Committee hears impact of possible Delta loss

Lawmakers heard testimony today on the possible fallout should Delta Airlines merge with an out-of-state airlines.

The airline gets a substantial tax break from the state on its fuel purchases and Delta officials put the airline's contribution to the metro Atlanta region somewhere in the neighborhood of 13-billion dollars.

Transportation sub-committee chair Republican Senator Judson Hill of Marietta says he supports continuing those tax breaks. However, Hill stopped short of calling for increased fuel subsidies.

"We're interested in continuing to help Delta and be responsible in a fiscally responsible way. Should we continue to do that? I don't know."

Rumors about a possible merger have been swirling for months, but Delta officials would neither confirm nor deny them. Delta officials attended the hearing but didn't speak to reporters
and wouldn't confirm or deny the merger rumors.

Either way, Senate transportation subcommittee Hill says he's worried.

"We always nervous when there's discussion of a merger. but we don't have to be nervious. we can be cautiously optismitic. The caution is what would happen if we were to lose a headquarters. The optimism is we could gain a head quarters and grow a hub even bigger."

Senator Valencia Seay (pron. see) represents parts of Fulton and Clayton Counties. She says her community is desparate for even the smallest bit of information on Delta's possible merger.

Residents there gave up a 1 percent tax concession to help subsidize Delta's fuel purchases.

"The phone was lighting up like a Christmas tree wanting to know if there was something that the Legislature could do to make sure that Delta stays here. They are seeing it as us having given back money and concessions and the tax dollars when we took that tax hit."

Also testifying at today's hearing was Hartsfield Jackson's General Manager Ben DeCosta who told lawmakers if the Delta leaves, he will recommend to Atlanta mayor Shirley Franklin that the airport not build a new international terminal.

Delta awarding CEO $13.6M for closing NWA deal

Delta and Northwest planes. (Jim Mone/AP)

Delta Air Lines CEO Richard Anderson will get stock awards worth almost $13.6 million beginning next year for closing the carrier's buyout of Northwest Airlines.

Employees of Delta Air Lines, including their new coworkers from Northwest, are also getting stock.

Atlanta-based Delta had said previously it would hand out about 15 percent of its shares to various employees, including almost 10 percent to the rank-and-file. Another 3.5 percent is going to about 700 officers, directors, and managers.

Anderson will get 760,000 restricted shares, worth almost $8.6 million based on Delta's share price at midday Monday. He also gets options on 1.52 million shares at an exercise price of $7.99 per share, which was Delta's closing share price on Wednesday, just before the Northwest deal closed.

With Delta shares trading at $11.28 at midday Monday, those options could give him a profit of $5 million if they could be exercised right away. However, Anderson has to stay with Delta to get the shares and options, with the first 20 percent vesting on May 1, 2009, and the last 40 percent vesting on Nov. 1, 2011.

Click here for more GPB coverage of the merger.

(AP)

Delta, Others Ink $12 Billion Deal

Delta Air Lines Inc., Air France and KLM signed a deal Wednesday to combine two separate joint venture agreements into one to create a more integrated trans-Atlantic powerhouse that they said will generate $12 billion in annual revenue. The airlines said they will share costs and revenues, as well as coordinate branding at airports and global advertising. Air France-KLM Group and Delta also will share governance of the joint venture. An executive committee consisting of the three CEOs and a management committee comprising representatives from the three carriers will work together on strategy.

The joint venture represents approximately 25 percent of total trans-Atlantic capacity.
The cooperation agreement between Europe’s largest airline and the world’s largest airline operator will mean together the carriers will operate more than 200 trans-Atlantic flights and offer about 50,000 seats per day.

The joint venture also covers all the airlines’ flights between North America and Europe, between Amsterdam and India, and between North America and Tahiti, the companies said.
The joint venture will not lead to the creation of a subsidiary, the airlines said at a news conference in Paris that was broadcast on the Internet.

No new routes were announced beyond what the two previous agreements provided for separately.

Delta chief executive Richard Anderson called the joint venture agreement “unprecedented.”
KLM signed a joint venture agreement with Northwest Airlines in 1997, while Air France and Delta signed a joint venture agreement in 2007. Following Atlanta-based Delta’s acquisition of Northwest in October 2008, the carriers decided to work on forming a single joint venture.

Alliances between U.S. and foreign carriers are not new. They allow the carriers to offer more options to passengers, while allowing the carriers to share revenues and costs.
There’s a pending bid by American Airlines and British Airways to cooperate on trans-Atlantic flights without fear of breaking antitrust laws. Regulators are looking at the issue. American and BA have been thwarted twice before in seeking closer ties, but their prospects appear brighter this time because of changes in the airline industry over the past several years.

American and its partners in an alliance called Oneworld argue that they should get antitrust immunity because two competing alliances already have it — Star (Lufthansa, United, and beginning this fall, Continental) and SkyTeam (Delta, Air France-KLM).

