Airline Pilots Go After Northwest (NWA) Merger With Delta (DAL)

The pilots fly the planes and it looks like they also set the course for big airline mergers as well. A combination of Northwest Airlines (NYSE: NWA) and Delta (NYSE: DAL) is being held up because the pilots cannot decide how to assign seniority in the event that a marriage goes through.

The news is an example of why the economics of airline mergers may not be what they seem. The pilots cannot block a merger, but the threat of a strike can certainly push a combined Northwest/Delta to make financial concessions. That, in turn, makes the whole deal a lot more expensive.

According to the AP, NWA pilots want younger Delta pilots put at the bottom of a seniority list. Even if this is resolved it still leaves open the question of mechanics and air crews. Any of these groups could cause labor unrest in the hope of better compensation.

Since a merger might destroy customer service and drive revenue down, the pilots may be doing the two airlines a favor.

Douglas A. McIntyre