Northwest Gets Ready for Merger Dealing

Late Thursday, Northwest asked its bankruptcy judge for permission to hire an influential investment banking firm whose financial experts have a track record for arranging airline deals.


"The activity that we are seeing in Northwest stock is a clear indication that people are expecting more consolidation in the airline industry," with some concluding that Northwest is a "target," said Rajesh Aggarwal, an associate professor of finance at the University of Minnesota.

Northwest has said it plans to emerge from bankruptcy during the first half of 2007. Northwest last pulled off a merger 20 years ago when it acquired Republic Airlines.

Jenkins, the aviation consultant, said he can't see Northwest bidding for Delta, which also is in bankruptcy, at this time.

"Right now, they don't even have money to come out of bankruptcy yet, let alone go out and buy somebody," he said.

But if the US Airways-Delta deal falls apart, Northwest management ultimately might attempt to put together its own offer for Delta -- long considered by many analysts as a good fit with Northwest because each is strongest in different U.S. and foreign markets.

Phil Baggaley, a Standard & Poor's analyst, believes Northwest is in a better position to fend off any unwanted offers than Delta.

"Northwest may have a greater ability to resist a hostile bid than Delta given how they have been performing [financially] and how far along they are" in restructuring their costs, he said.



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