Delta Extends A Wing To Midwest
[B]The airline makes bolsters its partnership with Midwest airlines, causing specualtion of an acquistion
Despite a merger with
Northwest Airlines,
Detla Air Lines has been looking to expand its network as it battles rising oil prices and decreased demand.
A new joint venture between
Delta and
Midwest Airlines will include expanded marketing and advertising, plus reciprocity for the duo's frequent flyer programs.
forbes:
Delta Extends A Wing To Midwest - Forbes.com already had a marketing agreement with Northwest Airlines, which
Delta (nyse:
DAL -
news -
people )bought nearly a year ago. (See "
Merge Or Die.") Since then, speculation has been stirring that Delta was eyeing another takeover, but analysts say Midwest is not big enough to hold any worth for Delta beyond this partnership.
"I think there are suspicions that Delta may do another acquisition," said Helane Becker, analyst at Jesup and Lamont Securities in New York. But, she added, "This is unlikely it."
Becker said Midwest Airlines has decreased its capacity to the point where now it is likely too small to be of value for Delta. "It's not that big an operation anymore."
Speculation on Delta's next move comes as the company aims to trim its own operations in the face of weakening demand for its services. The company in December said it will reduce its consolidated system capacity by 6.0% to 8.0% in 2009 – making prospects for a soon-to-occur acquisition distant. (See "
Delta Will Clip Its Wings To Stay In Air.")
Still, the deal is worth noting, mainly because it likely helps the struggling Midwest Airlines stay afloat by defraying some of the company's marketing costs. Midwest Airlines in October announced a deal with Indianapolis-based
Republic Airways
Under the new agreement, Midwest and Delta frequent flyers will be able to earn or redeem frequent flyer miles on either airline’s networks. The deal is expected to close in June, while the frequent flyer program will take effect later this year. It will also expand the existing Midwest-Northwest airport club membership agreement to include Delta Sky Clubs in the near future.