To celebrate its 50th anniversary, Austrian Airlines has painted an Airbus A320 (OE-LBP) in a "retro" colors. Austrian's first flight was on March 31, 1958, from Vienna to London (via Zurich) on a Vickers Viscount. Austrian is the latest European airline to commission such a livery - others, such as Lufthansa and SAS, have done so as well.

Even after a wave of airline bankruptcies has recently shaken the US airline industry, Virgin Group chairman Richard Branson said on Thursday that he is "extremely pleased" with the airline's performance and that it is "well ahead of budget". He was also predicted that "in three or four years time, it'll be flying to all the major American cities."

In addition, the Wall Street Journal reported today that British and American investors in the airline are planning to infuse approximately $100 million of new capital as the airline plans to expand. The money will certainly help Virgin America stay afloat amid high oil prices and a weak economy.

CEO David Cush has said that Virgin America is on track to become profitable by 2010, although the airline is currently losing money. He also said that the airline might be able to take advantage of some of the recent turmoil in the industry, which has caused other airlines to scale back service and reduce capacity in some markets, to gain a foothold in markets where it doesn't currently operate.

In January, Virgin America was able to sell 65% of its seats - significantly lower than the 80% industry standard. Cush has recently said that this figure has improved to just over 70% - still below average. Branson, however, stated that the low figure is not surprising, given that the airline started operations eight months ago.

Denver-based Frontier Airlines filed for Chapter 11 bankruptcy protection earlier today, citing a move made by its credit card processor, First Data Corporation, which has started withholding a larger percentage of proceeds from ticket sales.

"To be clear, we filed for very different reasons than those of other recent carriers, and our customers and employees can be confident that we intend to keep on flying and providing outstanding service and products," said Sean Menke, Frontier president and CEO. "Given the recent progress we have made towards strengthening our balance sheet and obtining additional financing, it is truly unfortunate that we have had to take this action."

Frontier's bankruptcy filing stems from what are known in the industry as "holdbacks". A bank that processes an airline's credit card purchases holds onto a certain percentage of the proceeds until the passenger actually flies. As of now, that percentage for Frontier is locked at 45%. But First Data was going to increase that to 50% immediately and to 100% by May 1. By filing for bankruptcy, Frontier can avoid the increase.

Frontier isn't in dire straits like Aloha and Skybus were, but right now, a lot depends on public opinion. Travelers have been hearing about a lot of airline bankruptcies recently, and even if Frontier isn't on the brink of collapse, a bankruptcy filing might scare away customers.

Only a few weeks after canceling hundreds of flights, American Airlines today canceled over 900 flights, affecting an estimated 100,000 travelers. The airline also canceled 460 flights on Tuesday and nearly 1,100 yesterday. The cancellations, which affected American's 300 MD-80s, are in response to an FAA directive involving the covers of wire bundles for the MD-80's fuel pump.

The problem was first identified back in 2006, and if American had taken steps to solve the problem immediately, the current problem would have been averted. But instead, the airline is being hit with this crisis at a time when fuel prices and a weak economy are affecting airlines in general. Because the cancellations are their fault, American is responsible for handing out $500 travel vouchers and hotel rooms for travelers - not to mention paying overtime for mechanics. And, perhaps even more significant, is future business that will be lost.

CEO Gerard Arpey apologized: "We have obviously failed to complete the airworthiness directive to the precise standards that the FAA requires, and I take full responsibility for that," he said. But it's little consolation to the travelers affected.

It's official: the long-anticipated merger of Delta Air Lines and Northwest Airlines has finally been announced. The combined carrier - already billed as "America's premier global airline", will be known as Delta and will be based in Atlanta. Delta CEO Richard Anderson would head up the new airline.

