Delta Chief Chats Up Merger With NWA

By Eric Smith

NO WORRIES: Delta CEO Richard Anderson said Thursday Memphis will be a major hub when Delta and Northwest Airlines finish their merger. -- PHOTO BY ERIC SMITH

Memphis will be an integral hub in the combined network of Delta and Northwest airlines following a proposed merger between the two companies, Delta CEO Richard Anderson told a packed house Thursday morning at the Holiday Inn-University of Memphis.

If anything, the merger of the two airline behemoths – expected to be completed by fourth quarter – will enhance the status and traffic of Memphis International Airport, Anderson said at a breakfast forum hosted by the Memphis Regional Chamber, Memphis-Shelby County Airport Authority, Memphis Convention & Visitors Bureau and the Economic Club of Memphis.

“The consolidation is about addition, not subtraction,” Anderson said.

Anderson said the move could even bring more flights to the city, especially international flights, considering the long list of worldwide cities now served by the two companies. He also noted that the two airlines don’t overlap in national and international network routes as much as Delta and U.S. Airways, which recently failed in a bid to overtake Delta.

Instead, he added, the union of Northwest and Delta creates a complementary network that spans the globe and retains a need for strong connection hubs like Memphis.

“The places Northwest is strong, Delta has little presence,” Anderson said. “And the places Delta is strong, Northwest has little presence. When you think about a map of the world, you want to cover the map of the world.”

Take the good with the bad

Anderson pointed to Memphis’ importance as a hub airport by citing the recent restructuring at Northwest. After all, if Memphis was found to be a valuable asset during and after the company’s bankruptcy, it surely will be a valuable asset after the merger.

“The Northwest-Delta merger is great for Memphis, great for the Memphis region, great for Tennessee and great for the United States.”
– Arnold Perl
Chairman, Memphis-Shelby County Airport Authority

Arnold Perl, chairman of the Memphis-Shelby County Airport Authority (MSCAA), said the retention of Memphis as a hub ultimately will hinge on the city’s benefits.

First, its central location makes it a natural fit for many air routes. Also, Memphis International Airport boasts the shortest connection time of any connecting hub in the U.S., which will be an increasingly vital consideration for airlines as the cost of fuel rises.

“The Northwest-Delta merger is great for Memphis, great for the Memphis region, great for Tennessee and great for the United States,” Perl said.

Of course, the airline industry faces numerous hurdles, and the merger could bring these to light. The skyrocketing price of oil has sent some airlines reeling, and the duplication of routes in the merger could spell reduced service for some markets.

And this summer, Delta will end a 10-year contract with Memphis-based Pinnacle Airlines – which also operates as a regional carrier for Northwest – perhaps bringing discord to merger implications in the region.

Anderson said that decision will have no bearing on the details of the merger, and that Pinnacle will continue to be an important part of the Northwest network.

Reasons behind reasons

MSCAA president Larry Cox said he believes the merger will be good for Memphis International, and that Anderson’s comments Thursday were in line with discussions he and other airport leaders have had with the Delta chief.

“It was consistent with our conversations with Delta and Northwest since this thing came up,” Cox said. “It gives Memphis the opportunity to grow even more. We’re very happy.”

Tom Schmitt, president and CEO of FedEx Global Supply Chain Services and chairman of the Memphis Regional Chamber, agreed. He said the issue at hand is about access and connectivity, and the merger should help passengers and cargo get in and out of Memphis more efficiently.

“This combination is going to help that,” Schmitt said. “There’s a reason we endorsed the deal.”

The deal, of course, is far from done, and a lot will play out over the coming months and years.

First, there’s resistance from officials such as Rep. James Oberstar, D-Minn., the chairman of the U.S. House Transportation and Infrastructure Committee, who recently sent a letter to the U.S. Department of Justice opposing the merger.

Even Anderson himself noted that the merger process would be highly regulated by the Federal Aviation Administration and would take 18-24 months to work out after the deal closes by the end of 2008.

But, he added, if everything falls into place and the consolidation occurs as planned, the future of air travel here could be bright.

“We look forward to many more decades of success in Memphis,” Anderson said.