After 14 months, Delta Air Lines and AT&T may be parting ways as joint equity holders of TransQuest Information Solutions, the information technology concern primarily serving Delta but also set up to rival AMR's Sabre to sell services to other airlines.
NCR, the computer division of AT&T and legal 'general partner' of Delta, is reconsidering almost everything - including joint ventures - as it prepares to become one of three separate AT&T entities later this year. The communications giant broke apart last year in a radical streamlining bid. NCR, called AT&T Global Information Solution when it took a 50 per cent stake in TransQuest, collects a 'seven-figure' annual fee from Delta, as well as an equal share of profits from systems sales.
However, sources indicate part of AT&T's doubts about future involvement is the fact that TransQuest has been spending most of its time in a 'commercialisation' process of upgrading Delta's sophisticated but highly customised IT systems. But TransQuest says it was only in the last months of 1995 that the company actually began marketing its wares to potential airline clients. 'In terms of real revenues and profits, 1995 was a year when the partners did not enjoy a windfall.'
Even if NCR drops out, Delta appears to be ready to stick with TransQuest. In most areas, the operation has exceeded performance targets and contributed to the carrier's '7.5' cost-cutting programme (1,100 people were moved from Delta to TransQuest). Boding well for NCR's continued involvement, however, is the guaranteed management fee and technology provision to Delta that over 10 years could bring in $2.5 billion.
Mead Jennings
Source: Airline Business
