NEW YORK - Northwest Airlines Corp. executives said yesterday that the carrier has the power to thwart a Continental Airlines Inc. purchase of Delta Air Lines Inc., discounting a report that such a transaction could get around a Northwest veto.
Northwest can block any transaction that might significantly increase Continental's size, not just a purchase of the Houston-based carrier, Chief Financial Officer Mickey Foret said at an investor conference in New York. He didn't elaborate after making the remarks at a Goldman Sachs transportation conference.
The Washington Post reported Saturday that Continental, the fifth-largest U.S. airline, might try to buy No. 3 Delta to circumvent veto power resulting from regulators' forcing Northwest to divest a stake in Continental last year. The three are reviewing options as the industry consolidates through acquisitions planned by UAL Corp.'s United Airlines and AMR Corp.'s American Airlines.
"Delta is considering all of their options, especially if they feel like United and American are dictating the direction the industry is going," said Arnhold & S. Bleichroeder Inc. analyst Robert Milmore.
Continental Airlines spokesman David Messing declined to comment on talks or whether Northwest's veto power extends to a Continental acquisition. Delta spokesman Russ Williams also declined to comment, saying, "We have a long-standing policy of not commenting on rumors regarding possible mergers or acquisitions."
Northwest wasn't immediately available for comment.
Continental's shares fell $2.79, or 5.2 percent, to $51.21 yesterday. Delta shares fell 50 cents to $46.89. Northwest's shares rose 13 cents to $24.81.
Making a run at Delta is another way for Continental to let regulators know that United and American aren't the only carriers considering acquisitions, Milmore said. UAL has bid $11.6 billion for US Airways Group Inc., and AMR wants to buy Trans World Airlines Inc. and some US Airways assets for $5.08 billion.
Industry executives and experts are scheduled to testify at a congressional hearing tomorrow on airline consolidation and the possible impact of mergers.
Northwest, Continental and Delta could always try a three-way venture, analysts said. Northwest and Delta might try to divide up Continental assets, said ING Barings analyst Ray Neidl.
