DOJ Sign-Off Last Remaining Obstacle

As expected, shareholders in both Northwest Airlines and Delta Air Lines overwhelmingly approved the merger of their two companies Thursday. The FAA has already signed off on the deal, leaving only approval by the US Justice Department.

The Associated Press reports Northwest claims over 98 percent of its shareholders voted supported the all-stock acquisition of Northwest by Delta, in which the Northwest brand will disappear. Northwest President and CEO Doug Steenland called the vote "...a great day for our employees, who will receive equity in the combined company and more stable, long-term employment opportunities."

Delta reported a similar result, with about 99 percent of its shareholders approving the deal.

Delta is the third-largest US airline, and Northwest is number five. The new Delta will easily eclipse American Airlines to become the world's number-one passenger carrier, with more than 285 billion revenue passenger miles to American's 223 billion, according to estimates from the Air Transport Association based on 2007 numbers.

The new Delta will serve 390 destinations in 67 countries after combining two route structures which have very little overlap. Delta is expected to wind up with annual revenue of $35 billion, nearly 800 planes, and a 75,000 employees.

Delta and Northwest beancounters estimate the combined airline will save $500 million in costs in its first year, and as much as $2 billion a year in subsequent years. "The two billion dollars in annual synergies achievable through this merger are something neither carrier could have achieved as a stand-alone carrier," Steenland added.

Not everyone is thrilled with the plan, though. The International Association of Machinists union, which worries about its 12,500 members at Northwest being folded into a larger, non-union workforce, is still talking the deal down. IAM general VP Robert Roach reacted to word of the overwhelming approval of the merger by Northwest shareholders.

"The Machinists Union believes Northwest and Delta will be unable to successfully combine their businesses without adversely impacting customers, suppliers, employees and shareholders because of the two airlines' vastly different corporate cultures and mismatched aircraft fleets," Roach said.

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