Late word is that Delta (NYSE: DAL) and Northwest (NYSE: NWA) pilots have re-started talks about seniority in a combined airline. Failure of negotiations helped kill earlier merger talks between the airlines.
According to Bloomberg, "The sessions were the first between the airlines’ work groups since negotiators failed to agree two weeks ago on how to combine the seniority rankings of 12,000 pilots."
The news may actually be bad for NWA and DAL shareholders. It is not clear that merging two airlines benefits shareholders. Fuel costs stay at present level. Labor costs often go up as groups including pilots look for ways to improve contracts with the new company.
Customer service virtually always deteriorates sending consumers to other airlines. Revenue erosion becomes a real possibility.
Douglas A. McIntyre
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