Next year, the U.S. airline industry will achieve a “rational industry construct” with four major airlines competing in the domestic and international air space, Richard Anderson, chief executive officer of Delta, said during an investor meeting yesterday.
In 2004, there were eight domestic airlines, and next year, if a merger between U.S. Air and American Airlines goes through, that number will have been cut in half. According to information gathered by Delta, a four-airline domestic market will likely produce better total revenues and net income than its eight-airline predecessor.
“We will, I believe, shortly have the U.S. Air-American transaction concluded. We’ve been vocal supporters of that transaction and consolidation both domestically and around the world,” he said during Delta’s Investor Day meeting, adding “we’re going to get where we need to be.”
Anderson noted that Delta's early merger with Northwest Airlines has given the carrier a lead in the industry, a margin, he added, that they don't plan on giving up anytime soon. But consolidation doesn’t simply involve U.S. airlines merging with each other. Anderson pointed to Delta’s recent acquisition of a 49-percent stake in Virgin Atlantic as another way the airline industry is becoming stronger by getting smaller. These international investments are important to Delta, he said.
“Cross-border transactions are really about consolidation,” he said. - Jon Ross