Delta Air Lines-Northwest Airlines merger

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Delta Air Lines-Northwest Airlines merger

On April 15, 2008, Delta Air Lines and Northwest Airlines announced a merger agreement.^[1] If the merger succeeds, it will form the largest commercial airline in the world.^[2]

The deal still must pass through anti-trust overview from the Department of Justice; however, most analysis expect the deal to pass through without problem because there is minimal overlap between the two airlines' routes and very little threat to competition in the industry.^[3] The merger is also expected to be the subject of several hearings on Capitol Hill. Congressman Jim Oberstar of Minnesota who also serves as chair of the House Committee on Transportation and Infrastructure, has already made clear his opposition of the merger and has said he will fight it in Washington.^[4] There is also strong support for the merger at the Capitol though, mostly from legislators from Georgia. Including Congressman Lynn Westmoreland, Congressman David Scott, and Senator Johnny Isakson.^[5] Although the merger is expected to be heavily scrutinized by the Democratic majority House and Senate, Congress has no real power to stop the merger. Only the Department of Justice has specific legal authority stop the deal on anti-trust grounds; whereas legislators can slow down the process until a new administration is inaugurated in 2009-January. However, foreign governments can impose antitrust penalties or block mergers between corporate entities. For example, between 2006 and 2008, the European Union issued a consent decree and monetary penalties against Microsoft for anticompetitive behavior, and the EU caused significant delay in the consummation of a merger between Google and DoubleClick though it was eventually approved in 2008-March.

It had been reported as early as January 2008 that Delta and Northwest were in merger discussions.^[6] News reports covering the event and the official press release reported that the new airline will use the Delta name and its world headquarters in Atlanta. The proposed merger partners lost a combined $10.5 billion in Q1, an amount that exceeded their combined market capitalization.^[7]^[8]

When and if the airlines combine, the "new Delta" would be based in Atlanta with a network focused on its WorldHub at Atlanta and WorldGateway at Detroit, along with hubs at Minneapolis-St. Paul International Airport, Cincinnati/Northern Kentucky International Airport, John F. Kennedy International Airport in New York City, Salt Lake City International Airport, Memphis International Airport, Narita International Airport near Tokyo, and Amsterdam Airport Schiphol.^[9]

1 Statements
- 1.1 Statement by Delta Air Lines
- 1.2 Statement by Northwest Airlines
2 Overview of Delta and Northwest
3 References
4 External Links

[edit] Statements

[edit] Statement by Delta Air Lines

A press release by Delta Airlines announced the merger. Below is a quote from the press release, explaining the merger:

“

Delta Air Lines Inc. (NYSE: DAL) and Northwest Airlines Corporation (NYSE: NWA) today announced an agreement in which the two carriers will combine in an all-stock transaction with a combined enterprise value of $17.7 billion, creating America’s premier global airline. The new airline, which will be called Delta, will provide employees with greater job security, an equity stake in the combined airline, and a more stable platform for future growth in the face of significant economic pressures from rising fuel costs and intense competition. Small communities throughout the United States will enjoy enhanced access to more destinations worldwide. Customers also will benefit from the combined carriers’ complementary route networks, which together will offer people greater choice, competitive fares and a superior travel experience to more cities than any other airline. In addition, combining Delta and Northwest will create a global U.S. flag carrier strongly positioned to compete with foreign airlines that are continuing to increase service to the United States.^[10]

”

[edit] Statement by Northwest Airlines

Northwest Airlines also released a statement regarding the merger, the beginning of which can be found below

“

By combining Northwest and Delta, we are building a stronger, more resilient airline that will be a leader in providing customer service and value. The combined airline will offer unprecedented access to the world, enabling you to fly to more destinations and have more flight choices.^[11]

”

[edit] Overview of Delta and Northwest

Delta is the second largest airline in the United States and has a fleet of mostly Boeing aircraft. Cities served stretch from limited markets in Japan and South Korea, to many destinations in South America and Europe all the way east to the United Arab Emirates and India. Its route structure is particularly strong in the South, where Delta maintains the world's largest hub, at Atlanta's Hartsfield-Jackson International Airport.

Northwest has two hubs in the Midwest (Detroit and Minneapolis) and one in the South (Memphis) and offers high capacity flights to many small cities across the Great Plains as well as extensive long haul service to Asia and Europe. It has strong codeshare relationships in several West Coast focus cities. Recently, Northwest has added hundreds of Airbus aircraft to their fleet after having predominantly Boeing and Douglas aircraft.