American also notes that the U.S. and Europe have signed an open-skies treaty, increasing competition at Heathrow, since its last failed effort to work more closely with BA.

The Delta-Air France-KLM joint venture is structured around six main hubs: Amsterdam, Atlanta, Detroit, Minneapolis, New York-JFK and Paris-CDG, together with Cincinnati; Lyon, France; Memphis, Tenn., and Salt Lake City.

The joint venture has no predefined end date, but can be canceled with a three-year notice after an initial 10-year term, the companies said.

Air France-KLM shares rose as high as 13 percent in early trading on the Paris stock exchange Wednesday after annual earnings results late Tuesday showed progress on cost-cutting. They showed that lower staff costs and marketing expenses helped it achieve a smaller-than-expected operating loss.

The airline also announced plans to cut its work force and reduce its investment plans.

(Associated Press)

Delta officials face hometown crowd

Delta officials faced the home town crowd in Atlanta today, one day after it was announced that Delta would merge with Minneapolis-based Northwest Airlines. Like any high profile marriage, a lot of people will be watching the union of Delta and Northwest. Including passengers concerned about quality and service. And, employees worried about their jobs. Although Delta officials have already said no to any immediate personnel cuts.

But, the toughest challenge the new company faces will be from the Federal Trade Commission. However, Delta CEO Richard Anderson remains confident of the outcome. "There's far more contestability with Southwest, AirTran. And, there's free entry into these markets. From contestability and a competition standpoint, these transactions should be approved by the regulators." Delta officials say they hope to have the deal wrapped up before the end of the year. Before the pro-business White House changes hands.

Click here for more GPB news coverage of the Delta-Northwest merger.

Delta posts first quarter profit

Delta Airlines reported 155 million dollars in operating profits for the first quarter but posted considerable losses, as well. The mixed financial picture comes as the Atlanta-based airline prepares to emerge from bankruptcy. Delta says it lost 130 million dollars in the first three months, ending March 31st. One-hundred and twenty four million ($124,000,000) of those losses, officials say are due to reorganization and one time bankruptcy related charges. The first quarter of the year did see an increase in sales of more than 11 percent. Delta says that's due in part to more international flights and customers. Delta officials say the past 18 months of operating in bankruptcy have been a challenging time, but they say the latest result show that the third largest airline has been fundamentally transformed. As of March 31st, Delta had $4 billion dollars in cash. On Wednesday, a bankruptcy court is scheduled to hold a confirmation hearing on Delta's reorganization plan. New Delta stocks could start trading in early May.

Delta, Northwest announce merger

Atlanta-based Delta Air Lines announced Monday that it will acquire Minneapolis-based Northwest Airlines in a deal that will create the world's largest airline. The combined company will retain the Delta name and be headquartered in Atlanta.

In a statement on its website, Delta says the airline will maintain its nine existing hubs in the United States, Europe and Asia. The deal is expected to result in a number of administrative job losses, but few are expected among frontline employees such as flight attendants, pilots or mechanics. 

Consumers could see higher fares with reduced competition on some routes. However, relatively little overlap exists between the current Northwest and Delta route systems. 

Frequent fliers can expect to retain their earned mileage points since both airlines' reward programs are already integrated through the SkyTeam network. 

Delta CEO Richard Anderson cited record oil prices, a weakening economy and increasingly competitive marketplace as reasons for the move. He expects the new airline will achieve greater financial stability and job security for its employees.

Anderson will remain CEO of the new, combined airline. Northwest CEO Doug Steenland will take a position on the airline's board of directors. 

Click here for more GPB news coverage of the Delta-Northwest merger.

Business news for Thursday, May 1, 2008

Home Depot to close some locations ...

Atlanta-based Home Depot has announced it will close more than a dozen stores nationwide. Citing poor performance, the home improvement giant will close 15 locations, including 3 in Wisconsin and 2 each in Ohio, New Jersey and Indiana. A spokesman for Home Depot says some of the 1,300 employees affected will be relocated, while others could lose their jobs. This marks the first time the home improvement retailer has ever closed a flagship store for performance reasons. Home depot is the world's largest home improvement store chain, with more than 2,200 stores in the United States, Canada, Mexico and China. The closures - slated to take place within the next two months -- represent less than 1 percent of Home Depot’s existing stores. And, although new store capital spending will be reduced by $1 billion over the next three years, Home Depot says it will go forward with plans to open 55 new stores in the 2009 fiscal year.

Delta pilots begin voting today on benefits package ...

