Thursday, April 17, 2008 - 12:06 PM EDT
Delta's Bastian pledges to keep Northern Kentucky hub, jobs

Delta Air Lines President Ed Bastian assured Kentucky Gov. Steve Beshear and reporters today that a merger with Northwest Airlines will not result in hub closures, frontline job cuts or the dismantling of its regional subsidiary, Comair.

In a press conference at the Cincinnati/Northern Kentucky International Airport, Bastian said the proposed $17.7 billion merger, announced April 15, will create "America's truest form of competitor," with a No. 1 or No. 2 position in major international markets, including Asia. But he would not say if Delta will increase its traffic out of Cincinnati or add originating flights, which are more profitable and help support local businesses, such as shuttle services and long-term parking.

Bastian did say that the merger will provide Delta with the financial durability necessary to manage rising fuel costs, which, with crude oil at $115 a barrel, are almost twice as high as one year ago. Each $1 of that increase translates to $80 million to Delta, he said.

"We think it will be a greater merger for our employees. It will be a greater merger for our customers. It will be a greater merger for our communities," Bastian said. "This, in fact, will help us keep this hub open."

Locally, he said Comair will remain a long-term partner regardless of whether it remains under Delta's wing or is sold off, which will be a corporate decision. Comair, which is larger than Northwest's two regional carriers, could actually see increased opportunities to service Northwest flights and hubs, he said. Of 1,100 U.S. routes, only four exist where competition will be reduced because of the merger.

Comair has actually flown 5 percent above plan so far this year, and by the summer may need to use some of 14 jets it said it would ground this year, said Comair spokeswoman Kate Marx. At the same time, Comair expects to reduce non-fuel expenses by $35 million in 2008.

Delta's rather upbeat prediction was enough to convince Beshear to abruptly change his plans Thursday and come to the airport. He said the state is always open to discussions on what it can do to make Delta more competitive.

"I feel very strongly that this airport and this hub are vital to the economic development of the whole region," he said. "I'm going to do everything I can to assure these commitments."

As for the hub's profitability, Bastian said it "supports itself" and is no more or less profitable than the hubs in Atlanta, Salt Lake City or New York's JFK. But with Northwest, it could benefit by feeding southern regions of the world, he said, pointing out that the recent Open Skies agreement with Europe means more European carriers will be flying directly in to the United States.

A combination with Northwest, he said, would better position the airline to compete in this dynamic. For instance, he expects international flights from Cincinnati to increase, including to Asia, a strong destination for Northwest, which is the No. 1 U.S. carrier to Japan. Delta is on a campaign to diversify overseas travel, a strategy devised when it emerged from bankruptcy in spring 2007. In March 2008, it added a route to Shanghai, China, from Atlanta, and in the summer will add four flights to Africa, all from New York-JFK.

The merger itself will provide the opportunities to grow, he said. "We're trying to take control of our destiny into our own hands."

The Northwest deal, which is pending regulatory approval and the blessing of Northwest's pilots, is expected to be complete by year's end.