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Details are scarce, but it looks like Delta has engaged Blackstone to advise it on a potential American Airlines acquisition. Separately, private equity firm TPG Capital (no, not related with this blog :-)) has also started to look into a potential acquisition.

Blackstone was the firm that helped turn Delta around their bankruptcy and TPG did the same for United. I think the biggest challenge would be for Delta getting regulatory approval since Delta and American are the #2 and #3 largest US airlines and they have a decent amount of route overlap, especially in NYC, and Delta has been growing a mini-hub in Miami.

American has indicated that it wants to remain independent, but they have a long road ahead of them to getting back to financial health and becoming a major player. They recently announced route cuts, like their only flight to India (Chicago to Delhi) and I just flew them today from Beijing to Chicago in business class and the flight was half empty and their product severely lags behind most other carriers operating from the US to Asia.

I’m not an aviation industry analyst so I won’t play armchair CEO on this one, but as a frequent flyer, I hope American and Delta stay separate. American AAdvantage is a far superior frequent flyer program to Delta SkyMiles and I’d hate to see less options when it comes to miles. Also, as a New York and Miami flyer, I can only imagine fares increasing as Delta wipes out competition.

I’d personally rather see a reinvigorated and independent American emerge with a focus on becoming a leader in in-flight product and service. That’s a tall order from where they stand now, but many airlines have made turnarounds with the assistance of bankruptcy protections.

These are all preliminary reports, so I’m sure there will be much more to follow in the coming months. You can read about it on Fox Business and IBT.

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