Delta Air Lines–Northwest Airlines merger

From Wikipedia, the free encyclopedia
Jump to navigation Jump to search
Most common symbol for the merger

On April 15, 2008, Delta Air Lines and Northwest Airlines announced a merger agreement.[1] The merger of the two carriers formed what was then the largest commercial airline in the world, with 786 aircraft. Delta Air Lines' brand survived, while Northwest's brand officially ended.[2]

Leading up to the announcement

It had been reported as early as January 2008 that Delta and Northwest were in merger discussions.[3] News reports covering the event and the official press release reported that the new airline would use the Delta name and have its headquarters in Atlanta. The proposed merger partners lost a combined $10.5 billion in first quarter 2008, an amount that exceeded their combined market capitalization.[4][5]

When the airlines combined, the "new Delta" would be based in Atlanta with a network focused on its main hubs in Atlanta and Detroit, along with other 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, Los Angeles International Airport, Memphis International Airport (hub later closed in September 2013), Narita International Airport near Tokyo, Amsterdam Airport Schiphol, and Paris-Charles de Gaulle Airport.[6]

Richard Anderson was CEO of Northwest Airlines until 2004, the year before Northwest Airlines declared bankruptcy. Then in 2007 became CEO of Delta Air Lines when the merger took place.

Announcement

On April 14, 2008, both Delta and Northwest Airlines announced that they would merge to create the world's largest airline under the Delta name. The Atlanta-based combined airline will have $17.7 billion enterprise value.[7] The company also stated on April 14, 2008 that it agreed with its pilot union to extend the existing collective bargaining agreement through the end of 2012.[citation needed] The agreement, subject to a vote by the pilots, provided Delta pilots a 3.5% equity stake in the created new airline.[citation needed]

After the announcement

On September 26, 2008 it was announced that both Delta and Northwest's shareholders had approved the merger.[8] Approval by a federal antitrust review board was the last step needed to finalize the deal.[9] The proposed merger "is likely to produce substantial and credible efficiencies that will benefit U.S. consumers and is not likely to substantially lessen competition," the Justice Department said in a statement issued by its Antitrust Division.[10]

The deal passed through anti-trust overview from the Department of Justice; as most analysts expected, the deal was not blocked, due to the minimal overlap between the two airlines' routes and very little threat to competition in the industry.[11] The merger was also expected to be the subject of several hearings in the United States Congress. Representative Jim Oberstar of Minnesota, who also serves as chair of the House Committee on Transportation and Infrastructure, made clear his opposition to the merger, and he fought it in Washington.[12] There was also strong support for the merger at the Capitol from legislators from Georgia, including Representative Lynn Westmoreland, Representative David Scott, and Senator Johnny Isakson.[13] On August 7, 2008, the merger got regulatory approval from the European Union.[14]

After a six-month investigation, government economists concluded the merger would likely drive down costs for consumers without curbing competition. On October 29, 2008, the United States Department of Justice approved Delta's plan to acquire Northwest.[15]

Delta and Northwest's operating certificates were merged on December 31, 2009. From a technical standpoint, Northwest then ceased to exist as an independent carrier. Ground operations and reservations systems were combined on January 31, 2010.[citation needed]

Transition from Northwest to Delta

In airports where Northwest and Delta operate in separate terminals, one airline moved to the other's terminal. For example, in Los Angeles International Airport, NWA, which had a smaller operation, moved into Delta's Terminals 5 and 6 from its previous location in Terminal 2 on June 30, 2009.

Northwest WorldPerks was merged into Delta SkyMiles on October 1, 2009.

See also

References

  1. ^ Delta/Northwest Announce Merger Agreements Archived 2012-09-11 at Archive.is (Official Press Release: April 14, 2008)
  2. ^ Delta/Northwest To Become Largest Airline In The World Archived April 15, 2008, at the Wayback Machine.
  3. ^ "Delta lets the guessing continue on merger talks". Archived from the original on January 15, 2008. Retrieved April 15, 2008.
  4. ^ David Olive (2008-04-27). "Business | On a wing and a prayer". TheStar.com. Retrieved 2013-04-14.
  5. ^ "AFP: Delta, Northwest slash their value ahead of merger". Afp.google.com. 2008-04-23. Archived from the original on 2012-10-08. Retrieved 2013-04-14.
  6. ^ "Airlines seek merger to increase profits". Twincities.com. Archived from the original on September 14, 2012. Retrieved 2013-04-14.
  7. ^ Delta Newsroom Archived April 15, 2008, at the Wayback Machine.
  8. ^ Northwest shareholders OK Delta combo plan Associated Press via Yahoo! News
  9. ^ Shareholders Approve Delta-Northwest Merger Archived 2008-10-02 at Archive.is
  10. ^ [1] Archived November 1, 2008, at the Wayback Machine.
  11. ^ KEVIN DIAZ (January 20, 2008). "NWA-Delta merger seen likely to pass U.S. scrutiny". Startribune.com. Archived from the original on October 8, 2012. Retrieved 2013-04-14.
  12. ^ "2nd UPDATE: Delta, Northwest To Face Few Antitrust Hurdles". Archived from the original on April 20, 2008. Retrieved April 18, 2008.
  13. ^ [2][dead link]
  14. ^ "Delta's merger with Northwest gets OK in Europe". chicagotribune.com. Retrieved 2013-04-14.[dead link]
  15. ^ UPDATE: US Justice Dept Allows Delta-Northwest Airlines Merger Archived November 1, 2008, at the Wayback Machine.