CHARLOTTE, N.C. -- The airline industry could be poised for a historic week.
None of the five-biggest airlines have attempted a merger since 2000, but now,
, the third- and fifth-largest carriers, appear little more than a handshake away from becoming unified.
The major stumbling block was removed over the weekend when pilot leaders from the two sides agreed on a method to consolidate their locals, the
reported. Other organizations have reported that a pact hasn't yet been reached.
The two carriers' boards are expected to meet Tuesday or Wednesday to determine whether to proceed with a deal, with a merger announcement to follow.
Should Delta and Northwest decide to link up, that could trigger another takeover. The second- and fourth-largest carriers,
, have also been talking, sources say.
The agreement between the two local chapters of the Air Line Pilots Association at Delta and Northwest calls for a pilot representative on the combined board and a 7% equity stake in the merged airline, and it sets out terms for joining the two seniority lists, the
The intent is to avoid the level of internal disputes that followed the 2005 merger of America West with
. There, a vote is expected this spring on whether to oust the Air Line Pilots Association as the pilot representative at the merged carrier.
Despite work force turmoil and a botched reservations systems integration, the US Airways and America West merger achieved some notable successes. It combined two weak carriers into one that produced unusually strong revenue per available seat mile, especially in its first year, as a result of reduced capacity and an enhanced ability to gather passengers at hubs.
But if that deal generally provides a template for getting it right, the two attempts more than seven years ago are studies in how to get it wrong.
An effort to merge United with US Airways was rejected by the Justice Department after United appeared to lose interest. The department allowed
, the owner of American, to acquire TWA, but after the September 2001 terrorist attacks, St. Louis ceased to be a hub and most TWA employees were laid off.
Nevertheless, some experts believe that American retains an appetite for transactions. In a report, Credit Suisse analyst Daniel McKenzie says the carrier could team up with Oneworld partner British Airways to bid for Northwest.
"Given the amount at stake for both American and British Airways, we don't rule out British Airways aid to American for a counter-offer on Northwest," McKenzie wrote in a research report. "Delta and Northwest appear to be going out of their way to sew up an air-tight deal that limits execution risk,
but a potential British Airways/American counteroffer could still force Delta to overpay."
Credit Suisse has a financial relationship with Delta that recently included management or co-management of a public offering.
Shares of Delta slipped 0.4%, while Northwest was up 0.6%. Continental edged up 0.2%, and UAL gave back 2.2%.