25 September 2008

NorthDelta? Deltawest? Nelta?

Bloomberg.com has a story by Mary Jane Credeur and Greg Bensinger about the upcoming merger of Delta Air Lines and Northwest Airlines:
Delta Air Lines Inc. and Northwest Airlines Corp. shareholders backed a merger of the companies, leaving a federal antitrust review as the final hurdle to creating the world's largest carrier. The votes came today at Northwest's annual meeting in New York and at a special session convened by Delta in its hometown of Atlanta. Delta's all-stock acquisition of Eagan, Minnesota- based Northwest is valued at $2.65 billion.
The combination of Delta, the third-largest U.S. carrier, and number six Northwest would surpass American Airlines as the world's biggest carrier by traffic. Delta and Northwest agreed to merge to take advantage of their international networks and growing cargo and maintenance units as higher fuel costs damped demand for US travel.
It's a "reasonable expectation'' that antitrust regulators at the U.S. Justice Department will issue a decision by mid- November, Delta Chief Executive Officer Richard Anderson said. The deal will probably close by year end, he said. Shareholders also approved a stock compensation plan to give 15 percent of the new company's shares to employees. Executives will get 3.5 percent, with an additional 1.6 percent set aside for future management awards; Delta pilots will receive 3.5 percent; Northwest pilots will get 2.4 percent; and another 4 percent will go to other employees.
The merged company will keep Delta's name and Atlanta headquarters and be run by Anderson. It will have $35 billion in annual revenue, with 800 aircraft and 75,000 employees.
Delta has already won approval from European antitrust regulators, and the carriers have 26 merger integration teams working on how to mesh their fleets, technology, facilities, and other operations.
Anderson reiterated the $2 billion target for cost savings and new revenue from the merger and said there's "probably more upside for those numbers.'' Delta has said integration costs will be $600 million over three years, less than its initial estimate of $1 billion.
The combined company would have Delta's trans-Atlantic routes to Europe and its Latin American network, as well as Northwest's Pacific routes including access to the restricted Narita airport in Tokyo. Adding overseas flying was part of each airline's strategy to return to profit after bankruptcy. Delta exited court protection in April 2007 and Northwest emerged a month later.
Rico says Northwest had such a cool logo, it's too bad that'll go in the merger...

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