Delta, NWA defend proposed combination
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The CEOs of Northwest Airlines and Delta said they will only cut about 1,000 jobs when the two airlines merge.
Northwest CEO Doug Steenland and Delta CEO Richard Anderson testified Thursday in front of the House and the Senate Judiciary Committees on the proposed merger. Members of Congress expressed concerns about the airlines cutting routes and jobs, but the executives received a mostly warm welcome.
Steenland and Anderson reassured members of Congress that their merger would hurt no one.
No front line employees would be involuntarily cut, no hubs would be lost, and a global airline would be competitive in international routes.
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Rep. Lamar Smith, R-Texas, was skeptical.
"What would you estimate is the total number of people who might lose their jobs?" he asked.
Steenland took a long pause before replying.
"I mean, It's hard to say because we haven't really done that granular analysis yet," he said.
"If you can already say it will only be in those in the corporate management, you surely have an idea of how many people you're talking about," Smith said.
Anderson said the total jobs lost of would probably be "some number under a thousand." He said most of the jobs lost will come in accounting and finance.
Steenland said he does not believe the job cuts that are made will come exclusively from NWA's Eagan headquarters.
"I think a lot of functions will be remaining in Minneapolis because of unique skills, and I think the commitment on both the Northwest and Delta side is to look to have a management team that contains participants from both companies and to look to have the strongest team going forward," he said.
Most committee members were concerned about how this merger would hurt consumers. Nearly every member of the House committee who asked questions wanted to know if their city -- Memphis, Orlando, San Diego -- would lose service.
Rep. John Conyers, D-Mich., had a different question.
"If you don't get this merger does that mean you're both teetering on bankruptcy again?" he said.
Steenland said the two companies had the best balance sheets in the business.
"If the transaction is not permitted to go forward, the biggest detriment will be the benefits that come from putting these two carriers together we'll not have at our disposal," he said.
This week, the airlines announced combined losses totaling $10.5 billion for the first three months of this year. After two hours, Steenland and Anderson walked out of the House Judiciary Committee room smiling. They then headed to the Senate, where Minnesota Sen. Amy Klobuchar was waiting for them. Northwest has been repeatedly bailed out, she said, and it has repeatedly made promises to serve customers and employees.
"If the merger triggers further concentration in the industry, what evidence do they have that prices won't increase?" Klobuchar asked. "What assurances can they give that consumers will have real choice? How can they assure that communities will stillhave frequent, shigh quality service?"
Steenland and Anderson refused to speculate on whether other mergers might follow, but they say fare web sites like Orbitz ensure consumers get reasonable prices.
Business Travel Coalition President Kevin Mitchell also testified. His group represents the interests of travelers and corporate travel interests. He called the proposed merger the canary in the coal mine and said the merger could cause a meltdown in the airline industry.
"How can there be untapped savings at two airlines that just underwent years of cost cutting and bankruptcy?" Mitchell said. "How can one accept that there are billions of dollars in revenue synergies when there are no plans to restructure either network?
"Unless Delta can convince outsiders of something on the order of $5 billion in readily achievable synergies there is no possible way this merger could benefit consumers or the public interest."
Two senators closed their remarks by saying they supported the merger. The merger is awaiting approval by shareholders and the department of Justice.
