At last, the United States Justice Department has approved the much-awaited merger between Delta Air Lines and Northwest Airlines, thus clearing the decks for the creation of the world’s biggest airline.
The combined airline will be called ‘Delta’ and will keep its headquarters in Atlanta, Georgia, the United States.
The new carrier’s chief executive will be Richard Anderson.
The new ‘Delta’ will be the biggest airline in the world in terms of traffic and the biggest airline in the United States in terms of annual revenue – which was a combined $31.7 billion at the end of 2007.
Shareholders of both airlines had, in September 2008, approved the plan for merger.
During the integration process, Northwest Airlines will become a wholly owned subsidiary of Delta Air Lines.
The decision on merger comes after a six-month investigation by the US Justice Department.
The Justice Department’s lawyers concluded that the merger would “likely bring down costs for consumers without curtailing competition.”
The US Justice Department said in a statement issued by its Antitrust Division: “The proposed merger is likely to produce substantial and credible efficiencies that will benefit US consumers and is not likely to substantially lessen competition. The merger should create cost savings by combining airport operations, information technology and other efficiencies, ultimately driving down prices for fliers.”
“The two airlines,” the Justice Department added, “currently compete with a number of other legacy and low-cost airlines in the provision of scheduled air passenger service on the vast majority of non-stop and connecting routes where they compete with each other.”
However, there is another obstacle to be overcome for the merger to materialise: A lawsuit has been filed in federal court seeking to block the deal. The lawsuit was filed in June 2008 by 28 airline passengers who argued that “a merger would violate antitrust law and substantially decrease competition.”
Trial on the lawsuit is set for November 5, 2008, in San Francisco.
Delta Air Lines, based and headquartered in Atlanta, Georgia, the United States, operates an expansive domestic and international network, spanning North America, South America, Europe, Asia, Africa, the Middle East and the Caribbean. Delta is the only major United States-based carrier that flies to Africa.
Northwest Airlines – often abbreviated as NWA – is the principal subsidiary of Northwest Airlines Corporation and is headquartered in Eagan, Minnesota, the United States. The carrier has three major hubs in the United States: Detroit Metropolitan Wayne County Airport, Minneapolis-Saint Paul International Airport, and Memphis International Airport. Northwest also operates flights from a small hub in Asia at Narita International Airport, near Tokyo, Japan, and also operates trans-Atlantic flights in cooperation with partner KLM from Schiphol Airport in Amsterdam. Additionally, it maintains focus city operations at Indianapolis International Airport, Honolulu International Airport, and Seattle-Tacoma International Airport.
In a joint statement, Delta Air Lines and Northwest Airlines said: “There will still be plenty of competition in the airline industry after the carriers combine, and the two carriers have relatively few overlapping routes. The new airline will begin its first day as a combined company with a commitment to delivering excellent service to customers in 66 countries and more than 375 worldwide cities – more than any other airline; with a dedicated base of approximately 75,000 worldwide employees; and with a best-in-class cost structure and strong liquidity balance that better positions the company to adapt to the weakening global economy.”
In a separate pres release, Delta Air Lines said it hopes to obtain a single Federal Aviation Administration operating certificate in 15 to 18 months.
Delta Air Lines and Northwest Airlines said the companies “will be integrated through a thoughtful process with customer benefits rolled out over the next 12-24 months.” The benefits to customers include:
The addition of Delta’s code to nearly all of the Northwest system by the end of 2008, creating thousands of additional connecting opportunities.
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