Delta Airlines-Northwest deal merger announcement raises some questions

Though opinion on a proposed merger between Delta and Northwest Airlines continues to be favourable, some doubts are beginning to emerge if the merger process will be a smooth one. With fresh details of the Delta and Northwest merger beginning to emerge, it appears that the number of affected parties, who weren't part of the consultation process is becoming larger – including Northwest's pilots.

Northwest's pilot's union has expressed the opinion that the deal has been structured around a lucrative contract for Delta pilots, and it was likely that they would suffer if parity was not exercised. This could result in simmering resentments in the work place.

"The labour discord that will result from the current structure of this merger is likely to overwhelm the potential economic positives. We will not tolerate being a B-scale airline due to an unfair contract," union president Dave Stevens said.

Another question exercising the mind of Northwest employees is whether Minneapolis-St. Paul, its current home, will continue to be a major hub of what is already being dubbed as the "world's largest airline." It is being felt that the decision to locate the head office of the new airline at Atlanta has not taken into account the customer service angle.

Wall Street too, has not shown any particular enthusiasm with stock prices of both airlines dropping on receiving the merger news. According to analysts there is a question about how the merged airline proposes to bring different pilot unions into a single labour agreement.

In the light of high fuel costs, and a downturn in the US economy, the market was expecting more clarity on how the merged airline would deal with issues of reducing capacity. This clarity, say analysts, wasn't forthcoming.

To top it all, there would also be a fat $1 billion bill in integration costs that will have to be taken on board by the new carrier.