12/02/12, 12:19:08 EST

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Delta CEO Renews Talk Of Airline Consolidation

money.cnn.com

Delta Air Lines Inc. executives said Tuesday that the carrier could take a role in future airline mergers, preferably as a buyer rather than a target.

Consolidation "could make sense for Delta (DAL) if it's done thoughtfully from a position of strength," Delta Chief Executive Richard Anderson said in opening a conference call on the company's third-quarter earnings.

"We will take a balanced view toward consolidation," he added, telling reporters later that Delta would rather be an acquirer than a target.

The comments tantalized airline investors, on the lookout for news that the nation's legacy carriers could merge, bolstering share prices and industry returns.

The heads of the largest carriers have acknowledged that high levels of capacity and overlap in U.S. air travel, driven by rapid expansion among discount carriers like Southwest Airlines Co. (LUV) and JetBlue Airways Corp. (JBLU) , have made the industry ripe for consolidation, which could expand profits in the long run.

But despite a failed run at Delta by US Airways Group (LCC) last year, no airlines have announced major mergers.

Delta shares bounced from an early loss of 3.5% to a 2% gain after executives spoke to analysts and reporters.

Executives said that no mergers are imminent and declined to comment on whether they had been approached by any possible merger partners or approached any themselves.

The reason for raising the issue of consolidation, they elaborated, was to put out a public statement on a question raised frequently by investors and employees.

Anderson said Delta's view on mergers was consistent with that of former chief Gerald Grinstein, who in early September handed the reins to Anderson, who used to be chief executive of Northwest Airlines Corp. (NWA)

That is, Delta's view is "not to be opposed to consolidation. We are mindful of our obligation to our shareholders," Anderson added.

Anderson's appointment by Delta's board this summer renewed speculation of a Delta-Northwest merger.

In any event, the carrier is looking at ways to boost the value of individual operating units, including deciding in the next quarter whether to keep or divest regional carrier Comair.

Any decision about whether to keep or spin off its SkyMiles frequent-flyer program would have to be made "post-consolidation," executives said.

 Printable Version  | published Oct 16, 2007