Wednesday, February 27, 2008

A Delta-Northwest merger? Well... maybe.

Just ten days ago, a merger between Delta Air Lines and Northwest Airlines looked like a foregone conclusion. Key details had been ironed out: the combined company, which would be the world's largest airline, would retain the Delta name and headquarters in Atlanta but would not close any of either airline's hubs, and there would be stock for employees. Senior managers were even looking beyond the announcement to a large marketing campaign designed to help the merger through regulatory hurdles. All that remained was for the pilots' unions of to conclude a deal on how to handle seniority.

Ah, but the devil's in the details, and that deal over seniority--a key issue which determines pilots' pay, flight status, and opportunities for advancement--turned out to be a lot harder to resolve than anyone had anticipated. Today, with Delta's management team basically saying that a merger just won't happen without union support, it's not clear whether a deal between the two airlines will ever get off the ground (so to speak).

Of course, things can still get worked out. Northwest CEO Doug Steenland is a strong proponent of consolidation and has advised the company's employees that the company is considering "strategic alternatives." United Air Lines, meanwhile, is waiting with anticipation as it considers its own bid for Delta if the merger with Northwest falls through.

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