Merging in the friendly skies
Posted
Feb 22 2008, 04:32 PM
by
Matt Koppenheffer
For a few weeks now, Delta Air Lines, the third-largest U.S. airline by traffic, and Northwest Airlines, the fifth largest, have been in talks to combine. The combination would create a new leader in U.S. air traffic and hopefully give the combined company significant synergies and economies of scale.
The negotiations have hit a bit of a snag though, as pilots have been unable to come to an agreement about how the seniority list of the new company would look. According to The Wall Street Journal, this list dictates everything from how much the pilots are paid, to what kinds of planes they fly and when they get time off. Though the hitch could be resolved, The Journal cited unnamed sources as saying the deal could be called off if an agreement isn't reached soon.
In The Motley Fool's CAPS community both stocks are rated one star out of five (the lowest), and most players don't believe the merger will change things much. CAPS All-Star dude59 said that "A merger of two companies that are both going [bankrupt] does not make this attractive if you can think." Meanwhile, fellow All-Star Radioman101 is more generally bearish on Delta's situation:
I just don't understand how big airlines keep resurrecting themselves from the dead and staying in business. I like and fly Delta as a customer but these guys aren't going to be digging themselves out of the hole anytime soon. Just run away screaming from this stock.
Want to share your thoughts on what this merger could mean? Or if it will happen at all? Head over to CAPS and join the other 83,000-plus investors already sharing their investing insights.