Where the fuel price leads by Claudia Sonea

Because of the increasing oil prices that got to record highs of $90 dollars a barrel, all airline executives are trying to find ways of reducing cost that usually leads to takeovers. Of course this struggle to cut expenses attracted rumors that US second- and third-largest carriers, United Airlines and Delta Air Lines, are holding talks with the purpose of merging. The Wall Street Journal's online edition used the pseudonym of official as the source that offered the data about the merge. Furthermore, it gave all the details of the talks like the name of United and the headquarters will remain in Chicago. Still, both Delta's CEO Richard Anderson and United denied such talks and underlined that there is no ongoing discussion on the possible merge. Indeed Wednesday Delta's board established a special committee to work with management to review and analyze strategic options for the airline. Despite the statement made on Oct. 12, 2006 by former Delta CEO Gerald Grinstein that there seems more than likely for a merge between the two airlines to consolidate. The so-called official also said that Delta held talks with other airline companies, therefore the fact that Anderson, former CEO of Northwest Airlines Corp., was brought in August to replace Grinstein everyone presumes that Delta also tries to get to an agreement with Northwest. Still, Anderson dispelled the rumors saying that he won't intermediate any consolidation with Eagan, Minn.-based Northwest. At the base all rumors stays the letter of Pardus Capital Management LP addressed to Delta's top management in which it underlined as a must to merge in order to deal with the soaring of fuel prices. Karim Samii, president of Pardus, and Shane Larson, estimated that the benefits of such a pairing would be about $585 million and also a merge between the two largest US airlines would mean a broader network than any other combination. It is a much better solution than the merge with Northwest from the point of view of the network width, but when it comes to profit, a Delta combination with Northwest would produce even bigger benefits of about $1.5 billion, primarily from combining the smallest hubs â€" Detroit/Cincinnati and Memphis/Atlanta. Who knows if the rumors are true or not? Moreover, does the official even exists? Until Delta will hold a press release, there is no way of knowing the truth. Don't go away, the news travel fast.

related story: http://news.yahoo.com/s/ap/20071114/ap_on_bi_ge/delta_united;_ylt=AjtfGSr5ZzOTvz3QhzH5i7Os0NUE

by Claudia Sonea for PocketNews (http://pocketnews.tv)

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