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Delta and Northwest reportedly near merger

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Associated Press / February 7, 2008

ATLANTA - Delta Air Lines and Northwest Airlines are inching closer to a combination that would create the nation's largest carrier, and if a deal is reached it could be disclosed next week, a person briefed on the discussions said yesterday.

Delta's board is expected to meet over the next several days, the person said without elaborating on the topic of the meeting.

The person, who was not authorized to talk as the negotiations entered a sensitive stage and asked not to be named, said one point of contention has been what Northwest chief executive Doug Steenland's role would be at the combined company.

Delta has a growing presence across the Atlantic and a strong hub in Atlanta, home to the world's busiest airport. Northwest has strong routes across the Pacific, and its main hub is in Minneapolis.

Atlanta-based Delta Air Lines Inc. has said repeatedly that if it were to combine with another carrier it would want to be in control, which could mean its chief executive, Richard Anderson, remaining in his post and Delta's chairman, Daniel Carp, remaining in his.

Anderson, who was chief executive of Eagan, Minn.-based Northwest Airlines Corp. when it began a drive to cut labor costs before he left in the fall of 2004, was replaced by Steenland. But Steenland actually carried out the cuts, leading to a mechanic's strike in 2005 and deep concessions forced on the other unions, which took effect last year while Northwest was in bankruptcy.

The person briefed on the discussions cautioned that things could change since Delta also has been talking to Chicago-based UAL Corp.'s United Airlines about a combination, and there have been reports that other carriers have been talking among themselves about possible deals.

A Delta spokeswoman said she could not comment beyond the airline's past statements that it its reviewing its strategic options. Spokeswomen for Northwest and United declined to comment.

The clock is ticking to get any deals accomplished quickly, some observers say, because a combination has a better chance of surmounting political and regulatory hurdles under the current administration than under President Bush's successor.

United and Houston-based Continental Airlines Inc. are widely viewed as possible partners if consolidation goes ahead, and United chief Glenn Tilton is believed to have made overtures about a combination long ago.

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