Money & Investing - Banks.com

For a couple of months, Delta Air Lines Inc. (DAL) and Northwest Airlines Corp. (NWA) have been working on a merger deal. In times when record oil prices are increasing the costs of energy and fuel, many airlines are looking for ways to cut costs and increase profits. Delta and Northwest are no different.

But, even though the two airlines have come to an agreement, the merger has yet to be approved by federal regulators. The Wall Street Journal reports on what is likely to happen before any DAL and NWA deal goes through:

The Justice Department is expected to investigate the deal’s impact on airline competition in a city-by-city review that could take the rest of the year to complete. And Congress has already planned hearings on the deal’s effect on consumers, with several powerful lawmakers staking out opposition.

Some lawmakers are concerned that this merger would limit consumers’ choices to a few mega-carriers. Others, however, cite the fact that this could bring some prices down. And the airlines point out that right around one-third of domestic air travelers use discount carriers anyway. Delta and Northwest are bolstering their case by pointing out that this would benefit them in terms of global competition.

Many analysts feel that the merger will go through eventually. After all, Delta and Northwest already have agreements (called code sharing) that let them sell each other’s seats. Additionally, many of the routes flown by Delta and Northwest are complimentary. Although it is possible that some flights between hubs might need to be eliminated.

Ultimately, with DAL and NWA both down on the stock market this morning, this deal might be helpful. It would allow the airlines to consolidated resources and possibly cut costs in terms of equipment, fuel expenses and employees.

Disclaimer: I am not an investment professional. Nothing in this piece or on this Web site should be construed as investment advice. Before making investment decisions, do your own research and/or consult with an investment professional. All investment comes with the risk of loss.

Tags: Delta Northwest deal, DAL, NWA, stock market analysis,
stock market blog, investing blog, record oil prices