WASHINGTON - Top executives of Delta and Northwest airlines voiced optimism Tuesday that they can win regulatory approval for their proposed merger despite skeptics in Congress who say it will reduce competition.
But even the merged airline, along with other carriers, likely would have to increase fares 15 to 20 percent to offset soaring fuel prices, said Delta Air Lines CEO Richard Anderson.
Anderson and Northwest Airlines CEO Doug Steenland are in Washington for three days of meetings with lawmakers and other government officials considering possible antitrust issues in the deal.
"We're hopeful that we'll be able to get it through the process here with the regulators at the Department of Justice and be able to put the airlines together and create a real global airline," Anderson told reporters.
He and Steenland are scheduled to testify Thursday before House and Senate committees examining the merger, which would create the world's biggest airline.
Although Congress lacks the power to directly block a merger, members can raise questions and exert pressure on regulatory agencies.
Among the merger's chief critics is Rep. Jim Oberstar, D-Minn., chairman of the House Transportation Committee, who argues it would reduce competition and lead to a "cascade" of mergers by other airlines.
Anderson and Steenland were met with a letter from 25 Senate Democrats, including Minnesota's Amy Klobuchar, urging inclusion of organized labor in merger talks. It said:
"The men and women who work hard every day for Delta and Northwest deserve a seat at the table."
Signatories included presidential candidates Barack Obama and Hillary Clinton. "We also hope that the merger process will not be used as a way to eliminate the union representation that has existed at Northwest for decades."
The two executives were expected to meet late Tuesday with Sen. Norm Coleman, R-Minn., who has expressed some concerns about the merger, and on Thursday with Klobuchar, who has said she has "serious concerns."
Pilot leaders agree to talk
Separately Tuesday, John Prater, president of the Air Line Pilots Association (ALPA), said that the chairmen of the Northwest and Delta ALPA units have "agreed on the need to move forward expeditiously on negotiating a single bargaining contract."
Before the merger announcement last week, Delta's management reached a labor pact with Delta's pilots. Northwest pilot leaders said they would oppose the merger "as it now stands" because Northwest pilots are on a lower pay scale.
In a phone interview, Prater said that he has spoken with Delta management, which is prepared to start bargaining on a single contract "in the near future.'' He added that "everybody understands that having pilots fly the same equipment on two different pay scales is a disaster in the making."
Delta's Anderson said in interviews that he wants to reach agreement on a combined contract this year while the merger proposal is undergoing a review by federal regulators.
In a written statement Tuesday, ALPA said the Northwest and Delta chairmen "agree that seniority integration should be accomplished through expedited negotiation after the negotiation of the single collective bargaining agreement." They said that, if necessary, they would use "expedited arbitration."
Monty Montgomery, Northwest pilots union vice chairman, said Tuesday that his pilots would work for the "defeat" of the merger in its current form. But he said they want to "make an early attempt to achieve a new joint contract that allows for immediate parity in rates of pay, benefits and equity for Northwest pilots."
Lens on competition
Steenland said that the focus of the Justice Department's antitrust review will be on the question: "Does putting these two airlines together lessen competition?"
On that score, he argued that domestically the combined airline would still be slightly smaller than Southwest Airlines, the largest domestic carrier, with 20 percent of the national market. The merged Delta-Northwest would have 19.2 percent of the total domestic market, with Delta operating nearly 13 percent and NWA about 7 percent.
Domestically, the two airlines overlap on 12 nonstop routes out of the roughly 1,000 they serve. In those 12 routes, there is "ample competition," Steenland said.
"We think we will be able to persuade the regulators that there are no competitive issues here and that the combination of the two carriers, under any set of circumstances, will create a stronger entity to deal with the challenges that the airline industry as a whole is going to face," Steenland said.
Delta's Anderson described the need to be able to compete with strong foreign carriers.
"When we assess where our airlines are today, where the industry is today, the economic environment, fuel prices, foreign competition -- when we look at the opportunity that we create by combining these two airlines -- it really does make the two airlines together a lot stronger than they are on a stand-alone basis," Anderson said.
He and Steenland will testify Thursday before the House Judiciary Committee and the Senate Judiciary Subcommittee on Antitrust, Competition Policy and Consumer Rights.
Staff writer Liz Fedor contributed to this story.