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Is there anyone who likes the Delta Air Lines Inc.-Northwest Airlines Corp. merger besides the executives who negotiated the deal? At this point, credit ratings agency Standard & Poor's offered some of its reservations on the proposed deal. S&P placed its B+ corporate credit rating on its creditwatch negative list while, at the same time, placed its B corporate credit rating on Delta on its creditwatch positive list.
Lost in translation yet? Well, in credit-speak, the bottom line is that should the merger close S&P forsees a corporate credit rating of either a B or B+ for the combined entity. "[The merger] entails risks in integrating employee groups and information systems, and will result in higher labor costs as labor contracts are reopened to secure employee support and capture the benefits of operating as a single airline," said Standard & Poor's credit analyst Philip Baggaley. And there is the catch. While Delta has secured an agreement with its pilots, no such arrangement exists with Northwest's pilots, who have already voiced their objections to the deal, noted The Deal's Lou Whiteman. - Gerald Magpily See TheDeal.com: Delta, Northwest seal pactSee S&P press release on ratings actions on Northwest (registration required) See S&P press release on Delta press release Categories Deal Video
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