Delta pilots begin voting today on whether or not to approve changes to their benefits package that would include among other things … pay raises. If approved by the union, in addition to a pay hike, Delta pilots could see an expanded stake in the combined airline as merger talks with Minneaspolis-based NorthWest continue. Delta has agreed to extend its existing collective bargaining agreement with the pilots union through the end of 2012. The revised contract provides the 74-hundred Delta pilots a 3.5 percent equity stake in the new company. The agreement becomes void unless a majority of rank-and-file Delta pilots who vote approve it. It does not cover Northwest's 5,000 pilots, who have their own separate bargaining unit. Pilots for NorthWest have repeatedly refused to sign on to any agreement which could cost them seniority in the new airlines. Voting for Delta pilots runs through May 14th.

Delta dismissed from deadly plane crash lawsuit

A federal judge has dismissed Delta Air Lines from more than 19 pending lawsuits involving a fatal plane crash in Lexington, Kentucky, two years ago. The 13-page opinion by U.S. District Judge Karl Forester says no Delta employee could be held liable for the crash of Comair Flight 5191. The plane crashed shortly after taking off from the wrong runway at Blue Grass Airport, killing 49 of 50 people on board. Comair is a subsidiary of Atlanta-based Delta Airlines, but Delta argued that each has separate management, differing policies and procedures and each employs its own pilots. One lawyer for the plaintiffs says the dismissal of Delta from the lawsuits won't affect an Aug. 4 trial on damages.

Delta inks deal with Alaska Airlines

Delta Air Lines will provide engine overhaul and repair services for Alaska Airlines in a seven-year, $200 million deal between the two carriers. Atlanta-based Delta says its maintenance division, Delta TechOps, will service the engines that power Alaska's fleet of Boeing 737-700 and 737-900 aircraft. Delta TechOps provides maintenance and engineering support for Delta's fleet and also serves more than 125 aviation and airline customers from around the world.

(Associated Press)

Delta, NW execs in nation's capitol

Newspaper reports say top executives at Delta and Northwest met with key U-S lawmakers on Capitol Hill earlier this week to make their case for a proposed merger. Ultimately, its up to the U-S Justice Department to review and sign-off on the proposed Delta-Northwest merger. According to the Atlanta Journal-Constitution, they'll be looking for possible anti trust implications. For example, will the merger create a monopoly. And, although Congress has no say-so in the antitrust review process, lawmakers can choose to hold lengthy public hearings. Delta officials have said they would like to have the merger wrapped up before year's end. On Tuesday, Northwest CEO Doug Steenland and Delta's Richard Anderson went to Washington to persuade lawmakers competition won't be undermined. Delta flies primarily to the south and east. Northwest is concentrated in the upper mid and north west. If the merger is approved by the Justice Department, it will create the world's largest passenger airline.

Delta pilots union chief says talks stalled

The union representing pilots at Atlanta-based Delta Airlines, says it has been unable to reach an agreement on seniority issues as merger rumors swirl around the nation's third largest carrier. Those rumors picked up steam after Delta emerged from bankruptcy in late 2007. Likely candidates included Minnesota-based Northwest Airlines and Chicago’s United Airlines. However, without an agreement on pilot seniority integration, such talks are likely stalled for now. In a letter posted on-line to Delta pilots, the head of the union wrote that the two sides were unable to reach a quote middle ground during negotiations held in New York City. Although pilot seniority integration is not required to advance a merger, Delta execs have said they would not move forward unless employees seniority was protected.

Read letter here to Delta pilots here:
http://crewroom.alpa.org/dal/DesktopDefault.aspx?tabid=2421

Permission granted: Delta pilots can picket NWA hubs

Delta Air Lines pilots have received permits to picket at Northwest Airlines hub airports in Minneapolis and Detroit. The move comes as the impasse over a proposed merger of the two airlines’ pilot seniority lists continues. The dispute has stalled a proposed combination of the carriers.

The permits allow Delta’s pilots to picket for two weeks, starting April 10. In the past, Delta’s pilots have received such permits but not engaged in picketing. Northwest’s pilots union says it will consider picketing Delta’s hub airports.

According to the Associated Press, executives with Delta and Northwest are trying to determine whether to proceed with a merger, in spite of the ongoing dispute between the two airlines’ pilots groups.

Delta Dumps Bag Fee

Delta Air Lines says it's scaling back plans to charge a $50 fee for a second checked bag on international flights. The Atlanta-based airline says some major competitors have refused to match the fee. Delta says the fee will apply only to travel between the U.S. and Europe. When Delta made the initial announcement a month ago, the fee was supposed to apply to all international travel. Delta has said the new fee was expected to generate more than $100 million annually for the airline. It did not provide a new figure Wednesday. The fee is effective for travel beginning July 1. The first checked bag on all Delta international flights remains free.

(Associated Press)

Delta celebrates end to Chapter 11

The celebration at Delta Airlines in Atlanta was part Hollywood premier and part pep rally, as hundreds of Delta employees celebrated the carrier's emergence from nearly two years of Chapter 11 bankruptcy.

