Delta, Northwest shares fall on cooled merger prospects
NEW YORK (Reuters) - The shares in Delta Air Lines Inc (DAL.N) and Northwest Airlines Corp NWA.N both plunged more than 6 percent on Wednesday, as the likelihood of a speedy merger dimmed.
Delta Chief Executive Richard Anderson sent a memo to employees late Tuesday that cooled expectations that a deal was around the corner.
"To date, we have not arrived at a potential transaction that meets all of our principles. Rest assured that we will not complete a transaction unless all of these conditions are met," Anderson said. "We have a strong stand-alone plan." (See nN26377869)
Delta and Northwest were reportedly close to a deal, but pilots have been unable to agree on integrating their seniority lists. It's unclear whether those talks would be restarted.
Wall Street was pessimistic.
"What investors forgot was that the interests of airline managements and unions have always been diametrically opposed to theirs," Roger King, an analyst with CreditSights, said in a note.
Delta shares fell $1.10 to $14.81, while Northwest dropped $1.11 to $14.90 in morning trade on the New York Stock Exchange.
Shares in United Airlines parent UAL Corp UAUA.O and Continental Airlines Inc CAL.N, who were expected to merge if Delta and Northwest did, also fell.
UAL was down 3.6 percent at $33.69 on Nasdaq, while Continental slipped 3.4 percent to $28.07 on the NYSE.
(Reporting by Chris Reiter; editing by Jeffrey Benkoe)
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