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Delta-Northwest would benefit AirTran, exec says

By RUSSELL GRANTHAM
The Atlanta Journal-Constitution
Published on: 01/30/08
AirTran Airways' chief executive says a merger between rivals Delta and Northwest would bring
his carrier growth opportunities.
AirTran would likely seek more gates at the Atlanta airport and additional operating rights at key
airports in New York and Washington, D.C., Chief Executive Bob Fornaro said Tuesday. In
comments after AirTran released its quarterly financial results, Fornaro said Delta and Northwest
— said to be in merger talks — would likely reduce flights and close one or more hubs, as well as
shed assets to make the deal palatable to federal regulators.
The prospect of such a merger remained the backdrop Tuesday as AirTran, JetBlue and
Northwest reported fourth-quarter losses caused partly by near-record jet fuel bills.
Delta also initiated merger talks with United Airlines, but they no longer appear to be active,
people familiar with the matter have said.
AirTran posted a $2.2 million loss for the final three months of 2007 as a 35 percent jump in fuel
costs overwhelmed increased revenues from rising traffic and fares. Northwest, which remained
mum about its merger plans, reported a net loss of $8 million in the quarter.
Orlando-based AirTran's loss was narrower than a year earlier, and the airline still posted a full-
year 2007 profit of $52.7 million. In 2006, AirTran reported net profit of $14.7 million for the full
year and a $3.6 million loss in the fourth quarter.
Some politicians are already voicing opposition to a merger involving two carriers as big as Delta
and Northwest, saying such a deal could spark broader consolidation and would harm
consumers.

AirTran's Fornaro, however, said a Delta-Northwest marriage could free up a handful of gates at
Atlanta's Hartsfield-Jackson airport now controlled by Northwest. AirTran is Delta's top competitor
in Atlanta and has long coveted more gates.
"We would try to make the case that we should get those gates," Fornaro said in an interview.
Likewise, he said AirTran would be interested in acquiring landing and takeoff slots that could
become available at New York's LaGuardia Airport and Washington's Reagan National — airports
favored by lucrative business travelers.
Even though a merged Delta and Northwest could be the world's largest airline as measured by
traffic, Fornaro said the combination would benefit AirTran more than hurt it.
"Carriers like AirTran that are efficient and nimble can really capitalize on this situation," said
Fornaro, who succeeded Joe Leonard as CEO in November. Leonard, still chairman, plans to
retire in May.
Also Tuesday, AirTran rolled out more expansion plans for Milwaukee, the home of Midwest
Airlines, which it tried unsuccessfully to buy last year. The move signals that AirTran is building its
own flight schedule in the wake of the failed buyout.
AirTran plans to start seasonal flights in May between Milwaukee and Los Angeles, Seattle, San
Francisco, San Diego, and Boston, plus additional nonstop flights to Las Vegas. The carrier
earlier announced plans for Milwaukee-New York flights.
AirTran operates or has announced plans for 20 daily flights from Milwaukee, and Fornaro said
that number will grow to 50 in the next few years.
AirTran dropped its plans to buy Midwest when private equity firm Texas Pacific Group teamed
up with Northwest Airlines to buy Midwest.
The Department of Justice is doing an extended review of the buyout, but executives at both
AirTran and Northwest said Tuesday that they expect approval soon.


So, it looks like the ATL gates AirTran would have access to in the short term are the ones being used by Northwest.