Merger talks involving Delta Air Lines and Northwest Airlines have hit a stumbling block over which executives would lead the combined airline, according to people familiar with the talks.
Many analysts have presumed that current Delta CEO Richard Anderson would serve as chief executive of the merged airline. But who would join him as the carrier's key executives appears to be a major topic still under discussion.
"The issue is about who would be in the top management of the company," a source close to the talks said Wednesday.
Anderson spoke with Wall Street analysts during an earnings conference call Wednesday, but he declined to discuss a potential merger. He emphasized that the Delta board is reviewing consolidation options and that the process is "ongoing."
Anderson, who was Northwest's chief executive from 2001 to 2004, worked closely with current Northwest CEO Doug Steenland at Northwest. Steenland was Northwest's president when he was tapped to succeed Anderson.
After his 14-year tenure at Northwest, Anderson is very familiar with Northwest's management team. He also has retained most of Delta's top management team since he became Delta CEO on Sept. 1.
Minneapolis attorney George Singer, who does merger and acquisition work in his practice, said Wednesday that he is not surprised that Delta and Northwest are grappling with the issue of fielding the surviving leadership team.
However, Singer said: "The acquirer has a pretty good idea of what executives they need to continue on a go-forward basis and for what period of time."
In the public statements that Anderson has made about consolidation, it is clear that Delta wants to be the acquirer.
"As long as I am CEO, there are certain conditions that are not negotiable," Anderson told Delta employees in November. "It would be named Delta, the headquarters would remain in Atlanta and the seniority rights of our people would be protected."
But Northwest may approach a merger with Delta or another partner as a merger of equals. In a Jan. 11 memo to Northwest employees, Steenland said, "If we wait to react to what others do, we could be left with options that are undesirable or with no options at all."
Pilots union leaders at Northwest and Delta have indicated an openness to support consolidation as long as a merger meets the financial needs of their members and the merged carrier would have the ability to survive in the long-term.
Dave Stevens, Northwest pilots union chairman, said Wednesday: "Forces that want a merger to fail, or those who put their personal gain and aspirations first, could jeopardize beneficial mergers for the shareholders, customers and employees."
Northwest would not comment on the subject of leadership of a merged carrier.
But Northwest's Steenland is talking directly with Gov. Tim Pawlenty. The governor sent Steenland and Anderson a letter last Thursday in which he asked them to preserve a strong airline presence in Minnesota.
"The governor has had several recent meetings with Doug Steenland," Pawlenty spokesman Alex Carey said Wednesday. He declined to describe the substance of those talks.
Liz Fedor • 612-673-7709