And That Bodes Well For Delta And Northwest
With the looming US presidential election focusing the public's
attention on such issues as the war in Iraq, high gas prices and a
slump in the housing market, it probably shouldn't surprise us to
learn members of Congress doesn't necessarily have airline mergers
on their minds. But that's music to the ears of executives at
Delta and Northwest.
The Atlanta Journal-Constitution reports Congress is now
scheduling hearings for the fall session. Four such meetings were
held this spring... but not a single review is on the docket for
the upcoming term.
Delta spokeswoman Chris Kelly thinks she knows why. "We believe
that Congress saw that antitrust (violations) would not be a
significant concern with this deal," she said, noting the planned
merger has already passed review by regulators in the European
Union.
As for antitrust concerns in the US, that's for the Department
of Justice to decide on. Attorneys are now reviewing the planned
business case for the combined airline, and a "nay" vote from them
could scrap any merger plans. And while lawmakers are forbidden
from attempting to directly influence that process, they can
indirectly pressure DOJ by influencing the general public.
Kelly notes, however, that there's been little significant
public outcry in opposition of the merger. As for anti-trust
concerns, Delta's case is aided by the fact a predicted sweep of
"merger mania" among other US airlines failed to come to
fruition... leaving several competitors in the marketplace for a
merged Delta/Northwest, at least for now.
"We are pleased with the progress that has been made and believe
we are on track for completion by the end of the year," she
said.
That doesn't mean there aren't forces at work that could make a
Delta/Northwest merger highly problematic, even if it's approved by
regulators. Joseph Tiberi, spokesman for the International
Association of Machinists and Aerospace Workers, said IAM remains
firmly opposed to any merger that means job losses for its
membership at Northwest.
"We’ve been opposed to this from Day One and our
opposition will continue," said Tiberi. "We will continue meeting
with members of Congress and take all steps possible to protect
workers, because Delta and Northwest management clearly are
not."
Tiberi points out airline executives have already stepped back from
their earlier promise not to furlough any frontline employees due
to the merger, telling Congress recently that "high fuel prices may
make that impossible," he said.
"We have seen Delta and Northwest change their stories," Tiberi
said. "If anything, we are less comfortable with [the merger.]"
Delta and Northwest executives hope to have the merger approved
before the end of this year. Both carriers "chose to announce this
merger in 2008 in part because of their belief that the Bush
administration has been very pro-management," said Fordham
University professor Frank Werner.
"Historically, Democrats have been more critical of mergers," he
added... though even a pro-corporate Republican administration
under John McCain could be skeptical of the benefits of fewer
choices in the market, especially if air fares continue to
climb.
"I'm a little bit surprised there hasn’t been more outcry
from the public," Werner added. Then again... people have other
things on their minds.
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