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VOL. 123 | NO. 28 | Monday, February 11, 2008

Northwest CEO Says Consolidation 'Highly Likely at Some Point'

AP

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MINNEAPOLIS (AP) - Northwest Airline Corp.'s chief executive has told employees that further consolidation within the airline industry is "highly likely at some point" and that doing nothing could be Northwest's "worst alternative."

Northwest and Delta Air Lines Inc. have been talking about joining the two carriers. Other combination ideas have been floated involving UAL Corp.'s United Airlines and Continental Airlines Inc.

In the letter sent to workers on Wednesday, Northwest CEO Doug Steenland said executives and Northwest's board "would not move forward with any transaction that did not serve the interests of our employees, our shareholders, our customers, and the communities we serve."

"I do believe that consolidation is highly likely at some point - particularly with the high cost of fuel and the other challenges that the industry faces," Steenland said in the letter sent to employees Wednesday. A copy of the letter was obtained by The Associated Press on Friday.

Steenland added that "doing nothing in this area could be our worst alternative. It's always preferable to be in control of our own destiny rather than have it dictated to us."

He wrote that any deal would have to create "a more stable, financially secure airline; one that offers world-class service with an end-to-end network and competes strongly as a truly global carrier."

On Friday, 29 Minnesota business leaders called on Steenland and Delta CEO Richard Anderson to increase service to Minneapolis if the two airlines merge.

The letter signed by CEOs - including those at Best Buy Co Inc., U.S. Bancorp, General Mills Inc., and Medtronic Inc. - pointed out that Minnesota has 20 companies in the Fortune 500, more than many larger states.

"World-class air service will be essential to our success - and profitable to the carrier that serves the region," the letter said.

The idea of combining Atlanta-based Delta and Eagan-based Northwest has also prompted elected officials in Minnesota and Georgia to remind the airlines of commitments they have made to their home bases. Both airlines employ thousands of people in their home states, and businesses factor in air service when they decide where to locate or expand.

Copyright 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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