DELTA Air Lines and Northwest Airlines boards gave a stock swap merger deal their approval, prompting speculation that United and Continental airlines might be the next to combine to counter high fuel prices and a slowing economy.
Under the terms of the Delta transaction, Northwest shareholders will receive 1.25 Delta shares for each Northwest share they own, reported the Associated Press.
Delta said the combined airline, to be called Delta, will have an enterprise value of US$17.7 billion, which includes the combined market values of the two companies and combined debt. It will be based in Atlanta, and Delta CEO Richard Anderson will stay chief executive.
Delta chairman Daniel Carp will become chairman of the new board and Northwest chairman Roy Bostock will serve as vice chairman. Delta president and CFO Ed Bastian will retain his titles.
Delta doesn't plan to close any of the two airlines' hubs, AP reported. Delta also said that it has agreed with its pilot leadership to extend its existing collective bargaining agreement through the end of 2012. The agreement, which is subject to pilot ratification, will provide Delta pilots a 3.5 per cent equity stake in the new company and other enhancements to their current contract, but the deal does not cover Northwest pilots.
The two pilots unions were unable to agree on integrating seniority lists before the combination was announced. A joint contract they had reached was never consummated.
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