High Hurdles Await Airlines

Some deals are already on the table in the airline industry, where a long-awaited round of consolidation seems to be nearing, and more deals are being discussed. The only catch is there's no assurance that any of them will get done.

In the past month, US Airways(LCC) and AirTran(AAI) have bid for other carriers. United(UAUA) has talked to Continental(CAL) about a combination, and Northwest(NWACQ) has hired a merger adviser.

Each case is facing its own substantial barriers. The US Airways bid for Delta(DALRQ) is a hostile one, opposed by the target company's management, as is the AirTran proposal for Midwest Air(MEH).

United, chasing a merger, has already been rebuffed by Delta, and the talks with Continental might hit a dead end, too. On Wednesday, Continental CEO Larry Kellner indicated he wasn't interested in merging with another major U.S. carrier, saying he was "satisfied with the airline's position in the market as it stands," the Jerusalem Post reported.

"There has been a lot of consolidation activity recently but we prefer that Continental remain independent, as we feel we are very well-positioned in the market at the moment," Kellner said at a Tel Aviv press conference, according to the newspaper.

US Airways' offer for Delta is opposed not only by management, but also by Delta's pilots, who say their contract would prevent a deal from getting done. US Airways denies it, but at the least, the contract would delay some of the cost and operational efficiencies that might otherwise be achieved.