an airline analyst from New York state, said he thinks economic pressures — soaring fuel costs and a softening business climate — rather than any strategy about Justice Department approval will drive the timing of a merger attempt.
"There's a lot of pressure to make this happen," Mann said, "There's pressure from investors. There's pressure to do it first. There's pressure from the people who gave them bridge loans out of restructuring."
Both Delta and Northwest emerged from Chapter 11 restructurings last year.
Mann has declined to speculate on the possible timing of a merger.
"The longer it goes, the less likely it is to get done," Mann said. "You strike while the iron is hot, or you end up without an iron in the fire."
Delta CEO Richard Anderson has assured Georgia politicians he would only seek a merger in which Delta is the surviving entity and remains headquartered in Atlanta, according to U.S. Sen. Johnny Isakson (R-Ga.).
Delta believes it can combine its extensive domestic presence with Northwest's massive route system in Asia and Europe to create a global carrier with its main hub at Hartsfield-Jackson International Airport, the world's busiest airport. The merger would give Delta hubs in Amsterdam and Tokyo and push Delta's Asia expansion plans ahead by decades.
"This would truly be a world-class global airline," Trippler said.
Trippler also believes a Delta-Northwest deal will trigger a wave of consolidation in the airline industry.
"If Delta and Northwest announce by Feb. 15, we'll hear another one by March 1," he said. "I think the second one is right behind the first one."
