Regulators Sign Off On Acquisition Of
Northwest
ANN REALTIME REPORTING 10.29.08 1700 EDT: The
"New Global Airline" is finally official. The US Department of
Justice approved the merger of Delta Air Lines and Northwest
Airlines Wednesday afternoon, just over six months after both
airlines
announced their plans to join forces against a shaky
economy.
"After a thorough, six-month investigation, during which the
Division obtained extensive information from a wide range of market
participants -- including the companies, other airlines, corporate
customers and travel agents -- the Division has determined that the
proposed merger between Delta and Northwest is likely to produce
substantial and credible efficiencies that will benefit US
consumers and is not likely to substantially lessen competition,"
wrote the Justice Department’s Antitrust Division in a
prepared statement to the media.
The new airline will retain the Delta name, and will be based at
Delta's current headquarters in Atlanta. Though many have termed
the merger as one of equals -- particularly as the carriers'
current route networks have little overlap -- for all intents and
purposes Delta is acquiring Northwest. The latter's branding is
expected to disappear over the next several years, and Northwest
will be operated as a Delta subsidiary.
Delta CEO Richard Anderson -- who served as Northwest CEO from
2001 through 2004 -- will serve as chief of the combined airline.
Current Northwest CEO Doug Steenland will retain a seat on Delta's
Board of Directors, but will not have control of day-to-day
operations at the new carrier.
"The airline industry faces a very difficult economic
environment around the world and this merger gives Delta increased
flexibility to adapt to the economic challenges ahead," said
Anderson.
DOJ regulators agreed. "...The merger likely will result in
efficiencies such as cost savings in airport operations,
information technology, supply chain economics, and fleet
optimization that will benefit consumers," they wrote. "Consumers
are also likely to benefit from improved service made possible by
combining under single ownership the complementary aspects of the
airlines' networks."
Regulators found little concern with the merger about the
potential for reduced competition among US carriers... a situation
aided by the fact no other airlines joined Delta and Northwest in
announcing mergers of their own.
While a predicted wave of "merger mania" never did truly take
off, some airlines -- including United and Continental, as well as
American Airlines and British Airways -- have opted to instead form
stronger alliances.
"With much of the work to bring our airlines together well under
way, the new Delta will be at the front of the pack in achieving
the benefits of consolidation and is well positioned to navigate
the tough waters ahead in a difficult economy," Anderson added.