The business stories that matter, by Fortune's Colin Barr
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February 11, 2008, 7:13 am

Unions considering Delta-Northwest deal

Has merger time finally arrived in the airline industry? Delta (DAL) and Northwest (NWA) are closing in on a deal that would create the biggest U.S. air carrier, Bloomberg reports, citing two people familiar with the matter. The report says union leaders are studying the combination, which could be announced within weeks and would vault the combined company past AMR’s (AMR) American Airlines into the No. 1 slot. The merger would match two carriers that emerged just last year from Chapter 11 bankruptcy, though Delta and Northwest are hardly unusual in that regard. Two other big airlines that have reportedly been in the early stages of discussing a merger are UAL’s (UAL) United and Continental (CAL), both of which have been through bankruptcy court as well (though Continental, which has avoided the post-2001 swoon of many of its peers, hasn’t been in Chapter 11 for more than a decade). The industry is marching toward consolidation as the deal-friendly Bush administration serves out its last year in office, and as a rise in oil prices makes scale more essential for big carriers. The big question, assuming the companies can get union support for the deals, is how much ticket prices might rise.

RE: Anonymous-Former Employee : February 11, 2008 5:54 pm

YOU DON’T HAVE TO BE A MECHANIC TO PUSH-BACK A/C. ESEs NEVER TOOK THAT JOB AWAY FROM YOU. WHO DO YOU THINK PUSHED A/C @ THE DOWNLINE STATIONS. BELIEVE IT, “BAG-SMASHERS” ARE NOT REQUIRED TO HAVE A 2-YEAR TECHNICAL DEGREE TO OPERATE PUSHBACK TRACTORS. YOU’RE JUST DISGRUNTLED CAUSE AMFA ASS-RAPED YOU WITH NO VASOLINE. GET OVER IT & STOP WHINING LIKE A LITTLE BEEE-YOTCH! SINCE YOUR SO INTELLIGENT TRY USING PROPER GRAMMAR AS WELL AS SPELL-CHECK!

Posted By current ESE @ MSP, MPLS, MN : February 12, 2008 6:06 pm

The airline industry will continue to consolidate as business travelers reduce their dependancy on commercial flyers.

The reason is simple; air travel moved from pleasant to unbearable. Much of the fault lies with TSA and security measures. The hassle passengers while cargo goes unhecked, employee screening lacking and our borders are porous.

High-end first class business travelers left for time share on smaller jets, next tier reduces it dependancy using other tools (web conferencing, teleconferencing, social software).

The general public has picked the void, on discount tickets. However those discount tickets happen because airlines expects (plans) business traveler (paying a premium) will make plane profitable. Without the business traveler the airline only as one option; raise fares or go out of business. If they raise fares, there will be a drop in general public flying, only putting more pressure on airlines.

Retire the TSA and let travelers travel

Posted By james roberts, Dallas, Texas : February 12, 2008 4:17 am

The Small group of around 900 Scab Mechnics in MSP and DTW do not choose to be union members after they stoled our jobs!Scabs are members in bad standing but legally AMFA still has to represent them until a federal law is changed.When Delta Airlines merges with NWA the non union Delta mechanics are the majority so the rest of that mechanic work force will become non union.I look forward to most of the crooked NWA SCAB Mechanics LOOSING thier jobs when NWAS stations become line hubs!!!The first scab Mechanics that will be booted out the door will be the ones that came from different parts of the country to get the scab training with the least amount of experience.Then they came up to MSP and DTW to rob jobs! They have the lowest seniority.The rest of the work groups -flight attendents may suffer the same way if Delta flight attendents do not vote in a union.The pilots will all loose a majority of their pensions after Delta gets through with ALPA! IAM bag smahers(the ones that took mechanic A/C pushback jobs ,clerks and CSAs work will be farmed out.Office workers and managers in MSP buildings will also loose their jobs after NWAs headquaters are shut down or some will have to mive down younder-Atlanta.Richard Anderson Deltas current CEO made it,”CLEAR” that DELTA WILL aquire another Airline.Deltas headquarters WILL remain in Atlanta-period! Oh well-welcome to the unenjoyment/start a new career club when your 50 plus EX NWA ladies and gentalmen(except for the SCABS)!You can thank your LEADERS at NWA as Dougy Steelin bails out with a 31 million dollar package!

Posted By Anonymous-Former Employee : February 11, 2008 5:54 pm

everybody keeps paying the high prices at the pump for their cars… just raise the plane ticket prices (which are ridiculously low anyway.) Why should airline employees subsidize cheap travel. So bizarre

Posted By McCloven, bleederville, USA : February 11, 2008 3:23 pm

While Continental did file for bankruptcy two times prior to 911, they had nothing to do with Continental staying solvent post 911. It was their outstanding managment team as well as the dedicated employees that got them through it.

Posted By RP Blakeslee, PA : February 11, 2008 3:19 pm

Mike, your 14 years old, right? I understand, things can be confusing at that age.

Posted By John, Colorado Springs : February 11, 2008 2:49 pm

The state of the industry is in such peril that the employees should recognize that mergers will be the lesser to two evils. None of the business models - LCC or Legacy - can support 80/90 fuel and with a recession this will only increase the pressure on airlines. So, employees and management have two choices: Merge and negotiate some clawbacks given during bankruptcy or prepare for another trip down bankruptcy lane.
For the politicians that want to block mergers, I have one point: You cannot deregulate pricing and semi-regulate capacity - let the markets call winners and losers or re-regulate the entire industry. The mergers will occur and employees should embrace the process to optimize a position for them in the post merger company.

