Sunday, April 13, 2008

Delta and Northwest merger imminent

Go to Financial Times original
Delta Air Lines is near an agreement to merge with rival Northwest Airlines, a tie-up that will create the world’s largest carrier and help insulate the company from a bitter industrywide downturn.

The accord, which may be announced as early as on Monday, would cap several months of negotiations between each airline and their pilots, people familiar with the matter said.

The standoff by the pilots in finding common ground on how to rank their members by seniority threatened to scuttle the merger last month.

But brutal market conditions have intervened. An unrelenting surge in fuel costs and a looming drop-off in demand for air travel triggered a spate of bankruptcies among smaller carriers and pressured even their biggest peers to consider transactions that would reduce expenses and maximise revenue.

Delta and Northwest have agreed to stick with many elements of the tentative pact they reached more than a month ago, including the location of the combined company’s headquarters - Delta’s hometown of Atlanta - and its leader - Delta chief executive Richard Anderson.


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