Chances of Delta-Northwest merger: maybe 50-50, says CAPA
It’s generally assumed the proposed Delta and Northwest merger will swiftly fly right by federal approvals but the real prospects of it happening may be even less than 50-50.
So says the Centre for Asia Pacific Aviation.
“The prospect of merger actually occurring are probably not even as high as(that),†says CAPA.
Why? “Because suddenly all the forces of inertia come to bear. Rationalism and logic are left on the shelf,” says CAPA.
CAPA cites three reasons:
(1) A cross-border merger is out of the question, because of “archaic, nationalistic foreign ownership restrictions,†CAPA says. So the scope for full merger is effectively limited to domestic options.
(2) The influence of the unions. Pilots in particular tend to be intransigent, often regardless of their own best interests when it comes to merging seniority systems. “Union opposition has the power both to foil the initial merger and its implementation,†CAPA says.
(3) The merger will change the competitive balance of the US industry, as well as the international marketplace, where the Skyteam alliance, led by Air France/KLM and Delta, will become a much greater force. “So as soon as the deal is formally agreed between the two US airlines, US anti-trust and European competition law authorities will all swing into action,†CAPA says.
CAPA adds they believe the merger needs to happen but that prospects of a “speedy and unconditioned response from all of the relevant bodies rank as high as winning the national lottery.â€
Report by David Wilkening
David
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