July 17, 2008 Thursday
Delta Reduces Cost of Northwest Merger; Eyes 4Q Completion
BYLINE: Darren Shannon
SECTION: News; Pg. 1 Vol. 373 No. 12
LENGTH: 402 words
Delta has reduced the projected cost of its merger with Northwest to $600 million, and affirms that the deal will generate $2 billion in annual synergies by 2012.
The Atlanta-based airline, which reported a $1.2 billion second-quarter net loss on July 16 (See related story on Page 3), also believes the deal will be completed by the end of the year, and it expects to begin filing for a single air operators certificate in August.
Delta plans to fully integrate Northwest into its own operations between 12 and 24 months after the merger is ap-proved. With this integration, the new company, which will be called Delta, will have common cabin configurations, livery and uniforms, as well as a new loyalty program Delta says will be the world's largest with 60 million members.
«The Delta/Northwest merger is a game-changing transaction,» says Delta in an investor update released with its second-quarter results. «[The] merger enables strong unit growth while maintaining industry-leading cost performance.»
Delta CEO Richard Anderson, during an analyst call, said this confidence is reflected in the carrier's ability to reach a tentative joint collective bargaining agreement with pilots from both Delta and Northwest. This four-year deal, he added, will give the new Delta more ability to expand code shares and make best use of its fleet.
Anderson expects the deal to be ratified in mid-August. If it is approved, pilots will receive an annual pay rise of about 4% and a combined 5.88% stake in the airline, says the CEO.
The $600 million cost analysis, which Delta once said could go as high as $1 billion, is based on a three-year spending plan. Of that cost, Delta says a significant amount will go to integrating technology, although bringing com-monality to the... [continues]
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