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Old 02-19-2008, 08:16 PM   #1  
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Default Delta "no merger yet"

Reuters:...someone might have already posted:

Delta chief tells senator no merger deal yet
Tue Feb 19, 2008 6:59pm EST

By John Crawley

WASHINGTON (Reuters) - The chief executive of Delta Air Lines told a U.S. senator on Tuesday there is no merger agreement yet with Northwest Airlines, but the two sides are continuing to work toward a deal.

Sen. Amy Klobuchar, a Minnesota Democrat, told Reuters in an interview that she spoke with Richard Anderson earlier in the day and he told her the airlines continue to work with their pilots on getting union support for consolidation.

Klobuchar said the Delta CEO did not have a specific time frame for any agreement or any guarantee from Anderson that a deal would be reached, but one source briefed on the matter told Reuters earlier that an announcement was possible within the next day or two.

The airlines have refused to comment substantively on merger discussions. Delta would not comment on reports that the boards of both carriers were scheduled to meet on Wednesday, possibly to vote on a plan.

Shares of U.S. airlines were mainly lower on Tuesday. Delta lost 55 cents, or 3.2 percent, to close at $16.77. Northwest fell 23 cents, or 1.3 percent, to $16.97.

In a letter to Klobuchar, Anderson and Northwest Chief Executive Doug Steenland discussed their vision of consolidation in an effort to reassure lawmakers concerned about possible service cuts and job losses.

The executives said they favor any merger that would offer greater efficiency and service improvements, not job cuts or contraction of routes or hubs.

"Any merger we might contemplate would be a transaction that succeeds through the power of addition, not subtraction," the two wrote in the letter dated February 8. Klobuchar's office released the letter on Tuesday.

"Benefits would be achieved through service improvements and greater efficiency, not by fare increases, schedule reductions or layoffs," Anderson and Steenland said.

The pair talked about growing hubs and wanting to avoid any problems with integrating work forces, a scenario that has plagued US Airways and their pilots since its merger with America West Airlines in 2005.

Delta and Northwest are giving their pilots time to try and sort out thorny union integration issues, preferring the full support of labor before any attempt to move forward.

While Congress cannot block a merger, it can pressure reviewers at the Justice and Transportation departments and exercise leverage over companies.

Minnesota lawmakers are concerned that a merger between Northwest, with its main hub in Minneapolis, and Delta, a bigger airline based in Atlanta, would threaten jobs and service to small communities.

Klobuchar, mindful of the rocky history of airline mergers, said she will "hold their feet to the fire" and wants a hearing on any proposal in the Senate Commerce Committee. Rep. James Oberstar, a fellow Minnesota Democrat, said he will hold hearings as chairman of the House of Representatives Transportation Committee, if a merger proposal is made.

"There are some good things in the letter," Klobuchar said. "It's a good start. The proof will be in the pudding."

An attorney, Klobuchar said she has begun discussions with congressional staff on possible antitrust issues related to a Delta-Northwest merger. Experts have said, however, the combination of a northern and southern carrier with few overlapping routes may not raise red flags with U.S. antitrust enforcers.

In a preview of what they might argue to antitrust officials at the Justice Department, Anderson and Steenland said in their letter that consolidation in the airline industry would boost competition. They also said low-fare rivals have become stronger and now carry one third of all domestic passengers while bigger airlines have shrunk.

"Moreover, low-cost carrier growth is assured," Anderson and Steenland said.

Delta and Northwest both emerged from bankruptcy protection last year.

(Additional reporting by Kyle Peterson in Chicago and Jui Chakravorty Das in New York. editing by Gunna Dickson and Tim Dobbyn)
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