A press release by the airline touted the benefits of the merger; it "creates a company with a more resilient business model that is better able to withstand volatile fuel prices than either can on a standalone basis." The release went on to say that "the merged airline will maintain all hubs at Atlanta, Cincinnati, Detroit, Memphis, Minneapolis/St. Paul, New York-JFK, Salt Lake City, Amsterdam and Tokyo-Narita... Delta customers will benefit from Northwest’s extensive service to Asian markets and Northwest’s customers will have access to Delta’s strengths across the Caribbean, Latin America, Europe, the Middle East and Africa."

Of course, the merger still needs to clear regulatory hurdles, and there's always the issue of the pilots at both airlines, which haven't yet agreed on seniority. But if the merger goes off successfully, it will create the world's largest airline. Also, keep a look out for a United-Continental merger, which has been rumored to occur if a Delta-Northwest merger was announced - it could be announced very soon. (Although United has favored a merger for some time, Continental has said it would consider it only if a Delta-Northwest deal went through.) More details of the Delta-Northwest deal will be revealed tomorrow at a press conference featuring both CEOs in New York, but until then, check out the website that Delta set up about the merger.

I've also posted below the internal memo sent out to employees today at Delta, which sheds a bit more light on the merger process (click on the images to view them at full size):

Skybus, the Columbus, Ohio-based no-frills carrier that famously started flying last May with $10 fares, announced on Friday that it will stop flying on Saturday, April 5. It becomes the fourth US carrier in less than a week to shut down (joining Aloha, Champion Air, and ATA). The news only broke late on Friday night, surprising both customers and employees.

"Skybus struggled to overcome the combination of rising jet fuel costs and a slowing economic environment," the airline said in a statement. "These two issues proved to be insurmountable for a new carrier. We deeply regret the impact this decision will have on our employees and their families, customers, vendors, suppliers, airport officials and others in the cities in which we have operated. Our financial condition is such that our Board of Directors felt it had no choice but to cease operations."

Why did Skybus fail? It's a question that will probably be debated for some time to come. Obviously, fuel costs and the state of the US economy are two major factors, but they've impacted every airline, not just Skybus. Here are a few Skybus-specific thoughts:

• Skybus did fly from secondary cities that, in many cases, were too far from the "major" cities that they were trying to market to. For example, what was listed as Hartford, CT on their website was really Chicopee, MA. In some cases, this was OK, but because there aren't many ground transportation options between these city pairs that Skybus chose, it was sometimes difficult and expensive to get to their destination city.
• Skybus also flew cross-country routes with a rather small fleet of Airbus A319s (it had only 12 planes at the time of shutdown), which meant that its airplanes weren't flying as many hours a day as they could have. Skybus' small fleet also left it vulnerable to losing money on under performing routes.
  
• Skybus didn't offer the option for connecting flights, meaning that they really limited themselves to those who were just flying between two cities that the airline served directly.
  
• Rapid growth. While this isn't necessarily a bad thing, Skybus did expand too quickly. It often would start out a new route and soon abandon it if it didn't make money, and while this can work, Skybus' small fleet meant that a significant proportion of its airplanes were on money-losing routes.
• Little customer service, in my opinion. Skybus didn't even have a toll-free number for passengers to call if something went wrong with their travel plans. And although the airline tried to get passengers to purchase food and drinks on board the plane (none were provided for free), its attempts to get passengers to dispose of the food and drink they already had always seemed unusual.
  

Regardless of the reasons, the failure of Skybus (and the other airlines that have closed in the past week) are indicative of the tough times that the US airline industry faces - we're likely to see more tough times ahead and, sadly, more airline shutdowns, in the coming months.

ATA Airlines announced today that after filing for Chapter 11 bankruptcy, it has "discontinued all operations and cancelled all current and future flights". "Following the loss of a key contract for our military charter business, it became impossible for ATA to continue operations," the airline said in a statement. "Unfortunately, we were not in a position to provide our customers or others with advance notice."

When it shut down, ATA operated 29 airplanes (Boeing 737-800s, Boeing 757-200s and -300s, DC-10s and L-1011s) and carrried about 10,000 passengers per day. The airline's 2,230 employees will be laid off.

