Merged Delta becomes world's biggest airline
30 Oct 2008
Washington: Delta Air Lines and rival Northwest Airlines Inc announced a $2.6 billion merger Wednesday that now creates the world's biggest, and the first truly global, airline. The merger also adds fresh momentum to consolidation moves in the aviation industry worldwide.
A US Justice Department antitrust review cleared the all-stock transaction, in the process creating the first domestic airline merger in the last three years. Officials said the merger would likely produce "substantial and credible efficiencies" without harming consumers or competition.
"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 Richard Anderson, the Delta chief executive who will head the combined entity.
The newly merged entity, according to experts, will command extraordinary scheduling and pricing strength, offering services to 375 cities worldwide. According to company estimates, the new company will realize nearly $2 billion in annual cost savings and increases in revenues.
The new Delta begins operations with 75,000 employees.
The merger, industry experts point out, creates the world's first truly global airline, bringing together Northwest's traditional strength's in Asia with Delta's overseas network and benefits of the transatlantic SkyTeam alliance.
Within the US, Delta was strong in the South while Northwest conducted operations from the northern cities of Minneapolis and Detroit.
In operation since 1926, Northwest will now operate as a wholly owned subsidiary of Delta. The process of integration is expected to take up to two years and cost about $600 million.
The new company will operate with the Delta brand and be headquartered in Atlanta, where Delta is based. Until further integration the carriers will maintain separate web sites, reservation systems and loyalty programmes.
The new Delta has announced that no frontline employee will be retrenched as a result of the merger and that no hubs would be closed.