The same exec tells the Journal the country needs a trillion dollars in investment over the next twenty years to keep up current production levels.

Is United-Continental next?

Delta officially agreed to merge with Northwest. If the deal goes to fruition it will create the biggest airline in the world. Bloomberg reports that it would control one-quarter of all U.S. air travel, and the Minneapolis Star Tribune says it would be “half again the size” of top carrier American Airlines.

The papers all say the deal is likely to spark a round of airline mergers. The WSJ on B1 says the deal will “unleash a wave of consolidation as U.S. carriers try to bulk up through mergers to endure deteriorating industry conditions.” It and the NYT report that United is expected to try to court Continental. The NYT says airlines will have to hurry to get them done before the merger-friendly Bush leaves office.

The NYT says the two companies hope to have the deal completed within a month. The paper says the deal is worth $3.1 billion, while Bloomberg and the Financial Times say it’s $3.63 billion. The WSJ fails to put a price tag on it.

The deal still faces headwinds from labor problems. The Atlanta Journal-Constitution, the hometown paper of Delta, says the news was “drawing howls of protest from Northwest pilots.”

Ouch!

Wachovia reported a near $400 million first quarter loss, officially announced that it’s raising $7 billion in a 14 percent-off sale to shore up its balance sheet, and cut its dividend by 41 percent. Its share dropped more than 8 percent.

In its C1 story, the WSJ goes up high with the heat on the bank’s CEO, while the NYT and FT emphasize the turmoil the loss signals for the rest of the financial industry, which is heading into earnings season (though it says the loss was only $350 million).

The FT quotes said CEO as saying things in loan land are about to get worse. Here’s the NYT:

A growing number of homeowners with mortgages from Wachovia walked away from their homes when they fell behind on their payments. Charge-offs nearly doubled, to 0.66 percent of net loans. Wachovia’s capital levels, meanwhile, have been depleted by the mounting losses from its ill-timed acquisition of Golden West Financial, a large California lender, near the peak of the housing boom. Lenders of all sizes face similar problems, and for some the situation is dire. On Monday, the Fremont General Corporation, a troubled mortgage lender, agreed to sell its retail banking assets for $198 million.

The WSJ puts the Fremont sale in a separate C1 story, and the Los Angeles Times notes that “California’s mortgage woes keep landing on Wall Street’s doorstep.

The Bear’s meager profit

In Bear Stearns news, the company somehow managed to report a profit of eighty-six cents a share (down 79 percent) in the first quarter despite its near collapse and rescue by JPMorgan Chase and the Federal Reserve.

The company said that the Securities Exchange Commission and the Federal Trade Commission are trying to wipe their feet on the Bear rug, the former for anti-competitiveness and the latter for violating consumer-protection laws.

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Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu. Follow him on Twitter at @ryanchittum.