The two companies have seemed on the verge of announcing a deal several times in recent months - raising hopes among some investors and worrying those concerned about loss of competition among airlines - only to back away from a merger.
During that period, the airline business has deteriorated sharply. Record-high fuel prices have sent a handful of smaller carriers into bankruptcy in recent weeks. The latest was Frontier Airlines, which made its announcement Friday.
Some analysts now expect the industry to lose money this year after two years that were mostly profitable. And the slowing economy is making it hard for airlines to raise fares to cover fuel costs.
A representative at Delta could not be reached and a Northwest spokesman declined to comment.
Shares in Delta and Northwest have plunged since they emerged from bankruptcy about a year ago. Delta closed at $10.01 on Friday, down from a high of $21.95 last spring. Northwest closed at $10.96, down from a high of $26.50 last spring. If the deal is structured as a stock acquisition of Northwest by Delta, it will be worth Northwest's market capitalization of $2.59 billion.
The broad outlines of a deal have remained constant: an exchange of stock at a ratio close to market prices; a combined airline that would be called Delta, with headquarters in Atlanta; and Richard Anderson, Delta's chief executive, keeping that position, with Northwest's chief executive, Douglas Steenland, stepping aside.
Pilots at Delta and Northwest earlier could not agree on how to merge their seniority lists, which is important to them because it determines their ranking for pay, what kind of planes they fly and their days off. So last month, Northwest asked Delta to proceed toward a deal without a combined list.
The carriers had hoped to get a merged list before a deal so that operations could be combined quickly and without rancor. US Airways and America West Airlines have been unable to combine operations fully more than two years after merging because of disputes over a seniority list.
Pilots have no legal power to block a merger, but they could appeal to lawmakers to help prevent a deal.
James Oberstar, chairman of the Transportation and Infrastructure Committee in the U.S. House of Representatives, has said he opposes big airline mergers because competition would suffer and some markets would lose service.
Putting a deal together now without a merged pilots list and amid an industry downturn could be difficult. The carriers had promised the pilots a raise and a lot of stock in the merged airline in exchange for a combined seniority list.
Leaders of the Delta and Northwest pilots' unions met separately over the weekend. There was no immediate action by either union.
Pulished: April 14, 2008
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Since Mr. Ho talked about the issue on the merger between Delta Air Lines and Northwest Airlines, I just hope this would provide you some additional infomations. =)
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