Delta Merger May Reshape Alliances

"From an Air France KLM perspective, we would prefer that Delta would do something with Northwest," Koster says. But he acknowledges that alliances are just part of the consolidation puzzle. Those pieces must be aligned, he says, "and then you can see how to handle the alliances."

In Koster's view, the Air France KLM arrangement, in which the carriers operate separately, might serve as a model. Were Delta to merge with United, he suggests, the two could operate separately and remain in separate alliances.

After all, he says, "losing United is a bigger loss for Star than losing Delta would be for Skyteam, because we would still have two major U.S. carriers if Delta left, while they would keep only US Airways(LCC)."

The third U.S. member of Skyteam is Continental(CAL).

Another potential outcome, suggests Morningstar's Thompson, is that U.S. airline consolidation could be followed by alliance consolidation. "If the legacy carriers really want to box out the smaller carriers, who are nipping at their heels, they might be better off cementing a huge cross-border pact," she says.

Many major scenarios contemplate high levels of alliance disruption. For instance, many analysts speculate that were Delta to bid for Northwest, United and Continental might also seek to merge -- and American could try to preempt Delta and bid for Northwest. (It sought to buy Northwest in 2000, but found the price too high.) The potential outcome could disrupt all three alliances.

"These alliances, particularly Northwest/KLM, would be very difficult to unwind," says Bill Swelbar, a research engineer in MIT's International Center for Air Transportation and an airline industry consultant. "I think that is one of the biggest potential question marks about a potential Delta/United combination. But in the end, I don't believe the alliance structure is poured in concrete."

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