Delta and Northwest appeared to move closer Monday to a deal that would create the world’s biggest carrier, but the exact timing for an announcement remained uncertain as closed-door meetings continued.
Three people familiar with the talks said Sunday that a deal could be announced as early as Tuesday. One of those people said Monday an announcement could be moved up to Monday night if everything fell into place.
The people asked not to be identified because of the sensitivity of the situation.
The boards of both companies must sign off on a combination. They were expected to meet Monday, one of the people said. Delta Air Lines Inc. is the nation’s third biggest airline, while Northwest Airlines Corp. ranks fifth.
The rising cost of fuel has put all airlines under intense financial pressure. A combination of airlines could help the resulting carrier boost revenue and cut costs.
Northwest pilots have threatened to oppose a combination with Delta if the decision-makers don’t keep the pilots’ interests in mind.
A person familiar with the talks said Monday that if a combination is announced, Delta pilot leaders plan to recommend to their fellow pilots that they approve contract changes to allow Delta more flexibility after the deal is consummated.
Northwest pilot union leaders met Sunday in Minnesota. Afterward, they issued a memo to rank-and-file pilots saying they will oppose any deal that does not keep the interests of Northwest pilots “at the forefront of the decision-making process.”
The union leaders said any combination must involve “fair and equitable seniority list integration.”
It was increasingly likely the two airlines would proceed without a prearranged seniority integration agreement between their pilots unions, so the main issue that remained was whether Delta pilots were willing to make changes to their contract to give Delta more flexibility after a combination, a person familiar with the talks said. The person said Monday that Delta pilot leaders appear willing to put the issue to a vote by rank-and-file Delta pilots, who would have to ratify any changes to their contract.
Delta may be willing to give incentives to Delta pilots to make changes to their contract, another person familiar with the talks said.
The changes being sought are related to a part of the Delta pilot contract that spells out what planes pilots fly and what routes they fly, people familiar with the talks said.
Any changes to the contract, including financial incentives, would apply only to Delta pilots since their contract only governs that airline’s pilots. Northwest pilots have a separate contract.
A memo sent Friday from Delta’s pilots union to its members said union leaders were meeting in special session in Atlanta. That meeting continued over the weekend.
The usual approach in airline combinations has been to have pilots work out a joint union contract after a deal is announced. Atlanta-based Delta and Eagan, Minn.-based Northwest took a different approach in their talks for months, figuring that if they could obtain full pilot agreements in advance they would reap the benefit of a combined airline much sooner.
With that in mind, pilots were in line to get raises and equity in the combined company. But the two groups couldn’t agree on seniority, which determines who flies more desirable aircraft and routes.
Since the talks began, Delta and Northwest have announced plans to reduce capacity this year, and Delta has announced plans to eliminate 2,000 jobs.
Minnesota Gov. Tim Pawlenty said Monday afternoon that a Northwest-Delta deal “appears imminent,” and he warned that the state will act to enforce Northwest commitments to keep its hub and headquarters in Minnesota. People close to the talks have said plans call for the combined company to retain the Delta name and be based in Atlanta.
“We’re going to have to just wait and see what the deal is and what it represents for our state before we can respond in any detail,” he told reporters at an unrelated news conference.
“We expect them to fulfill those commitments. If they don’t intend to do that they are going to have to pay us money or they are going to have to re-negotiate in some way that is favorable to our state,” Pawlenty said.