Airline Consolidation - Who wins?

Implications: US Air's plan to Acquire Delta will likely lead to a new round of consolidation and mergers in the airline industry.

Concurrently, American, Continental, Northwest and United will evaluate their strategic options and determine next steps.

Further consolidation will reduce competition while enhancing shareholder value, but create less options and therefore likely higher prices for travelers.

Analysis: US Air has made a bold move to acquire Delta which is likely to be accepted by Delta's bondholders.  While the deal it has many hurdles to overcome, it will be carefully evaluated and likely occur unless an intervening bid by another carrier results in a superior offer.

United has previously talked to Delta on several occasions and would still be a likely acquirer.  Delta provides strength in the US Southeast and TransAtlantic markets which complement United strenght in the transcon, midwest, west and TransPacific markets. 

American, Continental and Northwest, will also be evaluating options and considering a competitive for Delta or perhaps mergers between themselves.  A Northwest-Continental or Continental-Delta merger could make sense since all three of them participate in the SkyTeam Alliance.   

Ultimately, more consolidation will occur as is evident in freight transportation companies including FDX, UPS and DHL.  The reduction in competitors should serve the shareholders well over time while reducing options and thereby increasing fares for the traveling public.