An agreement has been reached, and barring any roadblocks from antitrust authorities Delta Airlines and Northwest Airlines are merging and will operate under the Delta Airlines name.
Richard Anderson, Delta CEO, said: "We said we would only enter into a consolidation transaction if it was right for all of our constituencies; Delta and Northwest are a perfect fit."
Delta Airlines released information outlining the basic elements of the deal and what ramifications they foresee for both the new mega-airline, and its passengers.
The list of benefits it sees by merging
- Combining Delta and Northwest will create a global US carrier that can compete with foreign airlines - foreign airlines that continue to increase service to the United States.
- Customers and communities to benefit from access to a global route system.
- More destinations means more schedule options, and more opportunities to earn and redeem frequent flyer miles.
- A more financially stable airline.
- Delta customers will benefit from Northwest's greater service to Asian markets. Northwest's customers will benefit from Delta's strengths across the Caribbean, Latin America, Europe, the Middle East and Africa.
- "Delta and Northwest's complementary networks and common membership in the SkyTeam alliance will ease the integration risk that has complicated some airline mergers. The carriers participate in a joint SkyTeam frequent flyer program with common customer lounges and airline partner networks."
Some of the details of the merger and what the merged Delta Airlines and Northwest Airlines will look like:
- Delta's headquarters were in Atlanta, and the merged Delta will retain its world headquarters in Atlanta.
- A mainline fleet of nearly 800 aircraft with nearly 75,000 employees worldwide.
- Northwest Airlines shareholders will receive 1.25 Delta shares for each Northwest share they currently own.
- No hub closures
- The Delta pilot leadership reached an agreement on a post-merger contract including a 3.5 percent equity stake in the new company along with other enhancements to their current contract.
- From Delta, "Frontline employees of both airlines will be provided seniority protection through a fair and equitable seniority integration process, as the airlines are combined. In addition, U.S.-based non-pilot employees of both companies will be provided a 4 percent equity stake in the new airline upon closing."
Some of the reasons cited for the merger
- An effective way to offset higher fuel prices. From Delta, "Record fuel prices have fundamentally changed the economics of the airline industry. Fuel is the highest single expense for Delta and Northwest, significantly eroding the financial benefits of restructuring and placing the airlines' new found strength and stability at long-term risk. At the beginning of 2007, oil prices were approximately $55 a barrel. Now, oil prices have nearly doubled. This dramatic run-up in the price of oil makes the transaction even more compelling."
- More efficient airline.
- Increase international presence.
- Ability to fund long-term investment in the airline business.
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