Deal still needs federal approval

After months of negotiations and false starts, Delta Air Lines and Northwest Airlines late Monday (April 14) finally announced their long-expected merger, creating the world’s largest airline. The surviving entity will be called Delta, and its CEO will be Delta chief executive Richard Anderson. Its worldwide headquarters will be in Atlanta, although it will maintain other U.S. “executive offices” in Minneapolis/St. Paul and New York, the companies said. The announcement noted that the combined Delta/Northwest will continue to maintain all their existing hubs, including Atlanta, Cincinnati, Detroit, Memphis, Minneapolis/St. Paul, New York Kennedy, Salt Lake City, Amsterdam and Tokyo Narita. The two carriers’ frequent flyer programs will be combined. The merger is still subject to approval by shareholders of both companies and a federal regulatory review, although those are not expected to pose any problems.

Anderson called the combination of the two airlines “a perfect fit,” noting Northwest’s strengths in Asia and Delta’s presence in transatlantic, Caribbean and Latin American markets. What’s more, both are members of the global SkyTeam alliance, along with their joint venture partners KLM and Air France. Together, Delta/Northwest and their regional partners will serve 390 destinations in 67 countries; their combined fleet includes nearly 800 mainline aircraft, and together they employ 75,000 people. “In an industry where the U.S. network carriers have shed more than 150,000 jobs and lost more than $29 billion since 2001, the combination of Delta and Northwest creates a company with a more resilient business model that is better able to withstand volatile fuel prices than either can on a standalone basis,” the companies said in a joint statement. They said the merger will give them “one of the strongest balance sheets among major U.S. airlines,” permitting increased investment in fleet and customer service. For example, they said the merger “will accelerate the upgrading of existing international aircraft with lie-flat seats and personal on-demand entertainment.”

The merger had been held up by the failure of Delta’s and Northwest’s pilots to agree on merging their seniority lists – something they still haven’t done. However, Delta noted that it has just reached an agreement with its pilot leadership to extend its existing collective bargaining deal through 2012. It also gives Delta pilots a 3.5 percent equity stake in the merged company. “Delta will use its best efforts to reach a combined Delta-Northwest pilot agreement, including resolution of pilot seniority integration, prior to the closing of the merger,” Delta said.