ATLANTA — A particularly thorny issue for Delta Air Lines in its talks with United and Northwest about a combination with one of the carriers is where the merged company would be based and what it would be called, industry observers say.
In recent months, Delta executives have spoken in near absolute terms about their desire and intention of keeping the Delta name and the headquarters in Atlanta. But aviation experts say such certainties are hard to achieve in complex negotiations that often involve competing interests.
“This is a business of egos,” said Robert Mann, a Port Washington, N.Y.-based airline consultant. “While lots of things get negotiated, some of the toughest to negotiate are those sorts of issues that go with what it’s going to be called, where it’s going to be headquartered and who is going to run it.”
Delta spokeswoman Betsy Talton reiterated Monday that Delta’s board is analyzing strategic options, including potential consolidation transactions, but she declined to provide any update on the process or address the name and headquarters-location issues.
Northwest officials are likely just as eager to see any combination they are involved in keep the Northwest name and the company based in Eagan, Minn., and would lose financial incentives if it left. United officials would probably want to keep the United name and its headquarters in Chicago.
Meanwhile, the Financial Times on Friday reported that United is considering new talks to merge with Continental Airlines if its negotiations with Delta are not fruitful.
Rep. Lynn Westmoreland, R-Ga., said his office has told Delta officials of its concern about the course of the merger discussions and in particular the issue of possibly moving the headquarters and changing the company name.
He said he has seen recent news reports discussing various scenarios involving the three airlines.
One of the biggest factors driving renewed talk of consolidation has been the sharp increase in fuel prices, among the industry’s biggest costs. Jet fuel costs have surged along with the price of oil, which jumped 58 percent last year.
Terry Trippler, a Minneapolis airline expert, said he has noticed some subtle changes in wording in how the airlines have addressed the issue of name and headquarters location in recent months.
Delta president Ed Bastian told Atlanta television station WXIA in late November: “Delta as a buyer, headquartered in Atlanta, run by Delta people: Those are our terms.”
Trippler said one possible scenario he envisions is a combination where the two airlines maintain their separate names and keep their headquarters cities as operational hubs, but have one board of directors in one city.
Denver Post staff writer Kelly Yamanouchi contributed to this report.
