Filed under: Deals, Industry, Consumer experience, Delta Air Lines (DAL), Recession
The on again, off again merger speaks between Delta (NYSE: DAL) and Northwest (NYSE: NWA) have started again according to the Financial Times. They’re being driven by an up-turn in fuel costs and a potential down-turn in traffic. The pilot’s union, which had blocked earlier attempts at a merger, may be left on the sidelines for now. The boards of the two companies believe that they’re bargaining for the survival of their respective companies.
While the last set of talks broke down in February, according to the FT, “Executives at Minnesota-based Northwest have since put pressure on their counterparts at Delta to proceed without the pilots’ support.”
A merger won’t help with fuel costs and unions are not prone to give in to job cuts, raising the issue of strikes. Yet the large airlines feel that they must act even if it only saves them a dime. Most of the huge airlines have huge debt loads and falling cash-flow. Mergers often cause problems with customer service while the parties try to mesh their reservations systems and IT.
If fuel costs keep marching up and a deep recession keeps people off planes, Northwest and Delta can go into Chapter 11 as a combined company instead of separately.
Douglas A. McIntyre is an editor at 247wallst.com.
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