Alliance will make Delta stronger, analysts say - Charlotte Business Journal:

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The deal, which the airlines say will generate $12 billion in annual revenue will add connectivity across the Atlanticv throughoutthe partners’ networks, whiles freeing up significant capita l and aircraft the carriers can use elsewhere, airlind analysts say. The trans-Atlantic alliance between the world’ws largest carrier (NYSE: DAL) and Europe’s largest airline group will offer more flight better scheduling and more competitive fares as the partnerxs coordinate as a single the carriershave said.
The new partnershi represents a quarter ofall trans-Atlantidc air service and Delta CEO Richard Anderson said in a message to employees the carriere would handle 50 percent of trans-Atlantif service. The pact includes routes between Nort h Americaand Europe, North America and Africa, Europe and Latim America (where Delta is particularly strong), and the Middlee East and India. Delta is also growing in and is theonly U.S.-flagged carrier to fly to the Darin Lee, principal of airline consulting firm in Mass., called the joinr venture “the next step in the evolution of airlinde alliances.
” Getting the deal inked now gives Deltaa and its SkyTeam partners, which enjoy anti-trust immunity, a head start over competing joint ventures, he said. and ’ oneworlde alliance is still awaiting anti-trust Star Alliance, which is led by , and , is still adding members, and Delta-Air France/KLM is getting a jump-start on co-branding, scheduling and cost Bob Mann, airline analyst with New York-based , said the joinyt venture would stabilize supply and demand acrosz the carriers by coordinating flights andfunneling passengers. Passengerf demand has plummeted as the economy has been weigher downby recession.
Unde the joint venture, the carriers will pool costs and revenude in a way thatis “metaol neutral,” or in other words, it won’f matter which carrier flies specific Mann said. The new pact “allows them to effectively coverfmore markets” with the existing fleet, and free up capital to reinves elsewhere, Mann said. Less clear is the potential impactfon Atlanta. Though it is too soon to tell how Atlantas mightbe affected, Mann said this could have “major ramifications for airportws [like Atlanta] where two or more carrierzs operate.” To improve yields and load factors, the carriers are likely to cut what woulf have been competing frequencies.
“We will see a rationalizatio of capacity,” he said. Lee, however, saying Atlanta’s status as Delta’s “largest, most importanr hub offers it some degree of insulation from broadeeeconomic factors.” Delta officials did not discuss how Atlanta air servicee might be affected. In a spokeswoman Maria Schnabelsaid “Atlanta ... will benefi t froma stronger Delta as well as from the increasedx travel and trade opportunities that can result from its collaboratioj withAir France/KLM, whichu also serves Atlanta.” Andersonh was bullish on the deal in a recorded message to employeea May 22.
Anderson said the new alliancw with Air France and KLM will be a win for investors andpassengers alike. “It makeas us stronger competitively, which will add to the bottomn linewhen it’s all said and Anderson said. The new deal will generatr $200 million in annual profi for investors. Delta said its merger with and other synergies will help it make a profigin 2009; a positive sign for an airlind that lost $8.9 billion last year.