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Proposed alliance between Delta and United stumbles

Published Sep. 13, 2005

A planned strategic alliance between United Airlines, the biggest U.S. carrier, and No. 3 Delta Air Lines went into a holding pattern Friday within hours of the official announcement.

"We were very close," said Delta spokesman Bill Berry. "We just simply don't have an agreement. Until every party is in agreement, there can't be an agreement." He declined to elaborate.

The apparent snag was concern about the proposed deal by unionized pilots for both airlines.

"All four parties had to be comfortable before proceeding with any transactions," said Kathie White, a spokeswoman for United's chapter of the Air Line Pilots Association. She referred to the two carriers and the two pilots' groups. "The comfort level wasn't there."

But a spokesman for Delta's pilots union said it would be "a mischaracterization" to say it opposed the alliance. "There certainly is room for talks on this," said Andy Deane, a spokesman for the Air Line Pilots Association group at Atlanta-based Delta. "It's not lost on us that the industry is in a consolidation mode."

United, based in Chicago, confirmed it had had "extensive discussions" with Delta but said they have been suspended.

Just three months ago, Delta's bid to merge with Continental Airlines fell through when Continental opted to form an alliance with Northwest Airlines. On Thursday, rivals American Airlines and US Airways announced their own partnership.

Officials of Delta and United early Friday scrubbed plans for a news conference in New York to discuss what Berry called "a global alliance." It would have linked their route systems, tied together their frequent flier programs, allowed qualifying passengers access to each other's airport club rooms and permitted code sharing, or selling seats on each other's planes.

United's strengths are on the Midwest and Far West U.S. routes, while Delta is strongest in the Atlantic Coast and Sun Belt states.

Airline analysts say such alliances provide carriers with many cost-cutting and marketing benefits that avoid the complications and regulatory barriers of a full merger. However, pilots unions usually have a say in code-share arrangements, and combining international routes would require government approval.

"Quite obviously, we do have some concerns," Deane said from Portland, Ore., where the Delta ALPA group, which represents 8,000 pilots, was meeting this week. He said code-share deals raise the possibility of less flight time for pilots and less advancement opportunity.

Statements from Delta and United gave no hint of their next moves.