Airline deals could hurt airports' credit

LOS ANGELES (Reuters) - A potential merger between Delta Air Lines Inc (DAL.N: Quote, Profile, Research) and Northwest Airlines (NWA.N: Quote, Profile, Research) could hurt U.S. airports, Moody's Investors Service said on Friday.

A combined company would likely cut costs by reducing some flights, which would result in "significant route restructuring and a reduction in available seats." That, in turn, could hurt revenue growth at U.S. airports, Moody's Assistant Vice President Kurt Krummenacker said in a statement.

Most at risk for substantial service declines would be the secondary hub airports of each of the two carriers. Also affected would be airports at which both carriers have a significant presence, or those at which neither airline is dominant, Moody's said.

Furthermore, there could be a more severe impact on airports' credit were the potential Delta-Northwest merger to be followed by further consolidations in the industry, Moody's said.

"A substantial contraction of the number of carriers could have a negative impact on the credit of airports throughout the U.S. as declining seat capacity would pressure airfares higher, leading to significant passenger level reductions," Krummenacker said.

Earlier this week, Delta announced it would buy Northwest for more than $3 billion in a deal that would create the world's largest airline. Regulatory approval is pending.

(Reporting by Alexandria Sage; Editing by Andre Grenon)