Carrier Will Absorb NWA Under Delta Brand

ANN REALTIME REPORTING 04.14.08 2042 EDT: The Associated Press reports Delta Air Lines has reached an agreement with executives at Eagan, MN-based Northwest Airlines, which will see the Northwest brand dissolve in the name of creating the world's largest airline.

According to early reports, the boards of directors of both airlines gave the deal their approval late Monday. The new airline, which will retain the Delta name, is projected to have an approximate value of $17.7 billion.

Confirming earlier speculation, the new airline will be based in Atlanta, home to Delta's current headquarters, and Delta CEO Richard Anderson will head the combined carrier.

In a joint statement Monday night, both sides said there would be no hub closings for either airline... though that promise may not survive the harsh realities of combining two airlines, however.

Northwest shareholders will reportedly receive 1.25 Delta shares for each share of Northwest, representing a 16.8 percent premium over shares in Northwest at the close of business Monday.

If approved by federal anti-trust regulators, the combined carrier will have projected combined annual revenue of some $31.7 billion, leapfrogging American Airlines, currently the world's largest passenger airline.

It would also be the largest carrier in terms of traffic, though regulators and/or economic realities will likely cull some current routes on both sides. One point in the merger's favor is the fact Delta and Northwest currently overlap on relatively few domestic routes.

Seeking regulatory approval may be the least of the new airline's immediate worries, however. Shortly after the announcement leaked to the press, the Northwest branch of the Air Line Pilots Association went on record opposing the merger, according to the Minneapolis Star-Tribune. 

After failing last month to come to terms with Delta pilots over combining seniority lists, Northwest pilots were shut out of talks between Delta and its pilots last week to come to terms on a new contract favoring the merger. That discord will almost certainly spell difficult times in reaching a common pilot contract... something Delta had hoped to avoid.

The announcement follows several months of speculation and rumors about a Delta/NWA combination... and one year after both carriers emerged from Chapter 11 bankruptcy protection.

ORIGINAL REPORT

0001 EDT: Trust us: if you're sick and tired of hearing about the oft-rumored merger between Delta Air Lines and Northwest Airlines... well, so are we. But this could just be the week all that talk over the past four months finally bears fruit.

Really. No kidding.

As ANN reported last week, Delta management recently agreed in principle with pilots on a contract that would raise pilot pay, and give them a stake in the combined carrier should a merger with Northwest proceed. That deal would keep the merged operation's headquarters in Atlanta, place Delta CEO Richard Anderson in the same position over the combined airline, and keep the Delta name.

Left behind in that agreement are pilots at Northwest... who would be left to negotiate their own deal once the merger takes place. In the end, however, almost-certain labor issues down the line are flying coach class to concerns the two airlines must merge now, in order to survive the current economic downturn in the industry.

And when they say "now," they apparently mean it. Bloomberg reports Delta's Anderson met with Northwest CEO Doug Steenland on Sunday to discuss terms of the deal.

Northwest's board will reportedly meet Monday with a similar agenda. If that meeting goes as planned, sources say, a formal announcement of a deal could come as soon as late Monday, or early Tuesday.

Stay tuned.

FMI:  www.newglobalairline.com/