Delta Air Lines and Northwest Airlines are approaching a merger agreement that would create the largest airline by traffic, according to the WSJ. Both emerged from bankruptcy in the spring of 2007.
Bankruptcy which can allow reductions in labor costs, pensions, and the shedding of costly assets, such as planes and redundant routes, often helps potential partners realign their operations. Mergers can yield many of the same benefits but are often viewed as expensive and sloppy, especially if cultures differ. The Delta and Northwest deal is currently being held up as pilot unions debate seniority integration.
Here is a table of how fleet sizes have changed since airlines have merged. On an annualized basis, most fleets have grown less than 1% per year. Only low cost players Southwest and AirTran have significantly grown their fleets.
A Rundown of Airline Bankruptcy History and Performance:Northwest and Delta entered bankruptcy in September of 2005, and both emerged from bankruptcy in the Spring of 2007
Bankrupt US Airways Group merged with America West in late September 2005, and shares are down over 28% since the merger.
UAL Corp. and Continental have also been mentioned as potential partners. It is also rumored that Continental and AMR , the parent of American Airlines have been in exploratory discussions. UAL's United Airlines filed for Chapter 11 bankruptcy protection in December, 2002.