Filed under: Deals, Industry, Delta Air Lines (DAL)
Northwest Airlines (NYSE:NWA) and Delta (NYSE:DAL) may actually announce a merger this week. They have been having at it for months. The deal would put Northwest’s value at $3 billion. As The Wall Street Journal points out “That would be well below Northwest’s market value of more than $4.6 billion as of Feb. 1, reflecting the industry’s worsening prospects in current weeks.”
Since the pilots have not approved the deal, they could threaten a strike, but even they have to know that the industry is in for its worst year in half a decade.
The marriage might not do a thing to save the carriers from a difficult fate. With fuel prices rising and a recession prone to hurt airline travel, putting the two companies together solves neither of those problems. While the companies can eliminate some duplicate routes, unions will press for better pay to support the transaction. Merging reservations systems and IT operations often takes a year or more. In the meantime, customers have to deal with the fall-out of integrations and the reservations booking problems which they can bring.
If the cost of oil keeps moving up, the merger won’t matter much.
Douglas A. McIntyre is an editor at 247wallst.com.
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