A Delta-Northwest merger: The view from Atlanta

Delta Air Lines
Delta Air Lines, based in Atlanta, is reportedly in merger talks with both United and Northwest. Georgia officials hope any merger would strengthen Delta's presence in their state, but Minnesota officials want Northwest to remain headquartered in the Twin Cities.
David McNew/Getty Images

(AP) - Whenever Delta Air Lines Inc. starts making noise, it has become standard practice in Georgia for lawmakers to quickly call a meeting and then shower the Atlanta-based company with praise.

It happened during the airline's descent into and then emergence from bankruptcy, a subsequent hostile takeover bid from US Airways and now with speculation that the nation's No. 3 carrier may be close to a deal to combine with a rival.

What's different now, though, is that Georgia could gain from the possible combination. There's hope that Atlanta could become the headquarters for a potential merger with either of the reported suitors, United Airlines or Northwest Airlines.

"We guardedly welcome these talks of a merger if they result in the relocation of a headquarters here," said state Sen. Judson Hill, a Marietta Republican who chairs the subcommittee that called Tuesday's meeting.

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"We guardedly welcome these talks of a merger if they result in the relocation of a headquarters [in Atlanta.]"

Rising jet fuel prices and other factors are driving fresh rounds of consolidation talks, and some analysts and Delta investors are among the loudest calling for a merger.

Northwest and United are seen as the best fit for Delta, as both have strong Pacific routes that would complement Delta's flights across the Atlantic.

Such a combination would also create the nation's largest airline, guaranteeing increased scrutiny.

Delta has said it is analyzing its options, but would not comment on possible merger talks.

Meantime, Minnesota officials are putting some pressure on Northwest officials to keep the airline's corporate headquarters in the Twin Cities.

Gov. Tim Pawlenty said last week he expects Northwest to honor its commitments and keep its headquarters and hub in Minnesota.

Northwest would give up $215 million in financial incentives at the airport between now and 2020 if it moves its headquarters out of Minnesota.

Pawlenty also indicated that additional state assistance might be available to keep the airline's headquarters and hub in Minnesota.

In Atlanta Tuesday, lawmakers and state officials urged Delta to stay in Georgia and praised its impact on the state.

Thanks to Delta, they said, the city boasts the world's busiest airport, Hartsfield Jackson Atlanta International Airport. And they reminded Delta that it has an estimated $13 billion economic impact on the state and has long been used to help raise Georgia's profile.

"Delta is an important arrow in our quiver as we go out and market our state," said Ken Stewart, the state's economic development commissioner. "They're a great partner when it comes to selling this state."

Ben DeCosta, the airport's general manager, said he's confident the potential combined company would maintain a hub in Atlanta, and added that the city could only stand to gain from a possible merger.

"In the Atlanta situation, all the indications say we'd be the winners" of a possible merger, he said.

Hill, wearing a button that said "Keep Delta my Delta," took the chance to remind airline officials the Legislature recently passed a measure that limited what it paid in state fuel taxes. It's likely to be far from the last tax break aimed at the company.

"How can we be helpful?" he asked at the meeting's end. "What can we do to be helpful as y'all continue this process, without interfering?"

(Copyright 2008 by The Associated Press. All Rights Reserved.)