Looking more like a movie star that the head of the nation's third largest airline, Delta CEO Jerry Grinstein was more than happy to share the spotlight with the crowd.

"You did it, this is your triumph!"

Grinstein told his employees that Delta emerges as a more formidable airline than before, ready to compete with low fair airlines, like Jet Blue and Air Trans.

"You've got a completely transformed company and you have ve four quarters of operating profit which hasn't happened since 2000, so this company is altogether different."

Later this week, 4-hundred million newly issued Delta shares begin trading on Wall Street.

At least 14-million of those shares will go to employees.

Analysts expect opening day prices to come in at around $20 a share.

Delta Posts 4Q Loss

Delta Airlines reports a net loss of $1.4 billion for the final quarter of last year. It comes within a weakened economy and the carrier’s recent merger with Northwest.

The loss of $2.11 a share was a big spike compared to the year earlier--an 18-cents-a-share loss for the carrier. For the full year of 2008, Delta lost nearly $9 billion. Other major carriers such as American and United Airlines last week reported fourth-quarter losses due to weak travel demand tied to the global financial crisis.

For Delta, much of its negative balance sheet last quarter involved $900 million given in employee stock awards relating to the merger with Northwest.

But while predicting a "sizable loss" for the first three months of this year, Atlanta-based Delta is forecasting a "solidly profitable" 2009, driven by lower fuel costs and its plan of reducing capacity.

Delta says it will cut its flight volume by an average 6-8 percent across its system this year.

Delta offers voluntary severance payouts

Delta Air Lines -- the world's biggest carrier --will offer voluntary severance payouts to a majority of the 75,000 employees at Delta and Northwest's mainline operations. Executives said today it's part of a plan to cut an unspecified number of jobs. Chief Executive Richard Anderson and President Ed Bastian said in a memo to employees that the program is similar to one earlier this year that Delta used to trim about 4,000 jobs. Northwest previously trimmed jobs of its own before being acquired by Delta on Oct. 29. The executives say the cuts are necessary because Delta will be reducing systemwide capacity in 2009 by 6 percent to 8 percent because the weak economy has eroded demand for seats on airplanes.

(Associated Press)

Delta passengers can purchase trees to offset emissions

Delta Air Lines is offering its online customers the option of buying trees along with a flight ticket.

The move is part of the Atlanta air carrier's attempt to reduce its carbon footprint.

As airline passengers pay for a domestic round trip flight on Delta's website, they can also decide whether to pay 5 dollars 50 cents for a tree.

"It's something we wanted to be low enough to attract people to do it and yet meaningful enough to be able to plant trees," said Tim Mapes is Delta's vice president for marketing.

The tree price for international flights is 11 dollars.

Along with the Internet option for customers, Delta says it spent corporate dollars buying trees.

Delta's green efforts are a partnership with the Conservation Fund. The fund says airplanes omit 21 pounds of carbon dioxide for every mile in the air.

Delta pilots brace for potential merger

Leaders of Delta Air Lines’ pilots union say the potential for a merger between Delta and another U.S. carrier is high. Lee Moak, Chairman of the Air Line Pilots Association, says soaring fuel prices, a weak Delta stock price and “rhetoric” by business groups over the past few months are undeniable indicators that a merger may be imminent. The union plans to prepare for a consolidation when it meets in Atlanta this week. Delta has declined to comment on the union’s speculation. Last fall, Delta executives formed a committee to consider strategic options, including a possible merger.

Delta prez: 'Merger still a "go" despite conditions'

The top official of Delta Airlines says despite the ever-changing climate in the airline industry, it’s still full steam ahead for the carrier’s proposed merger with NorthWest.

Delta president and chief financial officer Ed Bastian says he understands why other airlines have hesitation for jumping into merger deals given the economics of the industry today. However, nothing is changing with the Atlanta-based carrier’s plans to combine with Minneapolis-based Northwest.

Bastian made the comments Tuesday at the company’s annual shareholders meeting in New York. He did say that further domestic capacity cuts will be needed for Delta in the future to help deal with spiraling fuel costs. Additional job cuts however, are not planned.

Delta announced in April it would combine with Northwest, and base its headquarters in Atlanta--Delta’ current home. Just last week, United and US Airways broke-off discussions on a possible merger between those two carriers.

Delta creditors give thumbs-up for new plan

An April 9th vote by Delta creditors shows more than 95 percent support the company's reorganization plan.

Creditors also voted in the same numbers to approve the reorganization plan of Delta's subsidiary, Comair.

The new plan calls for some of Delta's creditors to receive newly issued common stock.

Delta is the nation's third-largest airline.

The carrier filed for bankruptcy protection in the fall of 2005, citing soaring jet fuel prices and increased competition from low-fare airlines.

Delta says it expects a bankruptcy court to confirm its reorganization plan at a hearing later this month.