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Tue, Apr 01, 2008

Surprise Merger Stuns Airline Industry

Northwest, Southwest Join Forces To "goWest"

ANN APRIL 1st "SPECIAL" EDITION: It's the merger NO ONE in the industry expected... but in a surprising move, on Tuesday officials with Northwest Airlines and Southwest Airlines announced the two carriers will join forces, pending regulatory approval, to form what executives called "the first step in the direction we expect all domestic airlines will ultimately go in coming years."

The new carrier, tentatively named "goWest," will merge Northwest's global route network, including its extensive Asia-Pacific presence, with Southwest's famed single-class service and low prices. Details of the proposed merger remain sketchy at this point; unidentified sources tell ANN the two sides met in secret talks over the past several weeks.

Under terms of the proposed deal, as told to ANN, Southwest CEO Gary Kelly will retain that title over the new airline, while Northwest CEO Doug Steenland will be named head of employee relations.

"When people think of a US-based domestic and international carrier, we want them to think 'let's goWest!" said Kelly. "While both the Northwest and Southwest brands remain instantly identifiable -- albeit for very different reasons, and some reasons better than others -- we felt it was time to branch off in a new direction.

"After all, you haven't really flown until you've gone west," Kelly added.

News of the deal came as good news for Northwest executives and investors, who in recent weeks appeared to grow increasingly motivated to merge with another airline, after talks with Atlanta-based Delta Air Lines reportedly fell through due to pilot disagreement over combined seniority lists.

From his new office in a Dallas, TX basement, Steenland said both sides hope to iron out labor agreements between employees at both airlines in the coming weeks, though he admitted several issues remain.

"Let's face it -- Southwest pilots aren't going to like taking the necessary pay cuts to bring them in-line with Northwest pilot pay," he said. "And Northwest flight attendants will likely need to go through extensive retraining, to teach them how to smile and things like that."

Despite the difficulties ahead, however, Steenland called the merger "the last, best hope for Northwest Airlines.

"I wouldn't go so far to say we were desperate -- rumors we asked Skybus if they were interested are absolutely untrue," said Steenland. "But I will say a partnership with Southwest gives our employees, and our airline, the best chances of surviving in a highly-volatile travel market, sparked by high fuel prices."

Officials with both carriers hope regulators will sign off on the merged airline before the end of 2008, with goWest-branded jets flying by the first quarter of 2009.



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