With the skyrocketing fuel prices, and slower economic growth, the U.S Airline industry is poised for a downturn and reports have that about three smaller airlines have closed shop. One of the major solutions for this seems to be consolidated airlines; yes I am talking about mergers. According to ‘Reuters’, Delta Airlines will buy Northwest for more than 3 billion, to create the worlds biggest Airlines.
After taking up $35 billion in losses in 2006, mergers seem to be the only solutions which would lead to higher fares and preferably lower cost. Never before has the Airline industry felt the need to cut cost in a combined effort. The new combined Airline is awaiting regulatory approval, on receipt of which the new Airlines would be headed by Richard Anderson and would be headquartered in Atlanta.
With both the management awaiting regulatory approval there seems to be some ‘union’ issues between both the Airlines, which is yet to be sorted out. The issue seems to be that the unions could not come to an agreement as to how to work under one security umbrella!