Delta aims to start UAL, Northwest merge talks: reportJanuary 10, 2008 2:18 PM ET
Delta Air Lines Inc plans on Friday to ask its board for permission to begin formal merger talks with both Northwest Airlines Corp and United Airlines parent UAL Corp , the Wall Street Journal reported on Thursday.
Citing unnamed people familiar with the matter, the Wall Street Journal said on its Web site that Delta would aim to ultimately choose between the two carriers.
Delta, which emerged from bankruptcy last spring after rebuffing a hostile takeover offer by US Airways Group Inc , set up a special board committee months ago to help it review its strategic options, including mergers.
Betsy Talton, spokeswoman for Delta, said the No. 3 U.S. carrier was not providing updates on the special committee's work, while it was in progress.
In November, Delta moved to quickly deny media reports that it was in merger talks with UAL.
"Our position on the need for consolidation generally in the industry is well known, and we don't comment on rumors or speculation," said UAL spokeswoman Jean Medina.
Northwest was not immediately available from comment.
Airline shares, already soaring on renewed merger speculation ahead of the report, continued to rally.
In afternoon trade, Delta shares rose 17.8 percent to $15.92, Northwest surged 24.1 percent to $14.90, and UAL climbed 21.9 percent to $31.73.
A deal between Delta and either airline would likely create the world's largest carrier, overtaking AMR Corp's American Airlines. An acquisition of either airline by Delta would be worth at least $3.5 billion, based on current market values.
The modest recovery in the U.S. airline industry has begun to flag amid soaring fuel prices and a sagging U.S. economy. Most major U.S. airlines are expected to post losses for the fourth quarter of 2007 after profits earlier in the year.
Mergers are seen as a way to stabilize the volatile and fragmented industry by allowing carriers to cut costs, reduce capacity, and raise fares.
Some industry insiders suggest any proposed deal between major carriers would stand a better chance of clearing U.S. antitrust review under the Bush administration, which has approved two big airline mergers, rather than a Justice Department potentially controlled by Democrats beginning in 2009.
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Aren't we pretty much gunning for the same two?
Delta Air Lines Inc plans on Friday to ask its board for permission to begin formal merger talks with both Northwest Airlines Corp and United Airlines parent UAL Corp , the Wall Street Journal reported on Thursday.
Citing unnamed people familiar with the matter, the Wall Street Journal said on its Web site that Delta would aim to ultimately choose between the two carriers.
Delta, which emerged from bankruptcy last spring after rebuffing a hostile takeover offer by US Airways Group Inc , set up a special board committee months ago to help it review its strategic options, including mergers.
Betsy Talton, spokeswoman for Delta, said the No. 3 U.S. carrier was not providing updates on the special committee's work, while it was in progress.
In November, Delta moved to quickly deny media reports that it was in merger talks with UAL.
"Our position on the need for consolidation generally in the industry is well known, and we don't comment on rumors or speculation," said UAL spokeswoman Jean Medina.
Northwest was not immediately available from comment.
Airline shares, already soaring on renewed merger speculation ahead of the report, continued to rally.
In afternoon trade, Delta shares rose 17.8 percent to $15.92, Northwest surged 24.1 percent to $14.90, and UAL climbed 21.9 percent to $31.73.
A deal between Delta and either airline would likely create the world's largest carrier, overtaking AMR Corp's American Airlines. An acquisition of either airline by Delta would be worth at least $3.5 billion, based on current market values.
The modest recovery in the U.S. airline industry has begun to flag amid soaring fuel prices and a sagging U.S. economy. Most major U.S. airlines are expected to post losses for the fourth quarter of 2007 after profits earlier in the year.
Mergers are seen as a way to stabilize the volatile and fragmented industry by allowing carriers to cut costs, reduce capacity, and raise fares.
Some industry insiders suggest any proposed deal between major carriers would stand a better chance of clearing U.S. antitrust review under the Bush administration, which has approved two big airline mergers, rather than a Justice Department potentially controlled by Democrats beginning in 2009.
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Aren't we pretty much gunning for the same two?
