Many Feel Merger Imminent; Strike Team Reactivated
More signs that Delta Air Lines may
soon announce plans to merge with another carrier. On Wednesday,
the executive council of the Delta branch of the Air Line Pilots
Association convened to discuss the ALPA response should Delta
chose to merge with another airline.
"Consolidation may indeed be at our door," said Lee Moak,
chairman of the Delta branch of the Air Line Pilots Association, in
a letter to members posted on the ALPA website. Moak added the
union would not necessarily be opposed to such a move, but only if
it helped the airline -- and its pilots' careers -- grow.
"His point is that any merger they want to do needs to involve
the pilots. Any consolidation won't work unless the pilots are
actively supporting it," said union representative Mark Saltzman to
the Salt Lake Tribune. The airline employs nearly 4,000 people in
Utah, including about 600 pilots.
As an example of ALPA's 'hope for the best, prepare for the
worst' attitude towards merger rumors, the pilots union also
reactivated its "strike preparedness committee," which had been
deactivated since last April, when Delta emerged from Chapter 11
bankruptcy. Pilots also moved to retain legal counsel, that
specializes in mergers.
ALPA has a member on the Delta board of directors, which in turn
formed a committee last year to study merger options.
As ANN has reported
extensively, merger rumors were fueled last November,
when investment group Pardus Capital Management floated a trial
balloon -- which was, in turn, picked up by several media outlets
-- regarding a potential merger between Delta and struggling United
Air Lines. Those reports were later downplayed by executives at
both carriers... but many analysts and insiders feel the question
of whether Delta will merge with another airline isn't a matter of
"if," but "when."
Many also believe when Delta makes its move towards
consolidation, it won't be with United... but rather Northwest
Airlines, which has a route network more compatible with
Atlanta-based Delta. New Delta CEO Richard Anderson -- who said
last year a merger "could make sense," as long as Delta initiates
the move -- is also the former CEO of Northwest, who presided over
the carrier's entry into bankruptcy.
UBS analyst Kevin Crissey told the Tribune a deal with Northwest
is "most likely" for Delta, and that he expects such a "major
merger" to be announced in the next six months.
There are additional signs such a move is likely... and soon. In
his letter to Delta pilots, Moak noted Delta's stock price has
plummeted since April 2007, at one point falling as much as 45
percent. It has since rebounded somewhat; on Wednesday, the stock
rose five percent in after-hours trading. Bear Stearns analyst
Frank Boroch also raised his recommendation on Delta stock to
Delta is "in the catbird seat for industry consolidation at a
time when its valuation [looks] compelling," Boroch told