Delta, Northwest again nearing merger

Delta Air Lines and Northwest Airlines may announce a merger to create the world's largest carrier as early as Tuesday, people familiar with the talks said.

Delta Chief Executive Officer Richard Anderson met Sunday in Minneapolis with Northwest CEO Doug Steenland, and the Northwest board is to meet today, said two of the people, who didn't want to be identified because the discussions are private.

Delta, the third-largest U.S. carrier by traffic, is betting that a combination with No. 5 Northwest will boost revenue and lower costs after jet-fuel prices surged 77 percent in the past year. The merged company would surpass American Airlines in size.

"They're going to be, by far, the largest, most dominant force in the industry," Michael Derchin, an analyst with FTN Midwest Research Securities in New York, said last week. "The cost cutting has to happen with oil at $110 per barrel, and on the margin this helps you do it a little better."

Delta spokeswoman Betsy Talton, Northwest spokeswoman Tammy Lee and Northwest pilots spokesman Matt Coons declined to comment. Delta pilots spokeswoman Kelly Regus didn't return messages seeking comment.

The airlines are forging ahead after earlier plans to get their pilots to draw up a combined seniority list on their own ahead of the merger failed.

Delta instead has focused on reaching an accord with its 7,000 pilots. The airline and its pilot leaders came to a preliminary agreement on most issues last week and are ironing out differences on the size of pay increases, two people said.

Northwest's 5,000 pilots would be asked to join under a single contract later.

Delta would keep its name and Atlanta headquarters, and Anderson would run the combined carrier.

The merged airline would benefit from Delta's trans-Atlantic routes to Europe and its Latin American network, plus Eagan, Minn.-based Northwest's Pacific routes, including access to the restricted Narita Airport in Tokyo.

Delta and Northwest combined fly about 12 percent of passengers at Seattle-Tacoma International Airport.

The merger was threatened last month after pilot leaders at Delta and Northwest failed to agree on how to combine their seniority lists. The two sides differed over how younger pilots at Delta would move up the list as older Northwest pilots retired.

Seniority determines pay, type of aircraft and routes flown.

Delta's pilot leaders met in a special session Friday.

Northwest pilots-union leaders met Sunday and later issued a memo to rank-and-file members saying they will oppose any merger that does not keep the interests of Northwest pilots "at the forefront of the decision-making process."

The union leaders said any combination must involve "fair and equitable seniority-list integration."

The rising cost of oil has put all airlines under intense financial pressure. Since the talks began between Delta and Northwest, the two airlines have announced plans to reduce capacity this year, and Delta has announced plans to eliminate 2,000 jobs.

Information from The Associated Press was included in this report.