US majors Delta Air Lines and Northwest Airlines have agreed to merge in a deal that if approved by regulators will create the world’s largest airline.
The SkyTeam alliance carriers today announced plans to merge under the Delta name in an all-stock deal. Northwest shareholders will receive 1.25 Delta shares for each Northwest share they own.
Delta says the merger, which effectively represents a takeover of Northwest, is subject to the backing of shareholders of both carriers as well as regulatory approvals, and “it is expected that the regulatory review period will be completed later this year”.
Delta has meanwhile reached agreement with its pilots’ representatives to extend a collective bargaining agreement through the end of 2012. The tentative deal, which still requires approval from pilots, would give cockpit crew a 3.5% equity stake in the new company.
US-based non-pilot employees of both carriers will be given a 4% equity stake in the enlarged airline.
If the merger goes through the airline will be headed by Delta CEO Richard Anderson, with Delta president and CFO Edward Bastian also retaining his existing titles. It will be headquartered in Atlanta.
An enlarged Delta will have more than $35 billion in annual revenues, nearly 800 aircraft in the mainline fleet and around 75,000 employees.
“The combined company will have a stronger, more durable financial base and one of the strongest balance sheets in the industry, with expected liquidity of nearly $7 billion at closing,” says Delta.
“In an industry where the US network carriers have shed more than 150,000 jobs and lost more than $29 billion since 2001, the combination of Delta and Northwest creates a company with a more resilient business model that is better able to withstand volatile fuel prices than either can on a standalone basis. Merging Delta and Northwest is the most effective way to offset higher fuel prices and improve efficiencies, increase international presence and fund long-term investment in the business.”
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Hooray for the new global airline