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Delta and Northwest in Merger Talks
by
findingDulcinea Staff
U.S.-based airlines Delta and Northwest are negotiating a merger that would create the world’s largest airline.
30-Second Summary
The deal could be struck by as early as the middle of this month, reports the Financial Times. However, the paper also notes that negotiations could fall through at any time.
Both airlines filed for Chapter 11 bankruptcy protection in recent years. Atlanta-based Delta completed its restructuring process on April 30, 2007, and Minneapolis-based Northwest officially emerged from the red on May 31 the same year.
In addition, the two companies already have close ties. Both belong to the SkyTeam code-sharing alliance, and former Northwest CEO Richard Anderson took over as head of Delta last summer.
CBS News reported at the time that “the move could revive speculation in a possible merger between Atlanta-based Delta and Eagan, Minn.-based Northwest.”
The Minneapolis-St. Paul Star-Tribune is upbeat about the deal, saying that Northwest meets Delta’s ideal of “a partner that can strengthen its financial position, including a favorable cost structure.”
Both airlines filed for Chapter 11 bankruptcy protection in recent years. Atlanta-based Delta completed its restructuring process on April 30, 2007, and Minneapolis-based Northwest officially emerged from the red on May 31 the same year.
In addition, the two companies already have close ties. Both belong to the SkyTeam code-sharing alliance, and former Northwest CEO Richard Anderson took over as head of Delta last summer.
CBS News reported at the time that “the move could revive speculation in a possible merger between Atlanta-based Delta and Eagan, Minn.-based Northwest.”
The Minneapolis-St. Paul Star-Tribune is upbeat about the deal, saying that Northwest meets Delta’s ideal of “a partner that can strengthen its financial position, including a favorable cost structure.”
Headline Link: ‘Delta and Northwest close to merger’
Delta and Northwest are nearing a merger deal, reports the Financial Times. The two companies could reach a deal by mid-February, although people attending the negotiations warn that the taks could still stall or fall apart completely. The merger would allow the two companies, already partners in the SkyTeam code-share alliance, to keep employees while lowering their operation costs.
Source: Financial Times (free registration may be required)
Background: Airline bankruptcy and reorganization
Atlanta-based Delta came out of bankruptcy on April 30, 2007, after completing a $3 billion restructuring process. CEO Gerald Grinstein said in an official statement that “it was a great day for the airline.” Delta’s emergence from default left Northwest Airlines as the only major U.S. carrier under Chapter 11 protection.
Source: USA Today
United Airlines CEO Glenn Tilton had no comment when asked about rumors of his company merging with Delta. United, which restructured from bankruptcy in February 2006, reported 2007 fourth-quarter losses of $53 million on the back of fuel increases and weather-related flight cancellations.
Source: Seattle Times
Key Players: Richard Anderson
On Aug. 21, 2007, Delta Air Lines named former Northwest CEO Richard Anderson as its new head. His appointment became effective on Sept. 1, when he replaced retiring chief executive Gerald Grinstein. CBS News reported that “the move could revive speculation in a possible merger between Atlanta-based Delta and Eagan, Minn.-based Northwest.”
Source: CBS News
Opinion & Analysis: ‘Northwest, Delta Closing in on Merger Deal’
The Minneapolis–St. Paul Star-Tribune said that Northwest Airlines fits Delta’s merger criterion of “a partner that can strengthen its financial position, including a favorable cost structure.” According to the paper, Northwest “had the lowest unit cost—excluding fuel” of the United States’ six major carriers. If the merger goes through, it would create the world’s largest airline.
Source: Minneapolis-St. Paul Star-Tribune
Reference: Delta’s and Northwest’s balance sheets
Delta’s financials, including its annual report and Web casts, are available on the company Web site.
Source: Delta Air Lines
Minneapolis-based Northwest Airlines came out of bankruptcy on May 31, 2007. The company’s preferred stock was cancelled for no consideration, and former shareholders no longer have stock interests in the company.
Source: Northwest Airlines
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