Reply #6: Delta to Buy Northwest, Form World's Largest Airline (Update1) [View All]

[ozymandius]

April 15 (Bloomberg) -- Delta Air Lines Inc., one year removed from bankruptcy, agreed to buy Northwest Airlines Corp. in a $3.63 billion stock deal that would create the world's largest carrier and may unleash more industry consolidation.

The airline will keep Delta's name, Atlanta headquarters and chief executive officer, Richard Anderson, 52. The purchase will lead to a total of $1 billion in new revenue and savings and won't shut any hubs, the companies said yesterday in a statement. The merged carrier will control about 25 percent of the U.S. air-travel market, estimates Ray Neidl, an analyst at Calyon Securities in New York.

Delta, the third-biggest U.S. airline by traffic, is betting that combining with Northwest, the fifth-largest, will help overcome a 74 percent increase in jet fuel over 12 months. The move also is likely to hasten merger talks among rivals including United Airlines to counter Delta's wider network.

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Shareholders of Delta and Eagan, Minnesota-based Northwest will have to approve the transaction, which also would need clearance from federal antitrust regulators. While Delta pilots would get a 3.5 percent equity stake in the airline and a board seat under a new contract, Northwest's pilots said they would ``aggressively oppose'' the tie-up.

http://www.bloomberg.com/apps/news?pid=20601087&refer=home&sid=asAv2lIPXOKU