Northwest reportedly gives Delta merger nod

Northwest Airlines Corp. has proposed to Delta that the airlines move ahead with their combination without a prearranged deal with pilots, a person with direct knowledge of the situation said on Friday.

The person, who asked not to be named because of the sensitivity of the situation, said Delta Air Lines Inc. hasn't rejected the idea.

Neither airline would comment on the development, but Delta said in a statement that it supports "industry consolidation as a vehicle to ensure Delta remains an industry leader." It said it is continuing to look at strategic alternatives.

The usual approach in airline combinations has been to have pilots work out a joint union contract afterward. Delta and Northwest took a different approach in their merger talks, figuring that if they could obtain full pilot agreements in advance they would reap the benefit of a combined airline much sooner.

With that in mind, pilots were in line to get raises. But the two groups couldn't agree on seniority, which determines who flies more desirable aircraft and routes.

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

The person who spoke about the talks said the absence of a seniority agreement means there won't be as much money for pilot raises.

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Northwest's move could be intended to spur pilots to renew efforts to make a deal on seniority. Northwest pilots have said they'd be willing to let an arbitrator decide seniority. Delta pilots have rejected the idea.

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Dave Stevens, chairman of the Northwest branch of the Air Line Pilots Association, issued a statement saying a successful merger will need the agreement of the pilots of both airlines.

"We will reserve our judgment and support until the economic and contractual elements of an agreement have been negotiated," he said. "Any merger must be in the best interests of our customers and the employees, not just the shareholders."

A spokeswoman for Delta's pilots had no comment.

Those shareholders have seen the value of Delta and Northwest investments shrivel. Both have lost about half their value since mid-February, suffering from rising oil prices and fading hope that they would combine. Both recovered from lows on Friday after the reports that Northwest was pressing the issue of combining. Northwest rose 30 cents, or 3.5 percent to close at $8.76. Delta rose 26 cents, or 3.1 percent, to close at $8.61.