Results Could Put Yet Another Carrier In Play
A merger to stave off another merger? Senior managers at Delta
Air Lines are reportedly engaged in talks with their counterparts
at both United and Northwest, over a possible alliance with one of
those airlines. This, to fend off an unwanted takeover bid by US
Airways.
The Wall Street Journal reports Delta has engaged in talks with
executives at Northwest over the past several weeks, regarding a
possible merger or, at the very least, strengthened alliances
between the two airlines. Officials at Delta have spoken with
United management, as well, although not as frequently.
The Journal states Delta's apparent interest in merging with
another carrier, particularly Northwest, is intending to show its
creditors how unappealing a merger with US Airways would be.
"If this is really a merger discussion, it might be an effort to
keep the US Air wolf from the door," said airline analyst Michael
Boyd on a possible Delta/Northwest merger. "Operationally it's not
too much better, but it's the lesser of two evils."
News of the talks comes one day after US Airways upped its
original takeover bid for Delta, to $10.2 million. In a letter
commenting on the increase Wednesday, Delta management stated
they'd look over the new offer... but it doesn't address the
fundamental problems Delta sees with a merger with US Airways.
"The revised proposal does not address significant concerns that
have been raised about the initial US Airways proposal and, in
fact, would increase the debt burden of the combined company by yet
another $1 billion," the airline said.
Analysts say the fact Delta is in talks with both Northwest and
United is significant for another reason... namely, it may indicate
a possible merger offering for yet another carrier.
Here's how that scenario would play out. Let's
assume Northwest and Delta enter into merger talks. That
leaves United out in the cold, right? Not necessarily... as that
would then free up United to make a possible play for Houston-based
Continental Airlines.
Under a previous agreement, Northwest holds the right to block
any deals between Continental and another airline... unless, that
is, it's in the middle of a deal itself. Oh, and by the way...
rumor has it United and Continental are already in talks.
For all the speculation, however, NONE of the players we've
mentioned here are talking publicly about their plans.