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The Latest Merger News  November 14, 2008 Delta, Alaska Air Grow Closer Carriers will expand marketing alliance; takeover may be down the road By HARRY R. WEBER THE ASSOCIATED PRESS ATLANTA -- Delta Air Lines Inc., which broadened its global reach with its purchase of Northwest Airlines, plans to expand a marketing alliance with Seattle-based Alaska Air Group Inc., a carrier that some industry observers have speculated Delta may have an interest in acquiring one day. The marketing alliance expansion was scheduled to be announced Monday at a news conference at Seattle-Tacoma International Airport, where the chief executives of Atlanta-based Delta and Alaska Air will speak, according to an event advisory issued by the carriers. Delta is the world's biggest carrier. Alaska Air operates Alaska Airlines and Horizon Air, which together serve more than 90 cities through their network in Alaska, Hawaii, the continental U.S., Canada and Mexico. Delta's existing alliance with Alaska Air was started in 2004, and there has been a relationship of more than 20 years between Alaska, Horizon and Northwest. Currently, code sharing by Delta, including Northwest, extends to more than 100 markets served by Alaska Air, including Horizon, and code sharing by Alaska Air extends to more than 30 markets served by Delta. Currently, Delta frequent fliers can book award tickets on Alaska Air flights that carry the Delta code. On Monday, Delta will announce enhancements to those agreements, including plans for new service that would be supported by their code-sharing partnership, Delta spokeswoman Betsy Talton said. Under code-sharing arrangements, one airline puts its name or code on a flight operated by the other, allowing it to sell tickets on the other's flights. The carriers, in turn, generally share that revenue. Code sharing is considered a low-risk way for airlines to expand their networks without the added cost of more planes and employees. Credit Suisse analyst Daniel McKenzie said in a research note in October that his firm has not ruled out the possibility of further merger and acquisition activity for Delta in the future. He said then that Alaska Air Group and New York-based JetBlue Airways Corp. "remain appealing targets, both with attractive assets and strategic positioning that would enable DAL/NWA to better compete with what we consider is an inevitable CAL/UAUA combination sometime down the road." Delta has not commented on the speculation. Houston-based Continental Airlines Inc. and Chicago-based UAL Corp., parent of United Airlines, were said to have had discussions earlier this year, but they never announced a combination. Both Delta and Alaska Air are coming off losses in the third quarter. For the three months ended Sept. 30, Delta reported a net loss of $50 million, or 13 cents a share, compared with profit of $220 million, or 56 cents a share, a year earlier. For the July-September period, Alaska Air Group reported a net loss of $86.5 million, or $2.40 per share, compared with profit of $81.8 million, or $2.01 per share, during the same period last year. In Friday trading, Delta shares fell 32 cents, or 3.9 percent, to close at $7.85, and Alaska Air Group shares fell 86 cents, or 3.4 percent, to $24.43. October 30, 2008
MINNEAPOLIS (AP) -- The Justice Department on Wednesday approved a much-anticipated merger between Delta and Northwest, clearing the way for creation of the world's largest airline. After a six-month investigation, government lawyers concluded the merger would likely drive down costs for consumers without curbing competition. The proposed merger "is likely to produce substantial and credible efficiencies that will benefit U.S. consumers and is not likely to substantially lessen competition," the Justice Department said in a statement issued by its Antitrust Division. The merger should create cost savings by combining airport operations, information technology and other efficiencies, ultimately driving down prices for fliers, the regulators said. The decision caps a six-month Justice Department investigation,
which was closed without Justice Department objection to the deal.
