Delta and Northwest merge

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Delta Air Lines today merged with Northwest Airlines, creating the world's largest airline that is expected to generate $2 billion or more in annual revenue and cost synergies from operational efficiency.

Yesterday, when the airlines received US DOJ approval to merge, Northwest Airlines closed on a $500 million two-tier financing package, which includes a three-year $200 million revolving credit facility and a one-year $300 million credit facility. The financing was led by US Bank with Citigroup and Morgan Stanley as co-lead arrangers.

The new airline, which will fly under the Delta brand, expects to incur one-time cash costs not exceeding $600 million to integrate the two airlines. The Delta-Northwest merger will occur through an integration process over the next 12-24 months.

As approved by both companies' stockholders earlier this year, Northwest stockholders will receive 1.25 Delta shares for each Northwest share they own.

The new airline will be headquartered in Atlanta and will serve more than 375 cities worldwide. Delta will maintain all its hubs at Atlanta, Cincinnati, Detroit, Memphis, Minneapolis/St. Paul, New York-JFK, Salt Lake City, and Tokyo-Narita.

"Delta is combining the best of two industry leaders to create a premier global airline that will be unmatched in the scope and level of service we offer our customers," says Delta CEO Richard Anderson. "As we have been proving, this is a different type of merger for the industry thanks to the complementary nature of the two airlines and the caliber of the people who will make this the most successful merger in airline history."

Previously the two sides have said they expect the transaction to close by yearend.