Will Mergers Fly?

Sen. Johnny Isakson (R-Ga.), who fiercely fought US Airways' bid for Atlanta-based Delta, said in an interview that he was not necessarily against mergers. With high oil prices, he said, it might be time for airlines to join forces.

Isakson said, however, that he was working to ensure that any merger would protect jobs in Atlanta. He added that lawmakers representing areas that have airline hubs and headquarters feel the same way. Delta is negotiating with Northwest Airlines of Minneapolis and United Airlines of Chicago, according to people familiar with the talks.

"My parochial interest is to ensure that Delta's headquarters and its name remain in Georgia," he said.

Another complication the carriers face on Capitol Hill are the words of a well-liked Delta executive. In meetings last year, Delta's then-chief executive Gerald Grinstein warned lawmakers that a merger would almost certainly spark other deals. That would lead to less service to some communities and potentially higher ticket prices, he told them, according to the lawmakers.

At the Senate hearing Jan. 24, Grinstein foreshadowed the dangers in allowing the industry's six major carriers to join forces.

Grinstein asked the senators: "Are you better off with more hubs or with fewer hubs? Because if you approve this, and what you are approving sets such a low standard, how are you going to say no to Continental and United? How are you going to say no to Northwest and American? You will devolve into three network carriers. And once that happens, you won't get the same level of service."

In an interview then, Grinstein also said he was skeptical of airlines combining because "the track record of good mergers is hard to find."

Pointing to Grinstein's comments, several lawmakers said they found it ironic that Delta, now seeking a partner, so fiercely fought a merger last year.

Grinstein, who retired from Delta in September, lives in Washington state and could not be reached for comment. A Delta spokesman declined to comment, as did representatives for Northwest and United.

Despite the thorny political landscape on Capitol Hill, airline executives believe the time is still right to put a deal together, some analysts and consultants said.

One reason: They believe they will have an easier time passing regulatory muster under the Bush administration than its successor.

Transportation Secretary Mary E. Peters, who would advise the Justice Department on the affects of an airline merger, signaled that the executives are probably right.

Citing the economic challenges facing the industry, Peters said in an interview that she believes "there is going to be some consolidation. "To the greatest extent that we can let the market work unfettered, the better off we are as a country," she said, adding that her agency would weigh each proposal on a case-by-case basis.