The statement made by the airline said that "a primary factor leading to these actions was the unexpected cancellation of a key contract for ATA’s military charter business, which made it impossible for ATA to obtain additional capital to sustain its operations or restructure the business." ATA's chief operating officer also attributed ATA's shutdown to "the tremendous spike in the price of jet fuel in recent months".

The airline was founded as American Trans Air in 1973 and changed its name to ATA in 2003. It filed for Chapter 11 bankruptcy once before in 2004, and emerged in 2006.

ATA was founded in 1973 and recent=

As an Open Skies agreement between the United States and Australia takes effect, Richard Branson's newest addition to the Virgin fleet was announced earlier this week. V Australia, a division of Australian carrier Virgin Blue, will fly from Sydney to Los Angeles starting in December, competing with Qantas and United (which are the two airlines that currently fly the route). Branson said that "there is going to be very fierce competition, as there is with Virgin Blue and Qantas in Australia, and fares will definitely drop quite dramatically across this route... Our philosophy is never to go out with an empty seat."

Fares are relatively cheap - V Australia's return economy seats start at $1899. A special promotional round-trip fare of $777 for the first 1000 US passengers to book sold out quickly. In terms of aircraft, V Australia will start out with a single Boeing 777-300ER (it has ordered 6 total). Right now, Los Angeles is the only concrete destination, but the airline has also been interested in flying to Japan. It has also applied to the US Department of Transportation for approval to operate from Sydney to San Francisco, Las Vegas, Seattle, and New York.

Minneapolis-based charter carrier Champion Air has announced that it will end operations on May 31, after 11 years of flying. “This is a sad day for the entire Champion family,” said Champion President and CEO Lee Steele. He went on to say that Champion's "business model is no longer viable in a world of $110 oil, a struggling economy and rapidly changing demand for our services" and that "the management team and our board of directors have decided that the best course of action is to cease flying and to wind up our operations in a responsible, deliberate manner.”

Steele said that the airline was experiencing a "perfect storm" from a slow economy and the current state of credit markets, which had a "negative impact" on the airline's attempts to attract investors.

Champion's end marks not only the end of the airline but also for Boeing 727 passenger service in the US (Champion operates a fleet of 16 Boeing 727-200s). This announcement comes just days after Aloha Airlines' surprise shutdown, which also meant that another 'old-style' airplane, the Boeing 737-200, left US scheduled passenger service.

Only days after filing for Chapter 11 bankruptcy protection (for the second time in as many years), Hawaiian carrier Aloha Airlines announced that it will terminate all passenger service effective today. The airline has been fighting a three-way price war with Hawaiian Airlines and startup go!, which is owned by Mesa Air Group.

"This is an incredibly dark day for Hawaii,”" said David A. Banmiller, CEO of Aloha. "“Despite the groundswell of support from the community and our elected officials, we simply ran out of time to find a qualified buyer or secure continued financing for our passenger business. We had no choice but to take this action." In a statement released by the airline, Aloha said that it "deeply regret[s] the impact this will have on our dedicated employees who have made Aloha one of the best operating airlines in the country... unfortunately, unfair competition has succeeded in driving us out of business, bringing to an end a 61-year-old company with a proud legacy of serving millions of travelers in the true spirit of Aloha."

Hawaiian Airlines met with Aloha early yesterday to try to work out a deal to save Aloha. The deal was viewed by Aloha executives as a "last resort", and would have involved Hawaiian keeping the Aloha name alive and operating inter-island and possibly a few inter-island routes. But the deal fell through after Hawaiian was willing to put up only about $5 million in cash (in comparison, Aloha was losing $5 million a month). This is indeed sad news for aircraft enthusiasts, too - Aloha was the last scheduled operator of the Boeing 737-200, and one of these airplanes was painted in a retro livery a few years ago.

This morning I reported on how several U.S. airlines that operate the MD-80 had to perform additional checks on wiring covers. A few hours later, I received a comment on that blog post that was rather entertaining. (Here are a few excerpts - for the entire comment in all of its gloriousness, click here.)

