Many changes likely from Delta-United merger
UAL Corp.'s United Airlines has been flirting with other legacy carriers since it emerged from bankruptcy two years ago.
It's been practically begging for a suitor and it just may have found one in Delta Air Lines Inc., which was expected to ask its board Friday to open merger talks with Northwest Airlines Corp. and United. But Delta officials would not discuss whether they got that approval.
Still, consolidation has been touted in an industry struggling with stiffer competition and rising costs. Any type of merger among the legacy airlines, such as Delta and United, could mean combined routes, workforces and other operations. The savings could help float the that newly formed airline into the future.
"With Delta's strength in the Atlantic and United's in the Pacific and you have a truly global airline," said Terry Trippler, airline analyst with TripplerTravel.com.
But if United and Delta would merge, what would happen to the employees, especially United's headquarters in Chicago and its operations in Elk Grove Township? And what would the merger mean to consumers?
Industry analysts believe a Delta-United merger would help to keep two of the largest legacy airlines afloat, save on rising fuel costs and streamline operations. But such a merger also could result in untold layoffs, such as eliminating redundant departments.
"But two sets of pilots would be ok," said David Stempler, director of the Air Travelers Association.
But a tug-of-war likely would erupt on seniority among the union pilots, each grappling for leadership and the surviving routes, analysts said.
Also, Delta's Atlanta headquarters likely could house the administrative offices and United's Chicago base would retain the operations center, Stempler said.
If there were choices between United's Dulles hub and Delta's New York hub, Dulles would be reduced. If they weighed Delta's Cincinnati hub and United's Chicago O'Hare hub, then Cincinnati would be eliminated. And choices between United's Denver hub and Delta's Salt Lake City hub would show Denver the winner, Stempler said.
Then routes likely would favor United's Asian flights, which are highly valued by business travelers.
About $500 million annually could be saved by cutting costs, said Brian Nelson, airline analyst with Chicago-based Morningstar Inc.
"Passengers will see routes scaled back," Nelson said.
Trippler also believes ticket prices would be unaffected.
"I really don't think there would be a major impact on ticket prices, compared to what fuel has done to airfares, any merger impact would be minor at best," said Trippler.
"With the Asia and Pacific strengths combined with the tremendous domestic routes, this would create an airline that no one in the continental United States would have to drive more than 150 miles to reach. Again, a truly global airline. "