Airline merger impact unclear locally

Charles "Speed" Holman (right), one of Northwest Airlines' first pilots, helps board passengers in Minneapolis around 1930.

ATLANTA — The No. 1 carrier at Charleston International Airport is proposing to team up with another airline that also caters to local travelers.

Delta Air Lines Inc. and Northwest Airlines Corp., squeezed by record-high fuel prices and a slowing economy, are combining in a stock-swap deal that would create the world's biggest carrier.

The boards of both companies gave the marriage the go-ahead Monday.

The deal, valued at $3.3 billion after U.S. stock markets closed Tuesday, had been expected for months.

Delta said the combined airline, which will be called Delta, will be based in Atlanta. Delta CEO Richard Anderson will head the merged carrier. It would have $35 billion in revenue and nearly 800 planes.

"Bottom line is, we think it's a really good fit," Anderson said.

It's unclear how the merger would affect air service in Charleston, where both carriers compete for passengers but offer nonstop service to different cities.

Delta is the dominant local airline, with about 18 daily nonstop flights to Atlanta, New York, Cincinnati, Boston and Orlando, though it is eliminating nonstop service to the last two cities in June.

Northwest offers five nonstop flights most days from Charleston to Detroit and Memphis, as well as a Saturday flight to its home base in Minneapolis-St. Paul.

Typically, some flights are cut after big airline mergers as executives seek to eliminate redundant operations and make the newly merged entity more efficient.

Delta and Northwest said they don't plan to cut more U.S. flights beyond what they've done separately. That decision tempered Wall Street's reaction. Stocks were down for both companies Tuesday.

There will be an unspecified number of job cuts or transfers through the consolidation of overlapping corporate and administrative functions, Delta said. The two airlines employ more than 80,000 people combined.

The company expects no involuntary furloughs of front-line employees, and said the existing pension plans for both companies' employees will be protected.

Ray Neidl, an airline analyst at Calyon Securities in New York, said Northwest's hub in Memphis could be most at risk because it's relatively close to Delta's home base in Atlanta. Delta's hub in Cincinnati, a connecting point for some Charleston travelers, might also lose out because it is relatively near Northwest's hub in Detroit.

The announcement could spur other airline combinations. The most likely scenario that has been talked about is a potential deal between United and Continental airlines.

The Northwest-Delta deal could be a rare nugget of good news for some passengers.

The combined carrier could give consumers in small cities access to larger airline networks, which means more travel choices, said Michael Boyd, an airline consultant.

"Most mergers are all about less," Boyd said. "This one could be something very innovative that could end up with consumers not losing service, not having higher fares, but having much better access to the rest of the world."

Joining Northwest's strong Pacific network with Delta's strong Atlantic routes would mean travelers could cover more of the globe on a single carrier rather than switching to an airline's partners, said industry consultant Robert Mann.

"That combination really opens up the east-west travel," Mann said. "It would be a big plus."

David Jennings, chairman of the Charleston County Aviation Authority, which operates the local airport, said a Delta-Northwest marriage would be more beneficial than harmful.

"It would seem that having a combined carrier would be a better option than having both carriers go the route of Eastern Airlines or any of the other airline names that are now just plaques on someone's wall," he said.

"On balance I think the merger will be a good thing for us," Jennings added. "The primary benefit ... is that the new Delta will be stronger financially than either the old Delta or the old Northwest, and that's a positive."

Gary Jackson, director of Greenville-Spartanburg International Airport, said Delta and Northwest don't "really have any overlapping of routes here, so we are hopeful that the level of service here won't be decreased."

Delta and Northwest executives want to complete their deal smoothly by the end of the year. But the two airlines have very different relationships between management and workers, which was reflected as soon as the deal was announced late Monday. Delta pilots support it. Northwest pilots oppose it, and 15 minutes after the announcement, the union that represents many Northwest ground workers pledged to fight it.