Merger necessary to compete against foreign airlines, say Delta, Northwest chief executives
26 Apr 2008
Testifying before the US Congress on Thursday, Delta Air Lines (DL) CEO, Richard Anderson, and Northwest Airlines (NWA) president and CEO, Doug Steenland, stressed that the merger of their respective carriers not only would not affect domestic competition, but indeed was necessary if the US industry was to compete against large European and Asian airlines.
Testifying before both the House of Representatives and the Senate, the chief executives said the merger would create "the first US global airline."
"This gives us the ability to compete and win against foreign flag carriers," said Delta CEO Anderson before the House judiciary subcommittee.
Both Anderson and Steenland stressed that there would be no hub closures as a result of the merger and that only executive, non-frontline workers would be subject to involuntary layoffs. "Ticket prices will still be set by the market," Anderson said.
He also pointed out that the combined airline would carry only 20% of domestic passengers and that there is minimal route overlap.
According to Steenland, the merger would make the combined airline "more financially resilient and stable" and able to withstand "volatile fuel costs and cyclical downturns."
Though presentations are being made before the US Congress, the fact is that it does not have the power to stop the transaction. "Our sense is that this is essentially a regulatory process with the Department of Justice," Anderson said earlier in the week. "While we'll cooperate with Congress fully, this process runs through the Dept. of Transportation and DOJ."
