From the Atlanta Journal Constitution:
Delta Air Lines' merger talks with Northwest Airlines have hit a snag over the respective roles of the carriers' chief executives, according to a person who has knowledge of the negotiations but is not directly involved.
Executives have been holding intensive talks in New York to put together a merger agreement in which Delta CEO Richard Anderson is expected to be the top executive of the combined companies.
However, those talks have stalled over a disagreement regarding how Anderson and Northwest CEO Doug Steenland would share power at a merged company, according to the person.
Delta and Northwest have been in intensive negotiations for about two weeks, according to people familiar with the discussions, that are aimed at reaching a stock-swap deal that would create the nation's largest airline. These people have said Delta also initiated talks with United Airlines, but that recently there has been little evidence of active discussions.
In a teleconference this week with industry analysts, Anderson said Delta's consideration of a merger is "ongoing," but he declined to elaborate or comment on merger scenarios. A Delta spokesman declined to comment Friday when asked whether talks have slowed over the naming of top management.
It's unclear whether this obstacle will kill the deal. Shareholders at both carriers, many of whom are former creditors from each airline's bankruptcy restructuring, are eager for a deal and could wield some influence.
However, there have been increasing signs this week that Delta's efforts to forge a deal with Northwest have run into some challenges.
The Minneapolis Star-Tribune, citing an unnamed source, reported Thursday that the companies had not reached an agreement regarding who would be in the top management. Industry analysts told Bloomberg that other stumbling blocks could be issues such as where the company would be headquartered and which operations may be shut down.
Industry analysts and insiders have presumed that Anderson, who has said he wants Delta to be the acquiring company, wants to be chief executive.
In many deals, the CEO of one company continues to head the merged firms while the other CEO often is named non-executive chairman. The person familiar with talks said it's likely that Steenland wants to be chairman.
But that power-sharing structure could present problems in the case of Delta and Northwest for a number of reasons, including the personal histories of the two executives and the potential make-up of the merged airline's board of directors.
Anderson, who was Steenland's boss while he was Northwest's chief executive in the 1990s, may not be too eager to have Steenland step in as the chairman of the merged carriers' board.
Steenland would likely have significant power in such a position. Northwest's shareholders could control roughly the same number of board seats in a merged carrier as Delta's shareholders.
Delta is the nation's third-largest airline in terms of traffic; Northwest is No. 5. A merger would create the nation's largest airline, with about a third of the country's traffic.
But as merger speculation has swirled in recent weeks, the market capitalization of Northwest has risen to $4.2 billion, nearly matching the Delta's $4.4 billion stock market value.
Delta Air Lines' merger talks with Northwest Airlines have hit a snag over the respective roles of the carriers' chief executives, according to a person who has knowledge of the negotiations but is not directly involved.
Executives have been holding intensive talks in New York to put together a merger agreement in which Delta CEO Richard Anderson is expected to be the top executive of the combined companies.
However, those talks have stalled over a disagreement regarding how Anderson and Northwest CEO Doug Steenland would share power at a merged company, according to the person.
Delta and Northwest have been in intensive negotiations for about two weeks, according to people familiar with the discussions, that are aimed at reaching a stock-swap deal that would create the nation's largest airline. These people have said Delta also initiated talks with United Airlines, but that recently there has been little evidence of active discussions.
In a teleconference this week with industry analysts, Anderson said Delta's consideration of a merger is "ongoing," but he declined to elaborate or comment on merger scenarios. A Delta spokesman declined to comment Friday when asked whether talks have slowed over the naming of top management.
It's unclear whether this obstacle will kill the deal. Shareholders at both carriers, many of whom are former creditors from each airline's bankruptcy restructuring, are eager for a deal and could wield some influence.
However, there have been increasing signs this week that Delta's efforts to forge a deal with Northwest have run into some challenges.
The Minneapolis Star-Tribune, citing an unnamed source, reported Thursday that the companies had not reached an agreement regarding who would be in the top management. Industry analysts told Bloomberg that other stumbling blocks could be issues such as where the company would be headquartered and which operations may be shut down.
Industry analysts and insiders have presumed that Anderson, who has said he wants Delta to be the acquiring company, wants to be chief executive.
In many deals, the CEO of one company continues to head the merged firms while the other CEO often is named non-executive chairman. The person familiar with talks said it's likely that Steenland wants to be chairman.
But that power-sharing structure could present problems in the case of Delta and Northwest for a number of reasons, including the personal histories of the two executives and the potential make-up of the merged airline's board of directors.
Anderson, who was Steenland's boss while he was Northwest's chief executive in the 1990s, may not be too eager to have Steenland step in as the chairman of the merged carriers' board.
Steenland would likely have significant power in such a position. Northwest's shareholders could control roughly the same number of board seats in a merged carrier as Delta's shareholders.
Delta is the nation's third-largest airline in terms of traffic; Northwest is No. 5. A merger would create the nation's largest airline, with about a third of the country's traffic.
But as merger speculation has swirled in recent weeks, the market capitalization of Northwest has risen to $4.2 billion, nearly matching the Delta's $4.4 billion stock market value.
