From yesterday evening's Financial Times:
http://www.ft.com/cms/s/0/cb732600-d...0779fd2ac.html
Delta Air Lines and
Northwest Airlines are closing in on an agreement to merge the two US carriers, people familiar with the discussions said.
The airlines may clinch the landmark accord as early as the middle of this month, the people said, though they cautioned that negotiations could still stall or even collapse.
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Delta and Northwest have made some progress in selecting the combined company’s top managers. Richard Anderson, Delta chief executive, would keep that title following the proposed merger, while Doug Steenland, Northwest chief executive, would remain part of a senior team that would include executives from both airlines, the people said.
A deal between Delta and Northwest, two of the world’s largest carriers, would help squeeze excess capacity from an industry beset by record fuel costs and intense competition for passengers. It could also spark a wave of consolidation throughout the industry, as rivals scramble to strike deals that help them eliminate unprofitable routes and weather a looming economic downturn.
The two airlines and their advisers still need to find common ground on the deal’s terms, including the ratio at which Northwest investors will exchange their shares for those in the new company.
There are also no assurances that any of the concessions either side have made will be part of a final agreement, should there be one, one person said.
Mindful of the scrutiny any airline merger will receive from regulators, politicians, organised labour and consumer advocates, both carriers are striving to structure a deal that would minimise job losses while still delivering the cost savings its shareholders crave.
It is a delicate balance and any agreement would merely mark the start of a lengthy process of winning the necessary approvals and then integrating complex operations into one company.
Northwest declined to comment on Wednesday. A Delta spokeswoman said: “Delta’s board is working with management to analyse strategic options, including potential consolidation transactions, to ensure Delta maintains its leadership position.”
Delta executives received approval from their board last month to pursue a merger with either Northwest or United Airlines, another legacy carrier. As January ended, and Delta’s talks with Northwest gained momentum, United in turn weighed reigniting negotiations with yet another airline, Continental.
Copyright The Financial Times Limited 2008