| The deal, signed this week, with regard to the merger of American airlines Delta Air Lines and Northwest Airlines creates prerequisites for new mergers.
UAL, the parent company of “United Airlines” and American Airlines, belonging to AMR are capable of signing larger deals than Delta and Northwest.
United Airlines, which is now the second largest airline with respect to transportation, long back planned to absorb Continental Airlines (№ 4 in the USA).
The merger of Delta and Northwest facilitates their task of signing a similar deal. Under this agreement, Continental has the right to take back the “Golden Share” in its company, which Northwest had received several years ago, and which allows Northwest to block the merger of Continental with any other airlines.
United and Continental had carried out consultations with regard to the merger even earlier but "Golden Share” created obstacles and moreover, Continental preferred to remain independent while the market conditions allowed.
But this week, the General Director of Continental Larry Kellner hinted about the changes in strategies. The company is returning back the “Golden Share” and reconsidering the alliance with Northwest and Delta. General Director of UAL Glenn Tilton stated that the company will participate in those consolidation deals, which will be favorable to the company.
According to sources, agreements between the companies are yet to be signed but they are ready to renew negotiations and can sign the merger deal in some weeks to come.
The joint company “United-Continental” will be more like the new Delta. The merge will allow in combining their significant shares actives in various regions of the USA and across the borders.
In the meantime, company American Airlines, first with regard to transportation, can try to make a more favorable proposal to Northwest or bid for Continental.
The US Airways Group is also a potential candidate for absorption. According to sources, the company is already carrying out negotiations with United Airlines for over a month in this regard.
The rise in fuel prices, slow economy growth and stiff competition from discounters and rich foreign airlines, which have the possibility to upgrade the fleet quickly, are forcing the American airlines to workout a merger. Without alliance, it is very difficult for these companies to survive in the market. Aloha Airgroup, Skybus Airlines, ATA Airlines and Frontier Airlines Holdings announced bankruptcy several weeks back and the first three listed even closed forever.
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Delta Airlines and Northwest Airlines announced that they are merging into one carrier. The merger was approved by the director boards of both companies this week. This merger will create the world's biggest carrier valued at over $17 billion. The combined airline will be called Delta, will be based in Atlanta and Delta's CEO Richard Anderson will head the combined company.
