Delta, Northwest defend merger

CEOs tell House, Senate deal will strengthen carrier

Northwest CEO Douglas Steenland (left) and Delta CEO Richard Anderson testified that the merged airlines will be better able to fend off foreign competition and handle record fuel prices. (Jim Watson/AFP/Getty Images)

WASHINGTON - A doubleheader of hearings yesterday gave the chief executives of Delta Air Lines Inc. and Northwest Airlines Corp. a sampling of the skepticism and scrutiny their proposed combination faces on Capitol Hill.

Delta CEO Richard Anderson and Northwest CEO Doug Steenland first told House and then Senate lawmakers that their airlines would be stronger together than they are apart, more competitive with large foreign carriers, and better equipped to handle record fuel prices that led them on Wednesday to report a combined first-quarter loss totaling $10.5 billion.

They reiterated that no hubs will be closed, no large-scale layoffs are planned, and the combination will create roughly $1 billion in cost savings.

"Oil is a game-changer and this merger makes us stronger," Anderson said, estimating that no more than 1,000 corporate positions will be eliminated.

The cost of jet fuel in New York is more than $3.50 a gallon, compared with just over $2 a year ago.

House Judiciary Committee chairman John Conyers Jr., a Michigan Democrat, said he was keeping an "open mind" on Delta-Northwest, but then blasted the Bush administration's merger-friendly Justice Department.

"We have an antitrust division that approves mergers left and right," Conyers said. If Delta-Northwest is approved, he expressed concern it will "result in a cascade of other mergers," including Continental Airlines-United Airlines and American Airlines-US Airways and lead to three megacarriers competing only against each other.

After leaving the House hearing, Steenland told reporters he had asked lawmakers earlier this week to establish a comprehensive energy policy and said not buying oil for the Strategic Petroleum Reserve would be a good idea, echoing some lawmakers' ideas. Democrats have criticized the Bush administration's policy of diverting oil into the reserve when prices are at record levels.

The airline executives acknowledged that sustained high fuel prices could reduce the frequency of some less profitable routes, but said market competition would continue to dictate fares, flight options for travelers will rise, and that only corporate jobs would be cut.