Legal Commentary

Ripples of the Delta-Northwest deal

By Tom Kirkendall

The merger agreement between Delta Air Lines and Northwest Airlines (they were meant for each other) announced yesterday not only would create the world’s largest carrier if approved, but it has renewed talk (see this W$J article, too) in Houston over the fate of one of the city's largest employers, Continental Airlines.

Continental's future has been the subject of conjecture over the years. This post from a couple of months ago summed up the current situation in anticipation of the Delta-Northwest merger. Unfortunately, Continental's most likely merger candidates -- United Airlines and American Airlines -- are not particularly attractive partners at this point. As airline consultant Adam Pilarski noted in this Scott McCartney/W$J column, "There's no history of anything good that happens in [airline] mergers. Two drunks holding each other up is not a good idea." The W$J's Holman Jenkins speculates as to why this is the case in the chronically-profitless airline industry, which Richard Anderson and Doug Steenland, CEOs of Delta and Northwest, argue the contrary position.

The proposed Delta-Northwest merger would create a behemoth company with more than $35 billion in annual revenues, a mainline fleet of almost 800 planes and a combined workforce of 75,000 people. Interestingly, the most successful US airline is the polar opposite of that structure.

Full post as published by Houston's Clear Thinkers on April 16, 2008 (boomark / email).