“All things are lawful,” wrote St. Paul, “but not all things are profitable.” And so it is with the proposed merger of Delta Air Lines and Northwest Airlines. Although the combination will probably navigate regulatory roadblocks successfully, it is unlikely to deliver on its promises of billions in savings and long-term profitability. Instead, the largest airline merger in history is likely to get bogged down in operational and personnel challenges. 

According to the airlines, the merger will allow them to offer a truly worldwide network, enjoy “one of the strongest balance sheets among major U.S. airlines,” and offset rising fuel prices. Northwest-Delta is being touted as a merger of equals, but the most effective airline mergers have usually involved a larger, richer carrier that is trying to get something another carrier has, such as routes, hubs, or aircraft. During the 1980s and 1990s, airlines that had been balkanized by federal regulation acquired one another, eventually growing into the nationwide carriers we know today. 

The Northwest-Delta merger more closely resembles the acquisition of US Airways by America West Airlines in 2004. Unlike the smaller mergers that yielded today’s major network airlines, this one was billed as a complementary and equal arrangement in which a smaller but more profitable airline purchased a larger, troubled carrier. America West’s strength in the western United States meshed well with the East Coast focus of US Airways. In a similar vein, Northwest and Delta executives tout the geographic fit of their pairing. But a geographic match is not the holy grail of airline mergers. The purported synergies of US Airways and America West have long ago been consumed by operational challenges.

At the time, the 2005 US Airways merger was hailed by Wall Street; indeed, after the merger the airline’s stock price rallied. But then, in 2007, the stock tanked, and the airline itself didn’t perform so well either. It took a year and a half to merge the respective reservations and booking systems of US Airways and America West. The two airlines’ pilot groups are nowhere near agreement on a master seniority list—which determines pilots’ pay, route assignments, and vacation time—and morale among the old US Airways crew is plummeting. Late last week, the old US Airways pilots, fed up with their union representation, voted to leave the Air Line Pilots Association and join a new union.

All of these challenges have affected the passenger experience. The Department of Transportation’s latest Air Travel Consumer Report indicates that US Airways has the highest complaint rate of all U.S. airlines.

Unlike the post-merger rally enjoyed by US Airways, Delta stock is down 17 percent since the merger deal was announced.

The Northwest-Delta merger is likely to fall victim to many of the same problems. The two airlines had previously promised they would not merge unless the pilot groups agreed on a master seniority list in advance. Talks collapsed in February, and most observers took the airline executives at their word and assumed the merger was off. As Lee Moak, chairman of the Delta group, wrote in a letter to Delta pilots, “labor integration issues are often an extremely difficult and contentious part of traditional mergers. As a result, when and if such mergers are eventually completed, many of the corporate synergies originally envisioned are unable to be fully realized or at least significantly delayed.”

Delta management fought back by negotiating favorable contract terms with Delta’s pilots. In a letter dated April 14, Moak announced his support for the merger with Northwest. Delta had agreed to give their pilots annual pay raises through 2012, furlough protection, and a 3.5 percent equity stake in the newly merged airline. Delta executives hoped that Northwest pilots would be willing to resolve the seniority list issues swiftly in order to get in on the benefits of the Delta contract.

But the Northwest pilots didn’t bite. Instead, the airline’s pilot union president referred to the merger as “a recipe for failure” and slammed the Delta union for “try[ing] to disadvantage the Northwest pilots economically and with respect to our seniority.” A US Airways-type merger would neutralize the expected gains at Delta.

After all that Northwest’s pilots have sacrificed in recent years—first there was the post-9/11 downturn, then the airline’s 2005 bankruptcy—they may take more drastic action. According to industry observer and former pilot Rob Mark, “Don’t be surprised if there is at least one major airline strike designed to fire one more shot where management can’t miss the message.”

While Northwest-Delta struggles to make its business case, it will also have to run the government gauntlet. The combined airline is likely to pass the Department of Justice’s antitrust tests, which include determining how much the new entrants might stifle or stimulate competition. Congress is another matter. Although they have no authority to stop a merger, some members are trying their hardest. Jim Oberstar (D-MN), the powerful chairman of the House Transportation Committee, penned a scathing and wrongheaded op-ed about airline mergers’ supposedly baleful effects on airline passengers. Several other representatives and senators have criticized the merger.

There’s a political challenge at the state level, too. Over the years, Minnesota has offered Northwest some $445 million in loans and incentives to maintain a hub and a headquarters there. But now the combined airline would be based at Delta’s headquarters in Atlanta.

Once you add these (not insurmountable) political hurdles to the treacherous operational challenges, the merger seems less likely to succeed. Unlike the post-merger rally enjoyed by US Airways, Delta stock is down 17 percent since the deal was announced. Even the most hopeful investors have good reason to be skeptical. Indeed, the biggest airline merger of all time may wind up being a huge disappointment.

Evan Sparks is an associate editor at the American Enterprise Institute. He blogs on aviation issues at EvanSparks.com.