WASHINGTON — A double-header of hearings Thursday gave the chief executives of Delta Air Lines Inc. and Northwest Airlines Corp. a sampling of the skepticism and scrutiny their proposed combination faces on Capitol Hill.
Delta’s Richard Anderson and Northwest’s Doug Steenland first told House and then Senate lawmakers that their airlines would be stronger together than they are apart, more competitive with large foreign carriers and better equipped to handle record fuel prices that led them on Wednesday to report a combined first-quarter loss totaling $10.5 billion. They reiterated that no hubs will be closed, that no large-scale layoffs are planned and that the combination will create roughly $1 billion in cost savings.
“Oil is a game-changer and this merger makes us stronger,” Anderson said.
Steenland agreed and said without a consolidation, Eagan, Minn.-based Northwest’s biggest challenge would be finding ways to offset fuel costs. The cost of jet fuel in New York is more than $3.50 a gallon, compared with just over $2 a year ago.
House Judiciary Committee chairman John Conyers, D-Mich., said he was keeping an open mind on Delta-Northwest, but then blasted the merger-friendly Justice Department and questioned whether airline mergers would lead to job cuts and higher fares for air travelers.
Anderson estimated that no more than 1,000 corporate positions would be eliminated. Both executives said market competition will continue to dictate fares, but the possibility of a merger-happy market dictated much of the questioning.
If Delta-Northwest is approved, Conyers expressed concern that it will “result in a cascade of other mergers,” including Continental Airlines-United Airlines and American Airlines-US Airways and lead to three mega-carriers competing only against one another.
During more than four hours of hearings, lawmakers from both parties expressed concerns about how the proposed Delta-Northwest combination would affect employees in, and service to, their home districts in Orlando, Fla.; Memphis, Tenn.; Milwaukee; San Diego; Minneapolis and elsewhere.
The airline executives acknowledged that sustained high fuel prices could reduce the frequency of some less- profitable routes, but they said flight options for travelers will rise and that only corporate jobs would be cut.
