Talk of a tie-up between the No. 3 and No. 5 U.S. carriers (by number of passengers) started slowly, or adagio. At midweek, whispers of an imminent deal had reached a deafening crescendo. But by Friday, the noise had ebbed to piano, perhaps even pianissimo.
What happened?
Speculation that Delta and Northwest pilots had reached a compromise over how to merge their highly prized seniority lists - a deed that would allow directors of both airlines to announce an agreement to form the world's biggest airline- turned out not to be accurate.
Although the pilots may have settled pay and other issues, the lack of an agreement over seniority appears to have pushed the final stage of merger talks into this week - or may have scuttled a deal altogether.
It has been tough to discern exactly what has been transpiring, given that until a couple of days ago neither side would acknowledge that merger negotiations had even begun. Perhaps the best evidence that talks had not only started but were progressing to a conclusion, came on Wednesday in Delta's hometown of Atlanta.
"We're wrapping this process down at this point," Lee Macenczak, Delta's executive vice president of sales and customer service said at a local chamber of commerce meeting.
"The largest social issues have been solved. A lot of the financial issues have been solved. Obviously, now we're waiting for the two pilot unions to talk to make sure we have a deal," Macenczak said.
It was the first public admission by an executive at either airline that Delta and Northwest were negotiating a consolidation. Until that moment, neither carrier had ever confirmed conversations were ongoing.
The unguarded admission startled Delta executives, who briefly considered whether to issue a Form 8K - a document public corporations must file with the Securities and Exchange Commission to report changes or events that are material to investors but haven't previously been disclosed.
On Friday, the company had retreated to its earlier tactic of turning aside questions about when or if a combination of Delta and Northwest might occur.
"His quotes have to stand as they are. I won't comment beyond what he said," Delta spokesman Anthony Black told The Salt Lake Tribune.
By Friday afternoon, speculation had turned another corner. Word was that the boards of both airlines would leak to the media their frustration over the impasse over seniority and that Delta would walk away from the negotiating table to pursue talks with another airline.
Asked to respond, Black was not forthcoming.
"Delta's board of directors continues to work with management to analyze potential consolidation transactions," he said.
"As we've said before, Delta's stand-alone business plan remains strong, and any decision to consider a merger or acquisition would be with the intention of creating an even stronger airline with benefits for our shareholders, employees, customers and communities we serve," Black said.
Seniority is so vital that the Delta and Northwest branches of the Air Line Pilots Association, while members of the same labor organization, aren't on the same page about a merger. Seniority determines when pilots work, what they fly, where they live and how much they earn. In the event of a layoff, seniority determines who goes and who stays on the job.
In fact, seniority is so important that so far it has upstaged what otherwise is a generous labor contract that Delta and Northwest pilots have worked together to negotiate, sources close to both pilot groups say. It provides 30 percent-plus pay raises for Northwest pilots over the four-year life of the contract.
Delta's pilots are paid more, so their raises would be smaller. Still, there reportedly is an additional $2 billion in compensation in the proposed deal for both Delta and Northwest aviators.
Whether the seniority dispute is overcome apparently depends mostly on whether Northwest pilots, who believe they were treated less favorably than Delta pilots while both airlines were in bankruptcy last year, can put aside short-term fears and focus on on the bigger picture.
The airline industry is increasingly globalized. Earlier this month, Air France-KLM Group, Europe's biggest airline, suggested it might invest in a combined Delta-Northwest. In December, Deutsche Lufthansa bought 19 percent of JetBlue Airways.
Northwest pilots have to decide whether it's better to fly for a small airline or become part of a combined company that is the biggest carrier in the world, sources say.
Whatever is decided in regard to a merger, Delta's future is important to Utah. The airline employs 3,500 people in the state, including 600 pilots and 700 flight attendants stationed at its Salt Lake City International Airport hub. Because of Delta's westernmost hub, the airport is the 22nd busiest in the country and 54th in the world, in terms of passengers, outsized numbers given the size and geographical isolation of Salt Lake City.
pbeebe@sltrib.com
