As speculated by the executives of Delta Airlines including Richard Anderson, their CEO on being the forerunner during the next big consolidation wave in the airline industry, the airline’s merger deal with Northwest Airlines was cleared by the Federal regulators. This merger will make Delta Airlines, one of the largest in the world in just 18 months after it went bankrupt.
Northwest now becomes a completely owned subsidiary helping Delta with a global reach and Atlanta a high profile international presence with the stock swap deal amounting to $2.6 billion. According to Ed Bastian, President of Delta, Atlanta is going to be a hub for a very strong airline.
According to the airlines, initially they will continue with usual business. Merger will not result in a noticeable change in the planes, flight schedules, frequent flier programs, check in procedures, etc. operations of the two airlines will be integrated and combined on a gradual basis which will span over the next two years. Executives from Delta say the merger is expected to generate savings of at least $2 billion annually apart from generating revenue from combining Northwest’s and Delta’s complementary routes.
Consumers are not very happy with the merger as their advocates say this is sure to increase airfares due to fewer competition and greater market control. Antitrust regulators from the Government however are not very pessimistic as they feel there will not be a considerable reduction in the level of competition.
The combined strength will feature $35 billion in revenues, 770 flying routes across United States, Africa, Asia and Europe and 75,000 employees.
