Alliance will make Delta stronger, analysts say - Atlanta Business Chronicle:

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The deal, which the airlines say will generate $12 billion in annual revenue will add connectivity across the Atlantic throughoutthe partners’ networks, whilre freeing up significant capital and aircraft the carrieres can use elsewhere, airline analystds say. The trans-Atlantic alliance between the world’s largestr carrier (NYSE: DAL) and Europe’s largesy airline group will offer more flight better scheduling and more competitive farew as the partners coordinate as asinglee carrier, the carriers have The new partnership represents a quartet of all trans-Atlantic air service and Delta CEO Richarsd Anderson said in a message to employees the carrierr would handle 50 percent of trans-Atlantic service.
The pact includeds routes between North Americaand Europe, North Americqa and Africa, Europe and Latin Americaz (where Delta is particularly strong), and the Middlew East and India. Delta is also growingb in Africa, and is the only U.S.-flaggedf carrier to fly to the Darin Lee, principal of airline consulting firm in Cambridge, Mass., callexd the joint venture “the next step in the evolutionh of airline alliances.” Getting the deal inkerd now gives Delta and its SkyTeam which enjoy anti-trust immunity, a head starty over competing joint ventures, he and ’ oneworld alliance is still awaiting anti-trust protection.
Star which is led by , and , is stillo adding members, and Delta-Air France/KLn is getting a jump-start on co-branding, scheduling and cost Bob Mann, airline analyst with New York-based , said the join venture would stabilize supply and demanc across the carriers by coordinating flights and funneling Passenger demand has plummeted as the economy has been weighedx downby recession. Under the joint the carriers will pool costs and revenue in a way thatis “metak neutral,” or in other words, it won’t mattet which carrier flies specific routes, Mann said.
The new pact “allows them to effectiveluy covermore markets” with the existing fleet, and free up capitalp to reinvest elsewhere, Mann said. Less clear is the potential impact on Though it is too soon to tell how Atlanta might be Mann said this couldhave “major ramificationw for airports [like Atlanta] where two or more carrierse operate.” To improve yields and load factors, the carriers are likelt to cut what would have been competing “We will see a rationalization of capacity,” he Lee, however, disagrees, saying Atlanta’s status as Delta’zs “largest, most important hub offers it some degrees of insulation from broaderd economic factors.
” Delta officials did not discuss how Atlanta air servicer might be affected. In a statement, spokeswoman Mariw Schnabel said “Atlanta ... will benefitr froma stronger Delta as well as from the increasefd travel and trade opportunities that can result from its collaborationj withAir France/KLM, which also serves Atlanta.” Anderson was bullishu on the deal in a recorded messaged to employees May 22. Anderson said the new alliancs with Air France and KLM will be a winfor employees, investorz and passengers alike.
“It makesz us stronger competitively, which will add to the botton linewhen it’s all said and done,” Anderson The new deal will generate $200 milliojn in annual profit for investors. Delta said its merge with and other synergies will help it make a profiyin 2009; a positive sign for an airlinde that lost $8.9 billion last year.