To: NATIONS OF THE WORLD – GOVERNMENTS, EMBASSIES, AND PRESS (Please See The Distribution List Below). DEFECTIVE AIRPLANES AND PARTS POTENTIALLY ABOUT TO FLOOD THE MARKET
Dear Your Excellencies, And Other Honorable World Citizens:
I am a lawyer in New York, an American citizen, and a man who greatly values the sanctity of human life.
Airline companies within the United States may be about to seek to “dump” defective aircraft upon, and/or sell harmful cannibalized aircraft parts to, businesses and citizens within your respective many countries...
To the extent that you may not already be aware of the current aviation safety crisis occurring now in America that has caused this clear-and-present threat, please inform your countrymen and countrywomen of this potentially-imminent and hazardous occurrence. Please ask your country’s officials, private firms, and citizens, to be vigilantly on the look-out for offers to buy these defective airplanes or parts. It is important you ensure that your friends and neighbors do not buy these items. The safety and lives of your fellow citizens may depend upon it...
...The fleets of a number of United States commercial airlines are deteriorating. Our federal government in the U.S. has finally caught up to the decay. We in America are now effectively in the painful process of outlawing these aged, dangerous planes – and holding civilly and criminally accountable those malicious individuals that would continue to sanction their use, regardless. This threat to us is from within. The airline companies’ next move will be to try to jettison the bad planes for profit.

My first thought was that this was a Nigerian spam comment, or something of the sort. It turns out that although it wasn't a spam letter, it had just about the same amount of factual value. The safety checks that have been carried out throughout the past month have more to do with making sure that paperwork is up-to-date, rather than having "dangerous airplanes". The US is home to some of the safest airlines in the world. There is no "current aviation safety crisis" in this country, as the author of the comment writes. As far as I know, none of the airlines are looking to "“dump” defective aircraft" - they're merely making sure that the planes get another look-over. And besides, even if they were, would you likely need to "ensure that your friends and neighbors do not buy these items"? I don't know about you, but I'm not shopping around for "defective aircraft" or "harmful cannibalized aircraft parts".

By the way, who wrote that comment? A click of the author's Blogger profile reveals that he is none other than John J. Tormey III, Esq. A quick Google search turns up the fact that he is involved with the "Quiet Rockland" project, which appears to be concerned with aircraft noise. What airplane noise and "defective aircraft" have in common is not immediately apparent. Tormey also writes a blog entitled "THE END OF SOUTHWEST AIRLINES" in which he writes vitriolic blog posts. These have titles like "THANK YOU FOR FLYING AIR KEVORKIAN a/k/a SOUTHWEST AIRLINES - YOU ARE NOW FREE TO SPRINKLE YOURSELF ABOUT THE COUNTRY" and "Thank You For Flying Air Kevorkian - I Mean, Southwest". In a blog post entitled "NO LUV LOST," he quotes himself as saying that "the persons that should be flying Southwest at this point, should be only those referred by Doctor Kevorkian."

I'm saving Mr. Tormey's comment and writing about it because I think it's rather hilarious. I don't think he realizes that Southwest Airlines has never had a fatal accident due to "defective airplanes".

American Airlines yesterday announced that it was canceling 300 flights on Wednesday in order to inspect wiring covers in its 300-strong MD-80 fleet, with an American spokesperson calling the move an "abundance of caution" by the airline. Later in the day, Delta also said that it would voluntarily reinspect 117 of its MD-88s as well as 16 MD-90s. Delta said that as of last night, it had not found any problems, but the airline was nonetheless forced to cancel about 325 flights yesterday, with a few more following today.

Other airlines flying the MD-80 also reviewed their fleets as well: Allegiant Air said that it reviewed its 35 MD-80s without needed to cancel flights; a spokesperson for Alaska Airlines said that its 10-strong fleet of MD-80s operated "normally".

The checks come at a time when airlines are scrambling to comply with FAA audits and safety directives. Earlier in the month, the agency fined Southwest Airlines $10.2 million for flying 46 of its Boeing 737s without proper safety checks. American Eagle grounded 25 CRJs last week in order to double-check inspection papers on the hydraulic systems and rudders.

