The Airlines’ Urge to Merge

Delta-Northwest. Delta-United. United-Continental. What’s it gonna be?

While the punditocracy is leaning toward Delta-Northwest as the most likely merger scenario, all sorts of other possibilities are being floated. One analyst suggested in the Detroit Free Press that Northwest might turn the thing on its ear:

"I do expect some merger of some type in the first quarter, and everyone speculates that it’s Northwest and Delta," [airline consultant Terry] Trippler said. "I’m not totally convinced that Delta would buy Northwest. … I think Northwest could be a buyer, and Northwest could make a move for someone else."

Marilyn Adams at USA Today points out that the whole thing is far from certain:

Airline mergers are unusually difficult because of federal scrutiny, labor union resistance and the industry’s volatility.

There’s little doubt, though, that something’s got to give. If we don’t see consolidation, we may see more bankruptcies. Either way, capacity goes down and fares go up.


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