American, Northwest reportedly in talks, Carriers won't comment on possible merger
Friday, June 2nd 2000, 12:00 am
By: News On 6
Talks about a possible merger between American Airlines and Northwest Airlines have begun, a St. Paul, Minn., television station reported Thursday.
Citing unnamed sources, ABC affiliate KSTP-TV reported that Don Carty, chairman and CEO of American's parent, AMR Corp., and Northwest president and CEO John Dasburg have talked about a possible merger.
Chris Chiames, a spokesman for American Airlines, said he could not comment about the possibility of a merger.
Northwest spokesman Jon Austin also declined to comment about the deal.
Last week, United Airlines' parent company, UAL Corp., announced its intention to purchase US Airways Group Inc.
Consequently, analysts have speculated that American is facing increased pressure to compete with UAL.
With the United-US Airways merger still pending, analysts say, American basically faces three options: make a counteroffer for US Airways, acquire another carrier or simply hope that United's plan falls through.
Analysts have noted, though, that it would be very expensive for American to make a counteroffer for US Airways because United has offered a premium price.
Many industry experts also believe the United-US Airways merger faces major obstacles from the Department of Justice and United's labor unions.
However, if American were to acquire Northwest Airlines, the combination would create another megacarrier to rival that of a combined United and US Airways.
Analysts have said that after US Airways, Northwest is the only large airline left that could complement American's route network.
Northwest would give American significant Asia-Pacific routes that the carrier currently lacks.
American would also become the dominant player in the Midwest, taking over Northwest hubs in Minneapolis and Detroit.
Northwest owns a controlling stake in Continental Airlines Inc.
But Continental has been seeking to buy back this stake from Northwest.
Both American and Northwest have experienced several labor disruptions in recent years because of rocky relations with their unions.
Staff writers Katherine Yung and Jennifer Chamberlain contributed to this