We're not sure what a synergy is (we hear they don't make very nice house pets) but they got a lot of them down there in Atlanta. That's the word from Delta, which has refined its estimates of how much it will save from its Northwest merger and how much it will cost. During Delta's second-quarter call the other day, Delta President and CFO Ed Bastian said that the two carriers had refined their estimates and come up with $2 billion a year after 2012. "We expect total synergies of in 2009 of roughly $500 million, increasing about $500 million a year until you get to the full run rate in 2012," he said. And the pilots at Delta get a 3.5% equity stake and those at Northwest get a 2.38% stake in the new Delta, he said. The new joint contract that has been agreed upon will include pay increases of roughly 4% a year through 2012.
One-time cash-integration costs will be about $600 million over three years, he said. But the $2 billion figure includes about $1.4 billion in network effects and net cost savings of about $600 million, annually.
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