Delta's Bastian: Merger Benefits Increasing
"The greatest value [from the new contract] was the ability to move aircraft around and use the right code mix," Bastian says. Additionally, once the carriers get a single operating certificate, which is expected 12 to 24 months after the merger is completed, pilots could fly any airplane in the fleet.
By contrast, in the 2005 merger between US Airways (LCC) and America West, pilot contracts did not prevent code shares, but the continued failure to merge the contracts means pilots still fly only the plaines from their pre-merger airline.
The deal gives Delta the world's largest loyalty program, with 60 million frequent fliers. In the next two years, the carrier expects to benefit from the expiration of agreements to issue credit cards linked to the two carriers' programs with American Express (AXP) and US Bancorp (USB).
"We will be America's premier global airline, and there is a price to pay for that," Bastian says. Last month, Continental (CAL) received $413 million when it extended a joint marketing agreement with JPMorgan Chase (JPM).Additionally, the merger will make Delta the operator of 700 to 800 regional jets, about 40% of the country's regional jet fleet. "That is a big opportunity," Bastian says. Also, Delta will get more than $100 million in improved efficiencies in airport operations, leasing less space at costly facilities like Los Angeles International Airport. As for regulators, Bastian says everything appears to be going well with the Justice Department, which must approve the deal. "We're meeting all the information requests, [for] over 10 million pages of information, and we're working in a very collaborative manner," he says.
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