Published on Tuesday, October 10, 2006
US airline consolidation has gotten to be a hotter topic than ever, with Continental Airlines considered the most attractive merger partner, according to news reports.
“But bankrupt Northwest Airlines would determine if Continental plays a role in future industry consolidation under a long-standing pact between the two carriers,” said Reuters.
The report said the airline industry is ripe for mergers because of the constant overcapacity that has led to often brutal fare wars.
“A long-predicted wave of airline mergers might finally commence in the months ahead…as the major carriers position themselves to survive and grow,” said www.dfw.com.
“Delta and Northwest are finalizing their bankruptcy reorganization plans. This is the infection point historically when many airlines have concluded that a merger partner would be their optimal strategy,” said Susan Donofrio, an airline analyst for Cathay Financial in a recent report.
American and Southwest Airlines are not likely to be swept up in a consolidation. But reports cited the possibility of United, Delta and Northwest combining in some way.
United’s long-time head Glenn Tilton has said recently that consolidation is needed to again make US airlines profitable.
US Airways CEO Doug Parker has approached Delta about another merger, but that airline declined to pursue the offer, reported The Wall Street Journal.
Likely pairings could include Delta-Northwest, both of which have hubs in Atlanta; JetBlue-Frontier, which could become a national low-fare carrier to compete with Southwest; and United-Continental, which could create an international airline with comparable airline fleets that could be easily combined.
United has hired an investment banker to look into possible mergers.
Report by David Wilkening
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