Japan's All Nippon Airways, which has been experiencing increased pressure in recent years from growing low-cost carriers in Asia, has announced plans to launch a budget airline of its own. ANA is considering a joint venture with another Asian airline, and the new carrier could be flying as early as March 2009. The Wall Street Journal has reported that the airline would probably be based in another country in Asia - Japan is noted for higher labor and operating costs.

The planned startup also comes at a time when ANA faces increased competition at its hub at Tokyo's Haneda Airport, which is due for expansion in 2010. A spokesperson for ANA said that the budget airline wouldn't fly under the ANA name.

United Airlines, facing a slumping economy and rising fuel prices, announced today that it would ground 10 to 15 of its "older, less fuel efficient, narrowbody aircraft" as part of a plan "to offset what could be more than a $1 billion increase in fuel costs in 2008". "We are taking a prudent step now by reducing our fleet, taking assets out of the network that don't make sense at these fuel prices, to better position United to be successful in an ever-challenging environment," United CFO Jake Brace said. "United has an aggressive five-year plan focused on creating shareholder value. We have led the industry in reducing domestic capacity and continue to lead efforts to pass commodity costs onto our customers, as other industries do." As for which type United will ground: probably either some of the Boeing 737-300s and/or -500s.

Oil, which has been hitting record highs seemingly every day now, has always been a problem for airlines. But when the price of oil starts getting above $100, it becomes a really big problem. On a pre-recorded telephone message for Northwest employees, CEO Doug Steenland said that oil was becoming a "serious budget-breaker". "If fuel remains where it is today, our increased fuel costs will again create a difficult financial challenge for the airline... This rapid increase in fuel is one reason we continue to believe consolidation in the industry is inevitable." Meanwhile, Northwest's merger talks with Delta are currently in hiatus while pilots unions at both airlines try to figure out how to combine their seniority lists.

Less than a month after United Airlines announced that it would be charging most passengers $25 to check a second bag, US Airways has announced that it would do the same, starting on May 1. US Airways claims that higher fuel costs are partly to blame and said that this new luggage fee will give the airline $100 million in additional revenue. It's a sign that the à-la-carte baggage trend is continuing throughout the major carriers - it's not unreasonable to say that by summer, virtually all of the majors will have adopted this fee.

And speaking of US Airways, the airline has been seeing some labor strife recently. Unions unveiled a 30-foot rat outside of the airline's headquarters, which supposedly symbolizes US Airways management. And CEO Doug Parker said that "our industry is in a mess, if you haven't noticed... we're about to head into what looks like another downturn."

With all the recent news about Super Tuesday in the US, I thought it would be interesting to see what airplanes the candidates are using. Apparently, Democratic front-runners Hillary Clinton and Barack Obama are both chartering Boeing 737-800s from ATA (Clinton has already dubbed hers "Hill Force One"). On the Republican side, now-former candidate Mitt Romney used a chartered Xtra Airways Boeing 737-400 (and even though he also chartered an Embraer regional jet from ExpressJet for press use, the press was billed for it); John McCain uses a jetBlue Embraer 190 (with DirecTV in every seat, of course). And the lucky one of these candidates will be able to use Air Force One next year...

If you've got any updates/changes to this partial list, please feel free to leave a comment on this post!

The Wall Street Journal is reporting that a merger deal between Delta Air Lines and Northwest Airlines could happen as soon as next week. Talks between the two were previously strained as the senior management of both carriers disagreed over whom would keep high-ranking management positions, but they have since come to an agreement.

As a result of Delta and Northwest's merger potential, merger discussions between United Airlines and Continental Airlines have also reportedly "grown more serious," said the article. United has proposed a merger with Continental before and has been turned down, but if Delta and Northwest announce a deal, Continental could change its mind very quickly and agree to merge with United, which has been actively looking for a merger partner for some time now.

