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Wed, Oct 29, 2008

Delta/NWA Merger Cleared By US Justice Department

Regulators Sign Off On Acquisition Of Northwest 

ANN REALTIME REPORTING 10.29.08 1700 EDT: The "New Global Airline" is finally official. The US Department of Justice approved the merger of Delta Air Lines and Northwest Airlines Wednesday afternoon, just over six months after both airlines announced their plans to join forces against a shaky economy.

"After a thorough, six-month investigation, during which the Division obtained extensive information from a wide range of market participants -- including the companies, other airlines, corporate customers and travel agents -- the Division has determined that the proposed merger between Delta and Northwest is likely to produce substantial and credible efficiencies that will benefit US consumers and is not likely to substantially lessen competition," wrote the Justice Department’s Antitrust Division in a prepared statement to the media.

The new airline will retain the Delta name, and will be based at Delta's current headquarters in Atlanta. Though many have termed the merger as one of equals -- particularly as the carriers' current route networks have little overlap -- for all intents and purposes Delta is acquiring Northwest. The latter's branding is expected to disappear over the next several years, and Northwest will be operated as a Delta subsidiary.

Delta CEO Richard Anderson -- who served as Northwest CEO from 2001 through 2004 -- will serve as chief of the combined airline. Current Northwest CEO Doug Steenland will retain a seat on Delta's Board of Directors, but will not have control of day-to-day operations at the new carrier.

"The airline industry faces a very difficult economic environment around the world and this merger gives Delta increased flexibility to adapt to the economic challenges ahead," said Anderson.

DOJ regulators agreed. "...The merger likely will result in efficiencies such as cost savings in airport operations, information technology, supply chain economics, and fleet optimization that will benefit consumers," they wrote. "Consumers are also likely to benefit from improved service made possible by combining under single ownership the complementary aspects of the airlines' networks."

Regulators found little concern with the merger about the potential for reduced competition among US carriers... a situation aided by the fact no other airlines joined Delta and Northwest in announcing mergers of their own.

While a predicted wave of "merger mania" never did truly take off, some airlines -- including United and Continental, as well as American Airlines and British Airways -- have opted to instead form stronger alliances.

"With much of the work to bring our airlines together well under way, the new Delta will be at the front of the pack in achieving the benefits of consolidation and is well positioned to navigate the tough waters ahead in a difficult economy," Anderson added.

FMI: www.newglobalairline.com, www.delta.com, www.nwa.com

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