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Delta buying 'feeder' line
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February 16, 1999: 12:53 p.m. ET
Purchase of regional carrier for $700M is bid to improve service
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NEW YORK (CNNfn) - Delta Air Lines Inc. agreed Tuesday to buy the rest of the parent of Atlantic Southeast Airlines, one of its regional "feeder" carriers, for about $700 million in a bid to improve service.
Delta, the nation's third-biggest carrier, already owns about 28 percent of ASA Holdings Inc., the parent of Atlantic Southeast.
Under the deal, Atlanta-based Delta agreed to pay $34 a share in cash for each of the 20.5 million shares of ASA it doesn't already own.
Delta said the move will improve service and boost its sales and earnings right away. It also said it will retain "feeder" agreements with four other regional carriers.
While a recent similar deal, American Airlines' $124 million acquisition of regional carrier Reno Air, sparked a labor dispute with American's pilots -- forcing it to cancel thousands of flights last week -- the pilots at Delta and Atlantic Southeast said they won't oppose the deal since pilots at the two carriers fly different aircraft.
Wall Street welcomed Delta's announcement -- the latest merger in the airline industry -- and ASA stock rose 1-7/8 to 33-13/16 on Nasdaq and Delta added 11/16 to 53-1/4 on the New York Stock Exchange.
"American and Reno is a very different situation," said Andy Deane, chief spokesman for Delta's 9,500 pilots, noting those airlines fly similar aircraft while Delta's pilots fly big jetliners and Atlantic Southeast's pilots typically fly planes with 70 seats or less.
Frank Ramsey, the head of the pilots union at Atlantic Southeast, said there could be "turf wars" with Delta pilots, but added: "There's room for all of us to win here and there's plenty of flying to go around."
Regarding a possible dispute like the one at American over Reno: "I don't see it," he told CNNfn.
The pilots at American were concerned that integrating Reno's pilots, who earn about half as much as American's pilots while flying similar aircraft, would cut their salaries and flying opportunities.
American's acquisition of Reno has proven less than stellar so far. Hundreds of American pilots called in sick last week, forcing the No. 2 airline to cancel thousands of flights and delaying hundreds of thousands of travelers ahead of the Presidents Day weekend.
But a federal judge ordered the pilots back to work and fined the union $10 million, allowing American to return to a more normal flight schedule this week. 
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