April 01, 1998|By BLOOMBERG NEWS
CHICAGO -- Delta Air Lines Inc. probably will seek an alliance with United Airlines that will let the airlines sell seats on each other's U.S. flights as they attempt to counter a major rival partnership, a report by United pilots said yesterday.
Delta, the third largest U.S. airline, stands to lose the most business of any airline to the pending alliance of Northwest Airlines Corp. and Continental Airlines Inc. and "may attempt to initiate some activity in order to protect its position," said the report. United is the most likely partner, it said.
A move by Delta would come as airlines increasingly jockey to boost revenue through partnerships. Most major U.S. airlines have alliances with international carriers, but the agreement between Northwest and Continental is spurring other domestic airlines to consider linkups with each other.
"The carrier that goes it alone is almost going to look like the old ma-and-pop store when Wal-Mart comes into town," Mike Glawe, chairman of United's pilots union and a member of UAL's board of directors, said in an interview. "They will have a hard time competing against someone with marketing power that big."
United's pilots union set up a committee in January to study the effect of the Northwest and Continental pairing on pilots and determine which other partnerships are most likely.
An agreement with UAL Corp.'s United is Delta's "most sensible long-range strategy" because the two airlines' routes have little overlap, the pilots' report said.
Delta has a big presence in the South, the East Coast and Europe, while United dominates Chicago, Denver, the West Coast and the Pacific. United, the second largest U.S. airline in revenue after AMR Corp.'s American Airlines, also is strong in Europe.
A seat-selling agreement between Delta and United would give the pair about 36 percent of the available seat miles in the nation -- a common measure of capacity -- compared with 26 percent for the pending Northwest and Continental alliance, the report said.
Douglas Hacker, United's senior vice president and chief financial officer, wouldn't comment on the report, though he said the Chicago-based airline is considering responses to the industry shift brought on by the Northwest-Continental alliance.
Atlanta-based Delta declined to comment.
Pub Date: 4/01/98
