A $20 billion deal to combine Delta Air Lines and Northwest Airlines was in "serious jeopardy" late Tuesday because the carriers' pilots...
ATLANTA — A $20 billion deal to combine Delta Air Lines and Northwest Airlines was in “serious jeopardy” late Tuesday because the carriers’ pilots unions were unable to reach an agreement on blending their seniority lists, two people close to the talks said.
The unions have agreed on a comprehensive joint contract but not on how seniority for the 12,000 pilots would work under a combined carrier.
Talks were expected to continue today, but if no agreement was reached, the merger would be in “serious jeopardy,” according to the two people, who asked not to be named because of the sensitive stage of negotiations.
The Delta and Northwest boards were expected to vote on a combination agreement today if a pilot deal were in place by then. Otherwise, they were expected to just get an update on the merger talks, three people close to the talks said.
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One of the officials said Northwest’s board might only meet by teleconference or, if things fall apart, not at all.
A combination of Atlanta-based Delta and Eagan, Minn.-based Northwest would create the world’s largest airline in terms of traffic.
There also has been speculation about a possible combination of Chicago-based UAL’s United Airlines and Houston-based Continental Airlines, which would be a bigger airline than Delta-Northwest in terms of traffic.
The clock is ticking to get any deals done quickly, some say. That’s because industry observers believe a combination has a better chance of clearing the considerable political and regulatory hurdles now than under President Bush’s successor.
Delta and Northwest don’t need a labor agreement between their pilots unions before announcing a combination, but having one in place could help them speed up the integration of the two carriers down the line.
One of the people close to the talks said a small group of Northwest pilot negotiators wants thousands of young Delta pilots to go to the bottom of the combined seniority list, a point of major contention.
A spokesman for the Northwest pilots union, Greg Rizzuto, did not immediately return a call and a page Tuesday night to his cellphone seeking comment.
Much of the terms of how the combined carriers would operate had been resolved as of Tuesday, two people close to the talks said.
The combined carrier would be based in Atlanta, would be called Delta and Delta’s chief executive, Richard Anderson, would be its head, the people said.
It remained unclear what role Northwest’s CEO, Doug Steenland, would play in the combined carrier, the people said.
A combined Delta-Northwest would maintain a substantial presence in Minneapolis and there would be no furloughs for front-line U.S. employees, the people said.
The two airlines have roughly 85,000 total employees.
Associated Press writers Chris Williams in Minneapolis and Dave Carpenter in Chicago contributed to this report.