Mumbai: Northwest Airlines is once again wooing Delta Air Lines in a bid to restart merger talks.
According to reports even though the carriers' pilots have not been able to agree on a criteria for merging their seniority lists, tentative discussion between Northwest and Delta have been initiated.
If the two were to merger, the unified entity would form the world's biggest airline. However, both airlines' respective units of the Air Line Pilots Association (ALPA) have practically ensured that the plan doesn't get off the ground, as they have been unable to work out a formula for working together.
Both airlines' unions have stated earlier that their support was crucial to the merger, as running a combined airline with irate pilots would be more than just an uphill task. Delta pilots played a key role in defending the company from a hostile merger attempt by US Airways Group Inc around a year ago (See: Delta rejects US Air offer; files own recovery plan).
Reports indicate that Northwest Airlines has proposed to Delta that it move ahead sans a prearranged deal with pilots. A pre-agreed deal with the pilots is seen as key in avoiding the kind of labour issues that still plague US Airways, which came with its acquisition of America West Airlines in 2005.
That merger still has pilots engaged in dogfights over a combined list, and has not allowed the integration of the company's operations as a single airline. Pilot seniority governs pay, schedule and a multitude of career elements for a pilot, and merging the seniority lists of two airlines is no different from walking a minefield.
The issue at the core of the pilot agreement is a merger of their two seniority lists, prior to the merger. Delta and Northwest were hoping to get a contract that would cover around 11,000 pilots that would put in place some kind of binding understanding for merging their two seniority lists prior to the merger. To motivate the two unions to reach an agreement, managements of the two airlines had offered higher pay, and a stake in the combined airline.
If the merger were to go ahead, the combined airline would be called Delta, and would be based in Atlanta, with Delta's Anderson at the helm. However, some Congressmen are opposed to large big airline mergers, citing reduced competition and consequential higher fares as possibilities for the future.
Higher fares are already giving nightmares to airlines, as increased fuel costs make them less competitive. Lower demand is also forecast, on account of a slowing down of the US economy, and some analysts expect losses totalling billions of dollars to airlines this year. Airlines have already started mulling fleet reductions to reduce capacity and control costs.