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
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
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.
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
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