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Delta exec says airline does not feel rushed to merge
February 29, 2008 / 5:39 PM / 10 years ago

Delta exec says airline does not feel rushed to merge

WASHINGTON (Reuters) - Delta Air Lines (DAL.N) said on Friday it is not rushing to merge as expectations it would strike a deal with Northwest Airlines NWA.N receded even further.

Ed Bastian, Delta’s president and chief financial officer, told CNBC television in an interview that the company has a strong stand-alone plan and would not enter into any merger agreement unless it was the right one for the company.

“We don’t feel pushed or hurried into any decision,” Bastian said. “If we find the right deal, we’ll pursue it.”

One industry analyst forecast on Friday that industry consolidation was on hold for the moment.

Delta’s chief executive, Richard Anderson, said on Wednesday in a note to employees that any deal must meet several conditions, including a guarantee that worker seniority at Delta will be protected.

Tricky seniority issues involving pilots, sources have said, have held up a merger agreement that would create the world’s largest airline.

Most major airline stocks have wiped out their gains of the past two months when investors priced in prospects for consolidation, which many in the industry believe is inevitable.

Delta shares traded at $13.92, down from a 2008 high of $18.97, after starting the year at $14.51. Northwest shares were at $14, down from a 2008 peak of $20.12. Shares started the year at $14.32. Both Northwest and Delta trade on the New York Stock Exchange.

Shares of UAL Corp UAUA.O -- parent of United Airlines, Continental Airlines (CAL.N) and American Airlines AMR.N, all mentioned in various consolidation scenarios in recent weeks, all traded lower.

“At this point, we believe that network airline stocks do not have any merger-related premium reflected in their prices,” Calyon Securities analyst Ray Neidl said in a research note.

Neidl predicted airline consolidation is on hold for now.

On Thursday, US Airways Group Inc LCC.N Chief Executive Doug Parker warned that the domestic airline industry is heading for a downturn. He cited record high oil prices and a weakening economy.

“Our industry is in a mess, if you haven’t noticed,” Parker said.

The last industry downturn from 2001 to 2005 pushed four major carriers into bankruptcy -- including Northwest and Delta -- and spurred one merger, US Airways and America West Airlines.

Reporting by John Crawley in Washington and Kyle Peterson in Chicago, editing by Phil Berlowitz

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