August 11, 2008 Delta, Northwest Pilots Approve Deal ATLANTA (AP) -- Pilots at Delta Air Lines Inc. and Northwest Airlines Corp. have approved a joint collective bargaining agreement. Ratification of the agreement has been a key element of Delta's efforts to achieve a smooth integration of the two companies when it acquires Northwest later this year. Delta's pilots union issued a memo detailing the results Monday, the deadline for rank-and-file pilots of both airlines to vote. The agreement covers roughly 12,000 pilots of the two airlines. Of eligible Delta pilots who cast a ballot, 61.74% voted in favor of the new agreement, while 86.76% of eligible Northwest pilots who cast a ballot voted in favor. With ratification by both pilot groups, the joint agreement will become effective when the merger between Delta and Northwest closes, which is expected by the end of the year, Delta's pilots union said in a message to its pilots. The pilots still do not have a deal to integrate their seniority lists, but have agreed to submit to binding arbitration if they cannot come to terms on their own within a certain time frame. A three-member panel has already been chosen in case arbitration is needed. Pilots value their seniority because it determines their schedule, the aircraft they fly and layoff protection. July 30, 2008 Delta doubles fee for checking a second bag. Delta Air Lines is raising its fee for checking a second bag from $25 to $50 and is also raising fees for bags weighing more than 50 pounds and special items, including surfboards. Delta does not charge travelers for checking a first piece of luggage. "Fewer than 20 percent of our customers check a second bag. I would imagine that it would be even less for a third," said a Delta spokesperson. "It's still a good value when compared with shipping or luggage services." July 10, 2008 Northwest axes 2,500 jobs, charges for first checked bag Northwest Airlines will reduce its frontline and management employees by 2,500 as a result of a previously announced capacity reduction that will take effect in the fourth quarter. All employee groups will be affected, said the airline. Also, Northwest will match American, US Airways and United by charging a $15 fee for the first checked bag. In addition, the airline will increase the fee for ticket changes and for frequent-flyer award tickets. “Our fuel costs have more than doubled in the past year,” said Doug Steenland, Northwest CEO. “In order to manage through this unprecedented fuel challenge, we have to take action to both control costs and increase our revenue.” Northwest will initially turn to voluntary programs to reduce personnel. These include early-out programs, voluntary leaves, work-rule modifications and attrition. The airline will resort to furloughs if it doesn’t reach its target with voluntary programs. The fee for the first checked bag applies to tickets sold on or after July 10 for travel starting Aug. 28 within the U.S. and from the U.S. to Canada. Elite frequent-flyers and full-fare coach passengers are exempt from paying. For award tickets issued in North America on or after Sept. 15, Northwest will charge $25 for domestic tickets, $50 for transatlantic travel and $100 for transpacific travel. “This is a temporary service fee to partially offset our fuel costs,” Steenland said. “As fuel comes down, we will revisit this decision.” Delta, which recently implemented a similar fee on award travel, also said it was temporary. Northwest followed moves by American, United, Continental and US Airways to increase fees for ticket changes. Starting July 9, the fee for domestic, nonrefundable ticket changes will increase from $100 to $150. International ticket change fees also will increase to $150 per ticket, depending on class of service and other restrictions. June 28, 2008 Group opposes Delta-Northwest merger, seeks ban on deal A group of 28 private citizens has filed a lawsuit to block the proposed Delta-Northwest merger, asking the U.S. District Court in San Francisco to bar the deal on the grounds that it is anticompetitive. The citizen complaint, filed by San Francisco attorney Joseph M.
Alioto, seeks an injunction to block the merger but seeks no other
damages, at this time. The merger agreement, announced by the two
airlines in mid-April, is awaiting antitrust review by the Justice
Department, which evaluates transactions in advance and advises
the parties whether or not it intends to challenge the merger in
court. Asked why he went to court before the Justice Department
process is complete, Alioto told Travel Weekly that he believes
the Bush administration's Justice Department has "abdicated
its responsibility" and "will not enforce the antitrust
law." "There is no protection" for consumers, he
said, calling the airlines "a bunch of whiners and crybabies"
who don't want to compete. The complaint and request for an injunction
said Delta and Northwest are "substantial rivals" whose
combination would reduce actual and potential competition. According
to the complaint, the merger would create the world's largest airline
and give it control of 24.1% of U.S. domestic traffic. June 24, 2008 Delta and Northwest pilots reach pre-merger deal Delta and Northwest pilots have reached a tentative agreement on a joint contract to take effect upon closing of the proposed Delta-Northwest merger. The pilot groups also have established a separate process designed to establish a single pilot seniority list by the close of the merger. The tentative agreement is subject to ratification by both airlines' pilot groups. Delta in April announced that it is combining with Northwest in an all-stock transaction. The merger, expected to close later this year, is subject to Justice Department and shareholder approval. April 14, 2008 It's in all the papers…and if you're a Northwest WorldPerks member or Delta SkyMiles member…you've already received an e-mail touting the great new opportunities the merger will bring. At Passageways, we think that's largely true. Of course, this will play out over time with regulators- including the Congress- picking at the agreement, union groups on both sides- especially the challenging pilot groups who could not deliver a combined seniority list on their own- pushing and pulling here and there, and two already huge organizations struggling to combine the best of each into an organization that really delivers the synergies everyone talks about. It will continue to be challenging for some time…but we wish both carriers much success in this combination. Honestly, the basics are pretty impressive.
So what can you do? Right now, just bring your seat to the full upright position, stow your tray table, fasten your seat belt…and know that both current carriers want to keep you as a frequent flyer…and your miles are safe… Both carriers and then the new Delta will be looking to take care of you…and Passageways will be there to help you along the way. Anticipate that both programs will continue separately for well over a year. If they get back to valuing each and every customer…and recognizing that frequent customer…they could exceed expectations…ours and theirs. Every time a customer makes a reservation, checks in or shows their boarding pass to the flight attendant, they offer their name. So, "Delta", let's start by taking advantage and showing some appreciation by saying "thanks for flying with Delta today, Mr. Rockne"... As noted, Delta CEO Richard Anderson is also a former CEO of Northwest, so he literally knows these two carriers better than anyone. Add to his accumulated airline knowledge, his experience in raising his two younger sisters after the deaths of his parents, a stint in the prosecutor's office in Houston and you have a leader who just might be able to pull this off. Tom Rockne | ||
