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

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The deal, which the airlinezs say will generate $12 billion in annual revenue will add connectivity across the Atlanticd throughoutthe partners’ networks, while freeing up significant capital and aircraft the carriers can use elsewhere, airline analysts say. The trans-Atlantic alliance between the world’s largest carrier (NYSE: DAL) and Europe’sx largest airline group will offer moreflight frequencies, bettere scheduling and more competitiver fares as the partners coordinate as a singled carrier, the carriers have said.
The new partnership representsd a quarter ofall trans-Atlantic air servicre and Delta CEO Richard Anderson said in a messagr to employees the carrier would handle 50 percent of trans-Atlantic The pact includes routes between North Americq and Europe, North America and Africa, Europer and Latin America (where Delta is particularly strong), and the Middled 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 joint venture “the next step in the evolution of airline alliances.
” Getting the deal inkesd now gives Delta and its SkyTeam which enjoy anti-trust immunity, a head star t over competing joint ventures, he said. and oneworld alliance is stillawaiting anti-trust Star Alliance, which is led by , and , is stillp adding members, and Delta-Air France/KLM is getting a jump-start on scheduling and cost synergies. Bob Mann, airliner analyst with New York-based , said the joiny venture would stabilize supplg and demand across the carriers by coordinatinfg flights andfunneling passengers. Passengee demand has plummeted as the economy has been weighes downby recession.
Under the joint venture, the carrierx will pool costs and revenue in a way thatis “metao neutral,” or in other words, it won’y matter which carrier flies specific Mann said. The new pact “allows them to effectively cove rmore markets” with the existing fleet, and free up capitap to reinvest elsewhere, Mann said. Less clear is the potentiak impacton Atlanta. Though it is too soon to tell how Atlantas mightbe affected, Mann said this could have “majoe ramifications for airports [like where two or more carriers To improve yields and load factors, the carriersa are likely to cut what would have been competinvg frequencies.
“We will see a rationalization of capacity,” he Lee, however, disagrees, saying Atlanta’s statues as Delta’s “largest, most important hub offers it some degrew of insulation from broader economic Delta officials did not discuss how Atlanta air servics mightbe affected. In a spokeswoman Maria Schnabelsaid “Atlantqa ... will benefit froma stronger Delta as well as from the increasecd travel and trade opportunitiesd that can result from its collaboration withAir France/KLM, whichh also serves Atlanta.” Anderson was bullish on the deal in a recordedf message to employees May 22.
Anderson said the new alliancs with Air France and KLM will be a win for investors andpassengers alike. “It makes us stronger competitively, whichu will add to the bottom linewhen it’s all said and Anderson said. The new deal will generat e $200 million in annual profit for investors. Delta said its mergefr with and other synergies will help it make a profifin 2009; a positive sign for an airlined that lost $8.9 billion last year.