Report: Delta will discuss merger prospects with Northwest, United

The airline merger rumor mill got a kick-start into action after the Wall Street Journal reported that Delta’s management is seeking board approval to start formal merger talks with both Northwest and United before deciding which combination to pursue. Wall Street pundits sent the stocks of legacy airlines higher, predicting this will be the start of a new wave of airline consolidation. Several weeks ago, Delta said it had formed a special group to examine its strategic alternatives, and this news could be a consequence of those deliberations. There is speculation that Delta wants to move on a merger this year, while a Republican administration remains in power, under the assumption that its regulators might be more sympathetic to a major merger. Some observers predicted that a Delta-Northwest combination could be more likely, since the two already have a connection through the SkyTeam global alliance and code-sharing partnerships. If Delta and Northwest do pursue a merger, pundits predict that Continental and United will immediately start their own merger talks.

Meanwhile, Delta’s pilots have put the company on notice that it could well face a strike if management works toward a merger without the pilots’ approval. United has been facing its own pilot problems recently: Wall Street observers are saying that substantial numbers of delays and flight cancellations by United in recent weeks were due to pilots declining to accept flying assignments beyond the amount specified in their contract, and calling in sick at a higher than normal rate.