Delta-Northwest Deal Seen As Early As Next Week - Report

February 6, 2008

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A merger of Delta Air Lines and Northwest Airlines could be announced as early as next week, the Wall Street Journal reported late Wednesday.

Merger discussions between the two carriers have picked up speed, and major snags over how management of the combined Delta-Northwest airline would be structured were overcome earlier this week, the Journal said, citing sources who have been briefed on the negotiations.

The newspaper also said that preliminary talks between United Airlines parent UAL and Continental Airlines have grown more serious, citing a person familiar with the situation.

All involved airlines were contacted, but declined comment on the talks.

Key details of either agreement are yet to be hammered out, and the negotiations for either tie up could still fall apart, the Journal said.

One of the concerns at Northwest was whether Chief Executive Doug Steenland and his team would retain top management roles. At a meeting on Friday, the Northwest board overruled Steenland's concerns and urged him to renew the talks. Negotiators from both companies went back to work on Monday, the Journal said.

Nearly a month has passed since directors at Atlanta-based Delta, the No. 3 US airline in terms of passenger traffic, gave CEO Richard Anderson the go-ahead to open simultaneous talks with both Northwest and United, with the goal of choosing one potential partner.

United, based in Chicago, ranks No. 2, and Eagan, Minnesota-based Northwest is the No. 5 carrier. A Delta merger with Northwest would create the largest passenger airline in the world.

Many airline experts say mergers are needed to help stabilize the volatile industry, which finally emerged from a five year slump in 2006 after racking up USD$35 billion in losses. But high fuel prices and a softening US economy are threatening to stunt the fledgling recovery.

The deal would combine Delta's strong Atlanta hub and its trans-Atlantic route network, with Northwest's extensive Asia presence that includes a hub in Tokyo.

Delta and Northwest filed for bankruptcy on the same day in September 2005. They both emerged after extensive restructuring in spring 2007. While in bankruptcy, Delta fended off a hostile takeover bid from by US Airways.