Delta and Northwest Airlines to Merge
In a record breaking deal creating the world’s single largest airline, the boards of both Delta and Northwest Airlines have agreed to a merger.
This merger between Delta and Northwest seems to be coming from necessity rather than anything else. Due to high fuel prices and a slower economy, both companies agree to the stock swap merger on Monday. The merger between Delta and Northwest is valued at around $17 billion dollars.
The new combined airline will still be called Delta and the headquarters will be in Atlanta.
There are no predicted hub closures at this time, however with more than 80,000 employees now between both companies, there are expected job cuts and eliminations.
“We would only enter into a consolidation transaction if it was right for all of our constituencies — Delta and Northwest are a perfect fit,” Anderson said. “Together, we are creating America’s leading airline –- an airline that is financially secure, able to invest in our employees and our customers, and built to thrive in an increasingly competitive marketplace.”
Delta Chairman Daniel Carp will become chairman of the new board of directors and Northwest Chairman Roy Bostock will become vice chairman. Delta President and Chief Financial Officer Ed Bastian will retain his titles. Northwest shareholders will receive 1.25 Delta shares for each Northwest share they own. This represents a premium to Northwest shareholders of 16.8 percent based on April 14 closing prices.
Delta says that they are willing to work with the pilot’s unions of both companies in order to reach an acceptable agreement for seniority and other benefits that could be affected by this merger.
Look for more detailed information to come out in the next few days.
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