World’s Largest Airline is Born: Delta-Northwest Merger Approved
The long-planned merger between Delta and Northwest airlines was officially approved Wednesday by U.S. Department of Justice officials, clearing the way for the two companies to team up to become the world’s largest airline.
The deal was under scrutiny for six months by anti-trust regulators at the DOJ who were investigating whether the merger would threaten consumers or give the company an unfair advantage in the marketplace.
They concluded that rather than hurt competition, the merger would actually “result in efficiencies such as cost savings in airport operations, information technology, supply chain economics, and fleet optimization that will benefit consumers.”
The new combined airline will use the Delta name and will be the most far-reaching American carrier, serving 66 countries and more than 375 cities worldwide. Northwest becomes a wholly-owned subsidiary under the terms of the deal. The company will have a total of 75,000 employees and will be headquartered in Atlanta, Georgia.
The merger benefited both airlines, which were previously undergoing restructuring amid a jet fuel price crisis and overall economic turmoil. Authorities expect the combined airline to reap $500 million in cost savings in the first year.
Little will change for now in terms of service and amenities. All the previous hub cities will remain as before, as will the separate frequent-flier programs, ticket counters, gate areas and Web sites. Delta’s regional subsidiary Comair will continue to operate as usual. Most of these items will remain status quo for at least a year, which is how long airline officials expect it to take to plan the next phase of integration.
Several issues have yet to be decided however, such as whether to charge for the first checked bag (Delta doesn’t; Northwest does) and which planes will be used on which routes. It is also unclear which services may be cut to create economies of scale and eliminate overlap, and whether or not airfares will rise.
Related links: Associated Press, Agence France-Presse, CNN, Wired
By Karen Elowitt for PeterGreenberg.com.
Don’t miss our previous coverage to brush up on the background to today’s events:
- What’s Next for the Delta-Northwest Merger?
- More Mergers Likely as Continental Reclaims Golden Share
- Delta Acquires Northwest: Now What?
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