Mar 28, 2008 4:02 pm US/Eastern
Delta, Northwest Close To Merger Deal
Pilot Seniority List Still In Question
MINNEAPOLIS, Minn. (AP) ―
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"We continue to believe the case for consolidation remains strong, perhaps even more necessary than ever in light of these current economics," said Northwest chief executive Doug Steenland.
CBS
Executives at Northwest Airlines Corp. have proposed combining with Delta Air Lines Inc. without a pre-arranged deal with their pilots, the Wall Street Journal reported on its Web site on Friday.
Pilots for the two airlines agreed on a comprehensive joint contract but failed to work out a combined seniority list despite talks that ended in mid-March. The airlines had tried to get their pilots to agree in advance to avoid lengthy post-merger squabbling that has plagued other airline mergers.
Delta is pondering whether to proceed without the pilots, the Journal reported, citing sources it didn't name.
Delta did not directly address the reported Northwest proposal, but issued a statement saying it supports "industry consolidation as a vehicle to ensure Delta remains an industry leader." It said it is continuing to look at strategic alternatives.
Northwest spokeswoman Tammy Lee declined to comment. A spokesman for Northwest's pilots did not return a phone message. A spokeswoman for Delta's pilots had no comment.
The usual approach in airline combinations has been to have pilots work out a joint union contract afterwards. Delta and Northwest took a different approach in their merger talks, figuring that if they could obtain full pilot agreements in advance they would reap the benefit of a combined airline much sooner. But the two groups couldn't agree on seniority, which determines who flies more desirable aircraft and routes.
Meanwhile, the cost of oil has put all airlines under intense financial pressure. Delta and Northwest have both said they expect to reduce capacity this year, and Atlanta-based Delta has announced plans to eliminate 2,000 jobs.
But the economic conditions don't take a merger off the table, Eagan, Minn.-based Northwest chief executive Doug Steenland told workers in a hot line message posted March 23.
"We continue to believe the case for consolidation remains strong, perhaps even more necessary than ever in light of these current economics," he said. "Consolidation may be the best way to rationalize the airline network and be the right vehicle to deal with excess capacity at these record high fuel prices."
(© 2009 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.)
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