Senate Hearing Casts Doubt on Sagaciousness of Northwest-Delta Deal

(NewsVisual, powered by IntellectSpace) -- A Senate subcommittee on aviation intensely scrutinized the $3.1 billion merger deal between Delta Air Lines Inc (NYSE:DAL) and Northwest Airlines Corporation (NYSE:NWA), questioning whether it could cut costs and benefit consumers during a time of escalating fuel prices.

"Members of the subcommittee on aviation were generally skeptical about the economic prospects of the merged airline and the ailing industry in general," The New York Times reported in an article on Thursday.

Although it seems unlikely that the subcommittee would move to block the merger’s completion, the Senators’ skepticism regarding the deal’s economic wisdom could undercut investor confidence in the companies, which could negatively impact the new company’s share value.

The prior personal connections between the leadership of the two airlines, however, provide it with the potential to consolidate the new airline’s management quickly once the merger takes place, and thus the new company will have a good chance for success.

NewsVisual decided to create an IntellectSpace Knowledge Map in order to illustrate the personal connections that already existed between the two companies before the merger talks began.

These personal connections are important because they can help to shore up the deal, even when it is confronted with shareholders’ doubts.

The Knowledge Map shows the following:

Delta CEO Richard H Anderson previously spent 14 years with Northwest as that company’s CEO from 2001 to 2004; Delta Executive Vice President Stephen E Gorman was also previously an EVP at Northwest; and Northwest EVP/CFO David M Davis was also previously Delta’s Director of Finance.

In addition, Delta Director Paula Rosput Reynolds and Northwest Director Michael J Durham are well acquainted via another board room; Durnham joined AGL Resources as a Director when Reynolds was the company’s CEO/President/Chairman.

Click here for an interactive and fuller version of this IntellectSpace Knowledge Map.

(Note: the information contained and presented in Knowledge Maps is public information from the Securities and Exchange Commission of the United States of America).