An interesting point in all of these merger talks is Northwest's so-called "golden share" in Continental. This is basically some preferred stock that allows Northwest to abort a merger between Continental and another carrier. If Northwest and Delta do merger, however, Continental has the option to acquire the "golden share" for $100. Continental would be able to get the stock even if the Northwest-Delta deal later falls through.

The mergers raise a lot of inevitable questions - what types of aircraft will the combined operations operate (what will happen to Northwest's A330s)? Which hubs will stay open and which will close or be downscaled (Memphis, Cincinnati, etc.)? What international routes will be dropped or added? It's most likely that the answers to these questions will be worked out before the merger is announced (after all, it would be pretty stupid to merge first and then tackle those problems). As always, lots of things could happen. American Airlines, which is being left out of all of the "merger madness" at present, could intervene somehow. Labor unions or antitrust regulators could always prevent these mergers from going through (and with the size of these airlines, any mergers would get a high amount of scrutiny from the antitrust folks).

United Airlines recently announced that, "as part of its continuing effort to offer customers choice, flexibility, and low fares," it will start charging passengers who purchase nonrefundable economy tickets for US/Canada flights $25 to check a second bag (the first one is still free). Exempt from the fee are passengers who have Premier or higher status in Mileage Plus/Star Alliance will be able to go by the old rules of checking two bags for free.

This is certainly an interesting move by United - it's the first legacy carrier to introduce such a fee (discount airlines like Skybus have already made baggage fees an integral part of their business plans). Other legacies are no doubt paying careful attention to United's move here - if it works (i.e., passengers don't desert the airline), then it's probable that they'll follow suit and also charge more for bags. After all, by some estimates, United's move could make more than $100 million per year in extra revenue and cost savings - not an insignificant chunk of change.

So is United's move here good or bad? A bit of both, perhaps - a mixed bag (ha). They are running the very real risk of alienating some of its passengers, but this risk might diminish if the other legacies follow suit. And United might be able to convince some passengers that by not charging for bags that you're not going to check, they're passing the savings onto you...

The man that brought you Virgin Atlantic, Virgin America, Virgin Blue, Virgin Nigeria and others is preparing to do it again.

Billionaire Richard Branson has announced plans to start an airline in Russia, tentatively called Virgin Russia. He plans to take advantage of the oil-fueled Russian economy, which has given the average Russian more money (and an airline market that's growing at around 10 percent a year). "We hope to offer the Russian people a really good airline. We may be able to do it a little better than is being done at the moment," said Branson. "We're in discussion with two or three partners." Branson also noted that there are "150 million people here within a three-hour flight from Moscow."

Branson certainly faces some challenges in his new endeavor. He'll be taking a swipe at state-run carrier Aeroflot, and is seeking "two or three" Moscow-based local carriers to team up with him, although he has said that his partners don't necessarily have to be airlines - "what we are looking for is people we can trust, people we could work with," he said. The Moscow Times identified several possible partners as Russian startups SkyExpress and Red Wings.

And Aeroflot is currently dominant in Moscow, which isn't planning that to change. Aeroflot Deputy CEO Lev Koshlyakov said that the "Russian market is competitive and is attracting more and more interest, with various business models... A new player coming in will make everyone mobilize their resources." And Aeroflot CEO Valery Okulov asked, "Why should we fear competition? We have always struggled with competition, so what do we have to fear?"

The Russian government also has to be dealt with. It has been notoriously hostile to certain foreign investment (e.g. some oil projects), and although there's no indication that the government would block a Virgin investment, Branson should definitely keep this in mind.

Irish discount carrier Ryanair is facing a bit of trouble after recently running two advertisements. The first features French president Nicolas Sarkozy with his girlfriend, French singer Carla Bruni. "With Ryanair," thinks Bruni in the advertisement, "all of my family can come to my wedding." This is a reference to the rumors of marriage between the two. A Ryanair spokesperson called it a "humorous comment on a matter of great public interest in France" and said that the airline apologizes "sincerely for any offence caused", but that's not satisfying either Sarkozy or Bruni: they're suing the airline separately for 1 euro and 500,000 euros in damages, respectively.

