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Airline merger met with skepticism

April 24, 2008 at 9:26 AM   |   Comments

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WASHINGTON, April 24 (UPI) -- The proposed Delta Air Lines-Northwest Airlines merger has found skeptics on New York's Wall Street and Washington's Capitol Hill, industry observers said.

The vote on Wall Street is measured by share prices. Since the merger was announced a week ago, Delta's stock has dropped 22 percent and Northwest's has declined 19 percent, The Washington Post reported Thursday.

On Capitol Hill, where airline executives are to meet with members of the House of Representatives and Senate Judiciary committees, the merger proposal has been met with criticism from both sides of the aisle.

U.S. Rep. James Oberstar, D-Minn., said the merger was "probably the worst development in the history of aviation since deregulation."

"Mark me down as skeptical," U.S. Sen. Kit Bond, R-Mo., said, citing "employees and consumers," as probable "losers" in the deal.

"How are they going to cut costs … without significant disruptions," Bond asked.

The airlines have argued that the merger would result in cost savings of $1 billion.

"The merged entity will be financially stronger than if the two airlines stay apart," Doug Steenland, Northwest's chief executive officer, said this week. "This positions the merged entity to be in better financial shape and to be more secure."

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