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Proposed Delta-Northwest Merger Raises Questions for Airline Industry

A proposed Delta-Northwest airline merger comes at a tumultuous time for an airline industry facing high fuel prices and questions over safety procedures. An airline analysts describes the possible implications of the mega-merger and whether consumers will benefit.

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  • JIM LEHRER:

    Judy Woodruff has our airline merger story.

  • JUDY WOODRUFF:

    The Delta-Northwest deal comes at a tumultuous time for the airline industry. Fuel prices are soaring; demand is slow; and thousands of flights were cancelled last week due to missed inspections.

    But by combining operations and extending travel routes, Delta and Northwest say they hope to save $1 billion a year by 2012. The deal still requires approval by the U.S. Justice Department.

    For more, we are joined by Philip Baggaley. He's a senior airline credit analyst with Standard and Poor's.

    Thank you for being with us. Both of these airlines came out of bankruptcy just last spring. Why do they want to merge?

    PHILIP BAGGALEY, Airline Credit Analyst, Standard and Poor's: Well, the situation has deteriorated. Last year, when they came out of bankruptcy, the airline outlook looked quite bright, really.

    At this point, as you mentioned, fuel prices are much higher; demand is slowing; and they feel they need to do something to counteract that.

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