Delta, Northwest Say I Do
Merger to create world's largest airline.
Two major domestic airlines took a break from announcing flight cancellations to push through a months-in-the-making deal.
According to The Wall Street Journal, Delta Air Lines (DAL) and Northwest Airlines (NWA) plan to merge their operations and create the world's largest airline. The deal faces some hurdles, however, as regulators must give it the thumbs up and labor unions aren't keen on signing onto a deal that would likely see a downsizing of its ranks.
Ditto the pilots union. The Journal reports Delta recently agreed to give aviators contract extensions and equity sharing in the new company, which it hopes will assuage fears. Meanwhile, Northwest's pilots union said it will "use all resources available to aggressively oppose the merger."
The hookup would create a carrier with more than $35 billion in revenue, supported by 75,000 employees. The two companies expect the transaction to generate $1 billion in additional revenue and create significant cost savings.
Analysts expect a rush of consolidation in the industry, as airlines hope to throw around combined weight to increase airfares with increased efficiency. United Airlines (UAL) is said to be renewing attempts to woo Continental (CAL).
High fuel prices, struggling consumers and a recent wave of bankruptcies and safety issues have wracked the industry at large. In the past month alone, Aloha Airlines, ATA, Frontier and Skybus have all succumbed.
As if delays and woeful service aren't enough, travelers will now have to pay more for the privilege. United already bumped up its fares and mergers will give the new mega airlines even more pricing power.
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