Aug. 22 (Bloomberg) -- Delta Air Lines Inc.'s board named director Richard Anderson, the former chief executive officer at Northwest Airlines Corp., to replace retiring CEO Gerald Grinstein.

Delta is in a ``position of strength'' after leaving bankruptcy on April 30, Anderson told reporters yesterday on a conference call. He joined the board of the third-largest U.S. carrier on March 30 and takes the CEO's job as Grinstein, 75, steps down as planned after leading Delta's reorganization.

In hiring Anderson, the board rebuffed two executives championed by Grinstein -- finance chief Edward Bastian and operations chief James Whitehurst -- and rekindled speculation about a future merger with Northwest or another airline.

``This could spur the possibility of further consolidation in the industry,'' said Seth Tobias, general partner of Circle T Partners LP in New York, which holds more than 100,000 Delta shares.

Anderson said he had no plans for a merger with Northwest. ``The short answer is no and the long answer is no,'' he said on the call. Delta said in February that it had considered a ``business combination'' with Northwest, the fifth-biggest U.S. airline, while fending off US Airways Group Inc.'s hostile takeover bid.

The new CEO comes to Delta from UnitedHealth Group Inc., where he was an executive vice president. Anderson spent 14 years at Northwest, including serving as chief from 2001 to 2004, and previously worked at Continental Airlines Inc. Rejoining the airline industry as an executive means he will have to battle low-fare domestic competitors and volatile oil prices.

`Two Headwinds'

``As the economy faces a possibility of a slowdown and we continue to have high fuel costs, those are two headwinds he's going to have to address,'' Tobias said.

Shares of Delta gained 39 cents to $18.10 at 4:02 p.m. in New York Stock Exchange composite trading.

The board's choice of Anderson preserves Delta's ``bench strength,'' Grinstein said yesterday in a letter to employees. ``Richard, Ed and the rest of Delta's highly capable management team will maintain the continuity and momentum Delta stakeholders need.'' Anderson's hiring is effective Sept. 1.

Bastian, 50, will remain as chief financial officer and add the title of president, Delta said. The announcement didn't mention Whitehurst, 39, who had led the airline's focus on improved customer service. Delta denied a Bloomberg request for an interview with Whitehurst.

`Airline Knowledge'

Anderson ``possesses the right blend of seasoned leadership, strategic skills, international experience and airline knowledge the company needs to navigate the industry's challenges and capitalize on its opportunities,'' Delta Chairman Daniel A. Carp said in a statement.

Delta left court supervision in April after cutting annual costs by $3 billion, shedding 6,000 jobs and shifting more flying to international routes. Northwest followed Delta out of bankruptcy a month later.

Anderson was among seven new directors appointed by Delta's former creditors' committee in bankruptcy. That probably influenced the choice of an outsider rather than Bastian or Whitehurst, said Joel Koblentz of the Koblentz Group, an Atlanta-based leadership advisory firm.

Delta employees preferred Whitehurst or Bastian as CEO over an outside candidate, creating a challenge for the new boss, said James Senn, director of the Center for Global Business Leadership at Georgia State University in Atlanta.

`Significant Concern'

``There is a significant concern within Delta that Anderson is a cost-cutter and headcount reducer,'' Senn said.

Anderson visited Delta's maintenance and customer service sites yesterday at Hartsfield-Jackson Atlanta International Airport, airline spokeswoman Betsy Talton said.

Asked whether Anderson's selection was a disappointment, Grinstein said in a comment relayed today by Talton, ``The board made this decision after careful and deliberate consideration. Richard's leadership experience at a senior level at the CEO and chief operating officer levels and his broad perspective will be valuable to Delta.''

Anderson joined Northwest in 1990 as deputy general counsel from Continental. He was promoted through various jobs until being named Northwest's CEO in February 2001, a job he held until October 2004.

``There's no doubt that he is really highly regarded'' in the airline industry, said Jon Ash, president of Washington- based consulting firm InterVistas-GA2.

`Labor Friendly'

Northwest's unions, which have a long history of antagonism with the airline's management, generally liked Anderson, said Kevin Griffin, head of Northwest's chapter of the Association of Flight Attendants. ``Anderson was a lot more labor friendly. He was able to communicate with the unions,'' he said.

Anderson had no health-care background before joining UnitedHealth. The company said it was attracted by his use of technology to save money at Northwest.

Anderson was succeeded at Northwest by current CEO Doug Steenland, who led a push to cut annual labor costs by $950 million, in part by reducing employee wages and benefits. Delta and Northwest filed for bankruptcy within minutes of each other on the same day: Sept. 14, 2005.

To contact the reporters on this story: David Mildenberg in Atlanta at dmildenberg@bloomberg.net; Mary Schlangenstein in Dallas at Maryc.s@bloomberg.net

Last Updated: August 22, 2007 16:31 EDT