Delta, Northwest defend proposed combination in Washington

WASHINGTON — The chief executives of Delta Air Lines Inc. and Northwest Airlines Corp. on Thursday tried to assuage skeptical lawmakers' concerns about their proposed combination, defending it as the best way to cope with surging fuel prices.

Delta CEO Richard Anderson and Northwest CEO Doug Steenland said their airlines would be stronger together than they are apart, more competitive with large foreign carriers and better equipped to handle record fuel prices that led them on Wednesday to report a combined first-quarter loss totaling $10.5 billion. They reiterated that no hubs will be closed, no large-scale layoffs are planned and that the combination will create roughly $1 billion in cost savings.

"Oil is a game changer and this merger makes us stronger," Anderson said.

Steenland agreed and said without a consolidation, Eagan, Minn.-based Northwest's biggest challenge would be finding ways to offset fuel costs.

The cost of jet fuel in New York is more than $3.50 a gallon, compared with just over $2 a year ago.

After leaving the hearing, Steenland told reporters he had asked lawmakers earlier this week to do their part to keep fuel prices in check. He urged them to establish a comprehensive energy policy and said not buying oil for the Strategic Petroleum Reserve would be a good idea. The Bush administration's policy of diverting oil into the government reserve when prices are at record levels also has been criticized by some Democrats.

House Judiciary Committee Chairman John Conyers Jr., D-Mich., said he was keeping an "open mind" on Delta-Northwest, but then blasted the Bush administration's merger-friendly Justice Department and questioned whether airline mergers would lead to job cuts and higher fares for air travelers.

"We have an antitrust division that approves mergers left and right," Conyers said. If Delta-Northwest is approved, he expressed concerned that it will "result in a cascade of other mergers," including Continental Airlines-United Airlines and American Airlines-US Airways and lead to three mega-carriers competing only against each other.

Lawmakers from both parties also expressed concerns about how the proposed combination would affect employees in, and service to, their home districts in Orlando, Fla., Memphis, Tenn., San Diego and elsewhere.

The airline executives said market competition would continue to dictate air fares, flight options for travelers will rise and that only corporate jobs would be cut.