Delta Acquires Northwest in $3.1B Deal

From CNN
Delta Air Lines announced a long-speculated deal to acquire Northwest Airlines for about $3.1 billion Monday, a combination that will create the world's largest airline and could lead to a series of other deals to reshape the U.S. airline industry. The new carrier will operate under the Delta name, and be based in Atlanta. Delta said the carrier will maintain the nine hubs of both airlines in the United States, Europe and Asia, serving more than 390 destinations in 67 countries. The combined carrier will have $35 billion in annual revenue, more than 800 airplanes and 75,000 employees, according to Delta. But many of the employee unions at Northwest were quick to voice opposition to the deal, even though Delta said it is not looking to cut non-office staff. The deal could lead to less competition and higher fares on some routes where the two carriers now compete. But there is relatively little overlap between the current Delta (DAL, Fortune 500) and Northwest (NWA, Fortune 500) systems. The greater impact on competition and fares could come if other major carriers follow suit and negotiate their own deals in response. Some experts have suggested that several deals could eventually leave three mega-carriers handling about 80% of the nation's air traffic. A deal announcement could open the way for No. 4 Continental Airlines (CAL, Fortune 500) to hold its own merger discussions. Northwest has held a so-called "golden share" of Continental, which allows it to block a deal for Continental. But it loses that veto by entering its own combination. There has been talk that United Airlines parent UAL Corp. (UAUA, Fortune 500) and Continental are eyeing their own combination.
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