Delta Air Lines appears to be on a firm path toward a merger, with either United or Northwest as a potential partner.
Delta has opened merger talks with United Airlines and Northwest Airlines, the Wall Street Journal reported Tuesday. Delta executives plan to present the preferred partner to Delta directors when they meet in early February, and a deal could be announced as early as mid-February, according to the Wall Street Journal.
Chicago-based United is the largest carrier at Denver International Airport, where it has its second-largest hub.
United spokeswoman Jean Medina declined to comment, saying the company doesn’t comment on rumors and speculation.
Some analysts have speculated that a Delta-Northwest combination is the more likely of the deals, and that such a combination would spur other airlines to seek mergers, such as United with Continental.
Calyon Securities analyst Ray Neidl said in a report Tuesday that “tougher economic conditions will force industry consolidation.”
Higher oil prices and the lack of enough fare increases have dimmed the outlook for airlines this year, according to Neidl.
American is the largest U.S. airline based on a common industry measure of traffic, followed by United, Delta, Continental, Northwest and Southwest.
United’s pilot and flight attendant unions issued statements Tuesday to emphasize their interests.
“United pilots will not rubber stamp any merger unless and until our interests are addressed,” said Steve Wallach, head of the Air Line Pilots Association at United, in a written statement. “We are prepared to protect the careers and futures of our pilots in the event of any merger or consolidation scenario.”
News of the Delta talks comes after hedge fund Pardus Capital Management in November urged Delta to merge with United. Delta said then it had formed a special board committee to review and analyze strategic options, including potential consolidation transactions.
Delta’s board Friday gave permission to chief executive Richard Anderson to begin talks with United and Northwest, according to the Wall Street Journal, which cited people familiar with the situation.
Observers have said Denver may not lose much to other cities in a merger with Delta. Such a combination could pit United’s Denver hub against Delta’s Salt Lake City hub, but Denver has the advantage over the smaller Salt Lake City hub. More broadly, a merged carrier may aim to cut flight capacity and raise fares.
United shares gained nearly 5 percent Tuesday, while Delta shares gained 4.4 percent and Northwest shares gained nearly 8.6 percent.
Kelly Yamanouchi: 303-954-1488 or kyamanouchi@denverpost.com
