I posted a message about the proposed Delta/Northwest merger on April 27, and pointed out that, in the previous quarter, Northwest had lost $3.2 billion, and Delta $6.4 billion. Well, it turns out that sometimes a loss is a loss but maybe it’s not a loss.

According to an article in the Salt Lake Tribune,Northwest, which agreed last week to merge with Delta, reported a $4.14 billion loss that included a $3.9 billion charge to reflect the slumping value of its stock. Last year, the airline lost $292 million.”

The article further states that “Delta’s loss was driven by a $6.1 billion noncash charge to goodwill. Goodwill represents the value of a company’s name that is on top of its assets… Subtracting the goodwill charge, Delta lost $274 million in the first quarter, compared with a net loss of $6 million a year earlier.”

So, the two airlines combined for a $10.5 billion loss, but the loss was due to slumping stock prices and a “goodwill” charge because its name is not as valuable as it once was.

Big businesses can do things that the average person cannot. If you have any doubt, call your accountant today and tell him your name is not as good as it once was, and you need a $15,000 tax deduction to make up for it.

So, did the airlines lose the money or not? Did they have to go into debt to pay off the money they may or may not have lost? I don’t know.

In the meantime, the proposed merger between United and Continental has collapsed, sending United into talks with US Airways. This morning the Times of London reports that British Airways, American Airlines, and Continental are in talks to create an alliance, with Continental possibly joining BA and AA in the Oneworld Alliance. Federal law prohibiting foreign ownership of an American airline would prevent a merger. Continental, after its deal with United collapsed, apparently feels it would do better in the Oneworld Alliance of airlines than it can currently do in the smaller Skyteam Alliance.

Things will get much more interesting before this is all settled