Delta weighs merger with another airline

ATLANTA – The chief executive of Delta Air Lines Inc. said Tuesday that the carrier wants to be the “undisputed leader” in the industry and that a deal with another airline may be in its best interest.

The comments came as the nation’s third-largest carrier reported a higher third-quarter profit and prepared to announce a revenue-sharing agreement with Air France-KLM.

“We are evaluating the best path forward for Delta,” CEO Richard Anderson said during comments about industry consolidation in a conference call with analysts after the airline released its results.

Anderson noted the consolidation of the airline industry and said he expects that trend to continue. He said he believes Delta’s financial improvements could make it a player.

“Ultimately, it’s our goal to be the undisputed leader in the airline industry,” Anderson said.

Delta executives addressed analysts during a teleconference from Paris, where the Atlanta-based airline is expected to announce today that it has signed a joint venture agreement with Air France-KLM to share revenues and costs on their trans-Atlantic routes.

The deal was expected to eventually encompass billions in annual revenues. The first phase of the pact begins in April 2008 and will include all nonstop flights operated by Air France-KLM and Delta between several European and U.S. hubs of the two carriers.

Delta fought during bankruptcy to fend off a hostile takeover bid by Tempe, Ariz.-based US Airways Group Inc. But since exiting Chapter 11 protection on April 30, the airline’s executives have seemed open to the idea of consolidation with another airline in the future.

Delta has indicated before that if it was involved in consolidation, it would want to be the acquirer. Anderson hinted at that again Tuesday when he said that consolidation would make sense to Delta if it was done from a position of strength and in the long-term best interest of shareholders.

Airline executives declined Tuesday to provide any further details on the future of subsidiary Comair Inc. Delta has said previously that it would consider selling the Erlanger, Ky.-based feeder carrier.

Delta President Ed Bastian told reporters the company continues to evaluate its options on Comair.

Delta on Tuesday reported a higher profit in the third quarter on increased sales and fuel hedging.

The company said it earned $220 million, or 56 cents a share. That compares with a profit of $52 million, or 22 cents a share, in the same period a year earlier.

Analysts surveyed by Thomson Financial were expecting earnings of 42 cents a share in the most recent quarter.

Revenue in the third quarter rose 10 percent to $5.23 billion, compared with $4.75 billion in the same period a year earlier.

Shares rose 8 cents to $20.08 in afternoon trading Tuesday.

Delta exited bankruptcy a leaner airline. It filed for Chapter 11 bankruptcy protection in September 2005.