Delta chief dismisses United merger rumours
The boss of Delta Air Lines has denied talking with rival United over a possible merger.
The rumoured deal between United and Delta Air Lines would create the largest airline in the world, with combined revenues of roughly $37 billion.
This would dwarf current industry leader, American Airlines with about $23 billion.
“There is a sense of urgency in the talks, which have been going on for some time and continued as recently as a week or so ago, an official with knowledge of the talks said,” said the news agency AP.
But Delta CEO Richard Anderson stressed that there had been no discussions with United, while admitting that there will be consolidation between US airlines.
Industry experts say the two airlines have complementary networks. Delta is strong on the US East Coast and in Europe. But that a merger would be difficult because it could be challenged by politicians. Employees might also raise issues.
But consolidation would offer financial relief to both airlines.
Pardus Capital Management, which owns both Delta and United stock, has been urging the move.
The company in a letter identified $585 million in annual savings from the merger, according to The New York Times.
Pardus executives said a Delta combination with Northwest would produce even bigger benefits of about $1.5 billion, primarily from combining the smallest hubs – Detroit/Cincinnati and Memphis/Atlanta.
Delta president Ed Bastian downplayed the move, denying that the Atlanta-based carrier was in serious merger talks.
“We have no negotiations ongoing,” he said, adding that the rise of oil prices to near-record levels had led Delta to consider a merger.
The talks involve United being the name of the combined airlines, the headquarters staying in Chicago and Delta’s Atlanta hub being an operational centre for the two carriers, one official said.
Delta said in a statement that its board has established a special committee to work with management to review and analyse strategic options for the airline.
Robert Mann, an airline consultant in Port Washington, N.Y., said the biggest problem would be that neither carrier has any recent track record of integration.
“I would see this as a very risky move from the standpoint of the actual implementation,” Mann said.
Phil Davies
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