Industry analysts felt that combining the two major US carriers would have helped alleviate financial problems for both. If the merger were to take place there was speculation that other domestic airlines would have had to follow suit in order to remain competitive. In particular the idea emerged that Continental would work a similar deal with United.
The stumbling point for pilots has to do with issues of seniority. Delta executives are reported to have said they would not move ahead with the merger unless their employee seniority was maintained. As pilots from Delta and Northwest entered negotiations, it became apparent they would not be able to reach agreement on the merger of their respective seniority lists. The merger is effectively dead at this point.
Delta has announced a 10% cutback in its domestic capacity during the second half of this year. As part of its restructuring since leaving bankruptcy last year, Delta has begun emphasizing its international operations. The carrier has indicated the most important function of domestic operations will be to feed its international network.
Additionally, Delta is reported to be offering voluntary severance payouts to about 30,000 of its 55,000 full-time employees. Not included in the offer are its airline pilots who have a separate union contract.
