Local Fliers Leery of Delta, Northwest Merger Proposal
By Thomas J. Monigan, Northwest Florida Daily News, Fort Walton Beach
Apr. 16–Delta and Northwest airlines apparently believe their survival depends on merging. But fliers and investors seemed less than impressed Tuesday.
“When you start monopolizing on something, that means the rates go up and you have no choice, like gas,” said Richard Levine, who had just flown into Oklaloosa Regional Airport on Delta from Ohio with his wife, Sandy. They were visiting their daughter, Debbie McKenzie.
“The question is, why are they doing it — what’s the purpose?” Levine said. “I’m retired, so I can drive here if I had to, and I would do that if it got too expensive to fly,” Meanwhile, Tuesday morning trading on Wall Street saw Northwest’s shares fall 48 cents, or 4.3 percent, to $10.74. Delta went down $1, or 9.5 percent, to $9.48.
Okaloosa County Airports Director Greg Donovan said there could be some consolidation of operations at Okaloosa Regional. However, he saw potential positives.
“We have a dialogue with both airlines about route development and I really believe it’s an opportunity to open up more destinations and service,” Donovan said. “Minneapolis-St. Paul and Detroit are traditionally in the top 10 of where people fly here from, and we don’t have direct service to either yet. That would be something we have to negotiate.”
Executives from both airlines said they hope to close the deal by the end of this year, before the end of the merger-friendly Bush administration. They are trying to avoid a repeat of 2001, when a proposed merger of United Airlines and US Airways fell apart amid antitrust concerns.
US Airways has since merged with America West and emerged from bankruptcy. It had once linked Okaloosa Regional to Orlando, but discontinued that service. The airline recently returned with service to Charlotte, N.C., which is its busiest hub.
American Eagle, ASA/ Delta Connection and Continental also fly in and out of Okaloosa Regional.
Delta and Northwest remain the two major commercial carriers locally. Airlines representatives said they would close none of their hubs, although Northwest’s Memphis, Tenn., operation and Delta’s Cincinnati hub are thought to be vulnerable.
They also said they would try to limit job cuts. The two airlines employ more than 80,000 people.
Shareholders for both carriers must approve the deal. It calls for Northwest shareholders to get 1.25 Delta shares for each Northwest share. U.S.-based non-pilot employees of both companies are in line for a 4 percent equity stake.
But none of that had travelers at Okaloosa Regional very excited.
“It could go either way,” said Barbara Bourne, referring to positive or negative effects. “That’s the question with all mergers. It will just take some time to shake out.”
Bourne had flown Northwest with sisters Sue Crawford and Donna Phillips from Ohio to visit sister Judy Mowery in Miramar Beach.
Michael Flinn was flying Delta to Atlanta en route to Germany on Lufthansa.
“I don’t think it will do anything good for us,” Flinn said. “This is my third or fourth time flying this year and it’s the first time I’m using this airport. Pensacola is usually cheaper.”
Donovan said it would take several years to sort out cost issues if the merger is approved. But a merged operation would logically mean lower costs.
“We have the lowest operating cost (because of the Air Force involvement) … and the numbers speak for ourselves here,” he said. “Travel here involves military and defense-related industries in addition to tourism.”
The Associated Press contributed to this report.
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