The second advertisement, touting "hottest back to school fares," apparently caused the British Advertising Standards Authority (ASA) to receive 13 complaints about it. "We considered that her appearance and pose, with the heading 'Hottest', appeared to link teenage girls with sexually provocative behavior and was irresponsible and likely to cause serious or widespread offence," the ASA said. Ryanair was ordered to recall the ad. But Peter Sherrard, head of communications for Ryanair, remained defiant: "It is remarkable that a picture of a fully-clothed model is now claimed to cause 'serious or widespread offence', when many of the UK's leading daily newspapers regularly run pictures of topless or partially-dressed females without causing any serious or widespread offence... This isn't advertising regulation, it is simply censorship. This bunch of unelected self-appointed dimwits are clearly incapable of fairly and impartially ruling on advertising."

According to United Airlines CEO Glenn Tilton, if United had to leave Star Alliance in order to finalize a merger, it was prepared to do so. "You can assume that absolutely everything goes into the mix of consideration," he said in a Chicago Tribune article published yesterday. The quote has sparked rampant speculation on internet forums as to whether or not United would actually seriously consider withdrawing from Star. United is one of Star's founding members, and is close partners with another founding member, Lufthansa. United makes a lot of money off of the feed that it gets from Star members (and vice versa).

There's no reaction yet from Lufthansa, arguably United's closest member. United does provide Lufthansa with a significant amount of connecting traffic, and losing United wouldn't be good. Lufthansa has covered its bases in the US market a bit with last year's investment in jetBlue, but jetBlue can't give them anywhere near the same amount of feed that United can. Perhaps Tilton's comments might be meant to scare Lufthansa into making an investment in United (as it did in jetBlue) - in this case, United's ties with Lufthansa and Star would probably be stronger than ever.

Of course, all of this is assuming that United is actually serious about leaving Star. United will probably remain in Star as long as it is financially viable; if a better alternative arises, United will probably do the sensible thing and 'go for it', even if this means dropping in Star in favor of another alliance. (A United-Delta or United-Continental merger might mean that the airline could join SkyTeam, but this seems more likely with the former.) For United, the most important item on the agenda is making money, and if this means merging with another carrier and leaving Star, then a United-less Star could indeed be a possibility.

Delta Air Lines, which has reportedly been interested in a merger for some time now, has requested permission from its board to start "formal" merger discussions with United Airlines and Northwest Airlines soon, with a plan to choose one of the airlines with which to merge.

In the last few years, Delta has carried opposing views on mergers: it exited Chapter 11 bankruptcy last year after successfully fighting off a hostile takeover proposal from US Airways. But soon after leaving bankruptcy, it started exploring its merger options, and has been the target of merger rumors before (such as this past November, with United Airlines). And with a stagnant economy and oil prices at nearly $100 a barrel, mergers might help relieve some of the pressure that the US airline industry is feeling right now.

A Delta-Northwest or Delta-United deal would probably create the world's largest airline (currently American). So which airline could it be? Back in November, Northwest was (and still is) seen as the most likely candidate, because the route structures of the two airlines has less overlap. And Delta CEO Richard Anderson has ties with Northwest, having worked there for 14 years and ultimately rising to the rank of Northwest CEO. But the main problem with a Delta-Northwest tie-up is the fact that two hubs - Delta's Cincinnati and Northwest's Memphis - would probably be shut down, due to their close proximity to each other. This might create trouble from both unions and politicians.

The possibility of a combined Delta-United has been raised before, and United management has been advocating industry consolidation for quite some time. But it will be some time before any merger plans become concrete, and even then, they can still fall apart quite easily. But this time, it appears that the unions - at least at Delta - are more supportive of the merger idea than they have been in the past. Lee Moak, chairman of the Delta pilot's union, said in a letter that “consolidation may indeed be at our door... We do not oppose consolidation, and may even determine that consolidation is desirable.”