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United, Delta rub wings?
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April 3, 1998: 6:36 a.m. ET
The nation's first and third largest carriers may be mulling an alliance
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NEW YORK (CNNfn) - Delta Air Lines and UAL Corp.'s United Airlines are discussing a broad strategic alliance that would offer each company many of the benefits of a formal merger without the cumbersome costs, according to published reports.
But an alliance between Delta (DAL), the nation's third-largest carrier, and United (UAL), the largest, is far from a done deal, the Wall Street Journal said Friday.
It would allow the airlines to swap services and expertise and create an airborne powerhouse boasting about 36 percent of domestic seat capacity, and a vast routing network. The Atlanta-based Delta's strength lies around its hubs on the East Coast and in the Southern United States. Chicago-based United dominates the country's northern and western regions.
Each airline is also likely to benefit from cooperation in frequent-flyer plans, marketing and domestic code-sharing.
Continental, the nation's fifth largest airline, spurned a buyout offer from Delta in January, opting instead to form a broad, trend-setting alliance with Northwest Airlines. Since then, a dejected Delta has been scouting for other opportunities, the Journal said.
Alliances have gained popularity in recent years, with cash-strapped air carriers seeing them as a way to expand their market reach free of the heavy investments in planes and workers associated with mergers.
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