Congressman confirms Delta, Northwest have started merger discussions

Rep. James Oberstar (D.-Minn.) confirmed to reporters last week that Delta and Northwest have started talks about the possibility of merging the two airlines – although he indicated he didn’t think airline consolidation was a good idea for consumers. Oberstar, who is chairman of the House Transportation Committee, said Northwest officials had informed him of the discussions with Delta, although the two airlines are keeping quiet themselves about the situation. According to the St. Paul Pioneer Press, Oberstar said he is concerned that any major merger will lead to reduced service, especially to smaller cities; and that a first step like a Northwest-Delta merger could result in “the collapse of the industry to two or three mega companies.” Meanwhile, the Wall Street Journal reported that Air France-KLM, which is a partner with both Delta and Northwest in the SkyTeam global alliance, is poised to provide strategic or financial help to see that the merger goes through. Delta is also said to be considering a possible merger with United. But in either case, according to the Atlanta Journal Constitution, the parties involved will probably try to come to a deal soon, since the Bush Administration’s Justice Department is considered to be more sympathetic to a merger than a Democratic administration, if one should come to power next year.