Will they, won’t they?

The Delta-Northwest farce finally appears to be drawing to a close. The two have been discussing a merger for over two months now, being plagued with seniority list integration issues. Today was the closest the deal has ever reached, with a possible announcement about its completion as early as tomorrow. If given the go-ahead, this would create the world’s largest airline. This has both United and Continental quaking in their boots, with talks of a possible merger between the two. Both Delta and Northwest shares rose over the day.

Airlines across the world are suffering from higher oil prices but they can’t pass these cost increases onto customers via higher prices when faced with a consumer slowdown. This double whammy means that precious profit margins are being eroded, and airlines have their backs against the wall in a “fly-or-die” situation. Delta has announced 2000 job cuts this year but it’s unknown how much that figure will increase if the merger is successful. For that the merger is unpopular amongst many (not the least trade unions), and Barney Gimbel, a sceptic from the start, has even claimed it to be “a merger that won’t work”.

All this is set against the backdrop of the Open Skies agreement which is expected to bring fiercer competition to the market. Exciting stuff. If only OCR2888 was on the aviation industry…