Delta Air Lines pilots may have approved contract revisions that effectively clear the way for a merger between their company and Northwest Airlines, but the proposed combination doesn’t look like such a deal anymore.
Delta, you’ll recall, announced last month that it essentially agreed to acquire Northwest Airlines in a stock-swap deal, creating what it claims would be the world’s largest carrier. Um, make that the world’s maybe largest carrier. A recent report cast serious doubts on the growth potential of a merged Delta.
Northwest Chief Executive Doug Steenland told a gathering of business leaders in St. Paul, Minn., that higher fuel prices might force the new carrier to shrink.
This can only go on so long. That will mean higher fares, so we’ll see demand come down, and the airline will have to shrink.
So what does that mean to Delta’s pilots? They approved changes to their contract that will give them pay raises, a 3.5 percent equity stake in the new company as well as other benefits. But this rubber-stamp from key Delta employees may be meaningless if shareholders begin to waver in their belief that the merger makes sense.
Because from where we sit, it’s beginning to make no sense whatsoever.
