Delta Airlines-Northwest Airlines Deal Far From Done

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As details of the Delta and Northwest "merger" emerge, the number of affected parties continues to grow and it's looking like some key people weren't consulted--like Northwest's pilots. Northwest's pilot's union claims the deal was structured around a new fat contract for Delta pilots and Northwest pilots will suffer, resulting in class warfare on the flight decks. "The labor discord that will result from the current structure of this merger is likely to overwhelm the potential economic positives. We will not tolerate being a B-scale airline due to an unfair contract," union president Dave Stevens said. Then there's the question of whether Minneapolis-St. Paul, Northwest's current home, will continue to be a major hub of the "world's largest airline." Regardless of the customer service angle, it's already been decided that head office of the new airline will be in Atlanta and the current CEO of Northwest, Doug Steenland wasn't exactly direct in his comments on the disposition of his MSP headquarters staff. "We want to be in a position to make commitments on those topics, and we have indicated to the elected officials here that as the transition plans develops, and we can be more specific, we'd like to sit down and have that conversation," he said.

Another interesting point is the market's view of the merger proposal. Stock in both airlines dropped on the news. "Wall Street was looking for more insight in terms of how to integrate these disparate pilot unions onto a single labor agreement," airline analyst Brian Nelson told Minnesota Public Radio. "I don't think Delta came out and said it would be aggressive enough with their capacity reduction to really help this industry move forward. And, of course, there's going to be $1 billion in integration costs." Federal regulators have yet to chime in, too.