Merging of Delta, Northwest Airlines

Having received approval from both the Federal Aviation Administration (FAA) and the U.S. Department of Justice (DOJ), Atlanta-based Delta Airlines announced yesterday that it has merged with Eagan, Minn.-based Northwest Airlines. Long expected, the merger between the nation's third and fifth largest airlines will create a "premier global airline" under the Delta moniker, according to Delta, which said it will integrate Northwest and its customers into the Delta system gradually over the course of the next 12 to 24 months.

"The airline industry faces a very difficult economic environment around the world and this merger gives Delta increased flexibility to adapt to the economic challenges ahead," Delta CEO Richard Anderson said in a statement. "With much of the work to bring our airlines together well under way, the new Delta will be at the front of the pack in achieving the benefits of consolidation and is well positioned to navigate the tough waters ahead in a difficult economy."

News of a rumored merger between Delta and Northwest broke as early as summer 2007, when Anderson took the helm at Delta. It became official, however, in April of this year, when the companies formally announced the massive amalgamation.

Stakeholders in both airlines approved the merger last month, as did the FAA. The transaction's final regulatory hurdle was the DOJ, which announced yesterday that its Antitrust Division had completed a six-month investigation into the companies and their intentions.

In the statement, the division concluded that the merger would help—not hurt—U.S. air travel: "After a thorough, six-month investigation, during which the division obtained extensive information from a wide range of market participants—including the companies, other airlines, corporate customers and travel agents—the division has determined that the proposed merger between Delta and Northwest is likely to produce substantial and credible efficiencies that will benefit U.S. consumers and is not likely to substantially lessen competition."

Although Northwest is now a wholly owned subsidiary of Delta, Delta plans to maintain the airlines' separate Web sites, operations and customer loyalty programs for the immediate future. In 2009, however, it will launch a fully consolidated worldwide flight schedule, integrate the Delta and Northwest brands, consolidate the airlines' loyalty programs and fully integrate their Web sites, kiosks and other customer-facing technology.

"This is a different type of merger for the industry thanks to the complementary nature of the two airlines and the caliber of the people who will make this the most successful merger in airline history," said Delta President and Chief Financial Officer Edward Bastian, who is now also president and CEO of Northwest Airlines.

For more information about the new Delta, which will serve customers in 66 countries and more than 375 cities.

Bomb Threat on Northwest Airlines Flight

A bomb threat was received against a Northwest Airlines Flight headed from Detroit to Atlanta. Fortunately, the airliner was still on the ground, enabling the safe deplaning of all 99 passengers and subsequent search of the plane.

The Associated Press reports NWA Flight 467 had rolled away from the gate at Detroit Metro Airport before passengers and their bags were removed, Northwest Airlines spokeswoman Michelle Aguayo Shannon said.

Scheduled to depart at 1:28 pm, the DC9-50 airliner was delayed for hours as authorities and bomb-sniffing dogs searched the plane and luggage for explosives. Transportation Safety Administration spokesman Christopher White said no bomb-like materials were found and no arrests have been made in connection with the threat.

Shannon said passengers were re-screened, and those without checked luggage were placed aboard a 5 pm flight to Atlanta. The remaining passengers were expected to leave on the original plane about 6 pm. Finally departing at 7:48 pm, Flight 467 arrived safely in Atlanta almost six hours later than scheduled, according to NWA records.

Merging of Delta Airlines and Northwest Airlines

Delta Airlines Inc. announced that its shareholders along with the shareholders of Eagan, Minnesota-based Northwest Airlines Corp. approved the merger proposal between the two companies in an all-stock transaction that would create the world's largest carrier, Delta.

The merger plan provides the issuance of 1.25 shares of Delta common stock for each Northwest share to be distributed upon completion of the merger. The merger proposal was approved by more than 99% of Delta stockholders, while 98% of Northwest stockholders voted in favor of the merger.

Delta stockholders were also favorably disposed to its broad-based employee compensation program that will allow the company to distribute equity to U.S.-based employees of the combined company upon completion of the merger. This amendment was ratified by approximately 92% of Delta stockholders.

The combination will provide customers access to more than 390 destinations in 67 countries and is expected to generate more than $35 billion in aggregate annual revenues. The combined carrier would have 800 aircraft and 75 thousand employees, surpassing American Airlines as the largest airline.

The transaction is expected to close later this year subject to the approval of the U.S. Department of Justice. The proposed merger has received unconditional clearance from the European Commission on Aug. 6, 2008.

Commenting on the development, Richard Anderson, Chief Executive Officer, Delta said, "This is another milestone toward completing a merger that brings together two unique airlines with complementary strengths that will offer unmatched global service. Providing both Delta and Northwest employees with the ability to share in the benefits of the merger from the beginning is a prime example of the Delta Difference.''

Shares of DAL are currently trading at $8.15, up $0.14 or 1.74% on a volume of 10.64 million shares on the NYSE.

NWA is currently trading at $9.92, down $0.07 or 0.70%, on a volume of 4.04 million shares on the NYSE.

After United Airlines Northwest Airlines Announced Baggage Fees

In June, Chicago-based United Airlines began charging $15 each way for the first piece of checked luggage and $25 for the second piece accompanying tickets bought June 13 or later for travel on or after Aug. 18. Fees for additional luggage, overweight bags or specially handled items ranges from $100 to $250.

The fees apply to customers traveling in the U.S. or to or from Canada, Puerto Rico and the U.S. Virgin Islands.

Northwest Airlines announced baggage fees accompanying tickets purchased on or after July 10 for travel on or after Aug. 28. Each Northwest customer pays $15 each way for the first piece of checked luggage, $25 for the second and $100 for each additional piece.

Most recently, Continental Airlines implemented a $15 charge for the first checked bag for tickets purchased on or after Sept. 5 for travel on or after Oct. 7.

Differing fees and policies among airlines also are leading travelers to research more before buying tickets. Even for travel agents, however, it's difficult to keep up with the variables among airlines, Sobolewski said.

"It's slowly snowballing," Sobolewski said. "Every day, it seems we get something different."