Posted By anonymous-FORMER employee : February 11, 2008 2:42 pm

Actually, NWAs mechanics ARE union. They are all just scabs. AMFA still represents the mechanic group. Many of the smaller shops such as brakes, seats, etc. are still being farmed out though.

DAL has outsourced their reservations departments to overseas, I hope they plan on bringing that group back onto US soil.

And to Mike in Eagan - nice attitude. Airline employees are disgruntled because the CEOs have sucked the company dry and we’re paying the price.

How would you like it if I said that your family should lose their jobs so that you learn a little respect for your fellow man?

NWA has several huge buildings in Eagan. Them pulling their HQ out of here will create several thousand unemployed people in MSPA MSPN MSPJ. Shame on you.

Posted By Andy, Eagan MN : February 11, 2008 2:14 pm

Mike,you are a hater! You clearly have not lived the life of an airline crew member after the tremendous loss he/she has to suffer thru post 9/11. I wonder how would you feel if you were forced to take hefty pay cut,1/3 of your vacation and sick time disappeared, work 14-hour day with less than 7-hour sleep and without a single meal provided!
When you wish thousands of others to endure the loss of their careers and livelihood, remember “what goes around, comes around”.
I do feel sorry for people who know you!

Posted By Lee, Cupertino, CA : February 11, 2008 2:02 pm

you know what, grow up and wish a little goodwill toward your fellow citizens and neighbors.. I am not sure why people in this country take pride in wishing negative things on their neighbors.. re: I don’t care if any of those employees losing their jobs

Posted By marty, bloomington : February 11, 2008 1:37 pm

Northwest mechanics are not union. Remember NWA’s CEO got rid of them. Now they are a much smaller lot with a lot of work contracted out.

Posted By jw Atlanta, GA : February 11, 2008 1:07 pm

I don’t care if any of those employees losing their jobs. Airline employees are the worst. A little unemployment will do them some good with their attitudes.

Posted By Mike, Eagan, Mn : February 11, 2008 12:39 pm

In the end there will only be a handful of big airlines left. DOJ can allow it to be done the least painful way - through merger. Or, the most painful way - bankruptcies. The latter would result in hundreds of thousands out of work. It would be wise to allow mergers in this very volatile industry.

Posted By barnett, : February 11, 2008 12:30 pm

Don’t forget foreign carrier’s. If we truely live in a global economy, then mergers with foreign carriers should be allowed

Posted By Anonymous : February 11, 2008 11:37 am

Everyone talks about the size of the airlines combined, and increased cost to the consumer, how about the loss of jobs and the turmoil for the employees?

Posted By GL NY : February 11, 2008 11:23 am

“You are wrong about Continental airlines being in bankruptcy, after 9/11 when most of the airline went into bankruptcy Continental did not.”

Of course they didn’t…they were already operating with a BANKRUPTCY advantage, having gone bankrupt TWICE!

Continental is nothing special. Delta and NW have been bankrupt ONCE…that is a big difference than using it TWICE!

Posted By San Francisco : February 11, 2008 10:59 am

Union approval will be forthcoming, as both carriers are ALPA and have been in talks for months to ensure no carrier’s pilot group will benefit at the expense of the other. Maybe the emphasis for approval should be focused more on convincing James Oberstar. He’s dug his heels in on this potential merger from the onset.

Posted By Jay, Atlanta, GA : February 11, 2008 10:46 am

People don’t seem to understand economics. Unprofitable businneses don’t stay in business very long. There are too many domestic seats available at too low a cost. Higher fares are coming one way or another, either through air line mergers or air lines closing up shop.

Posted By russell atlanta georgia : February 11, 2008 10:46 am

Did you read the whole article Jharag? Are you a continental scab?

Posted By Guido, Houston,Tx : February 11, 2008 10:36 am

May be good for economy but will take time to go through. Delta employees are not in unions (except for pilot) and northwest employees are all union employee. Could get ugly there.

Posted By Louis Queens New York : February 11, 2008 10:01 am

Continental has been in bankruptcy twice. Which enabled them to avoid it after 2001, because they had lower cost then everyone else due to the fact they went through bankruptcy in the mid 80’s and 90’s!

Posted By David,Lake Village, Arkansas : February 11, 2008 9:57 am

here we go again, adding to the inflation. Well i think the administration did plan for the american future very well and we can see those results.

Posted By sm, oh : February 11, 2008 9:54 am

That is the point…..Another Bush type of deal that will give consumers the shaft.

Posted By Bexley, Searchlight, Nevada : February 11, 2008 8:41 am

you are quite correct - unlike the others, continental has been solvent for many years. its two bankruptcies were in 1986 and 1991. i’ll amend the post to make the distinction clear.

Posted By Colin Barr : February 11, 2008 8:23 am

You are wrong about Continental airlines being in bankruptcy, after 9/11 when most of the airline went into bankruptcy Continental did not.

Posted By Jharag Houston TX : February 11, 2008 8:13 am
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