Shareholders of Northwest Airlines (NWA) and Delta Air Lines (DAL) are scheduled to vote today on a plan to combine the 2 companies.

The combined companies would create the largest airline in the world in terms of traffic and the largest in the US in terms of revenue.

Northwest shareholders will vote in New York and Delta shareholders will vote in Atlanta. Shareholders are expected to approve the deal. Approval from the US Justice Department could come in about 2 months.

The deal calls for Northwest shareholders to receive 1.25 shares of Delta stock for each share they own. That values Northwest at about $2.8 billion based on Delta's current stock price and about 277 million Northwest shares outstanding or to be issued as part of its bankruptcy reorganization plan.

Unions may be a sticking point. Delta has reached an agreement with the pilots of both airlines on a joint contract, but hasn’t yet determined how to integrate seniority lists of both carriers. An arbitration hearing on the issue is scheduled for October 2nd in Los Angeles. Only the pilots at Delta are unionized, but the workforce at Northwest is heavily unionized.

The two carriers had about 85,000 full-time workers on June 30th. Earlier this year, Delta said it planned to cut about 4,000 jobs. Northwest said it planed to cut about 2,500.

Airlines have been hit hard by rising fuel costs. Some, including American Airlines (AMR), now charge $25 for a second checked bag. However, frequent fliers, international travelers, and those who have purchased full-fare tickets are exempt.

Southwest Airlines (LUV), a no frills carrier, has been consistently profitable.

American travelers griping about cattle-class service might count their blessings. China's airlines apparently haven't mastered customer service, so the government has issued an edict: Be nice or else.
 

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