Delta (finally) acquires Northwest
It took seemingly forever (actually some six months), but Delta Airlines finally got the antitrust authorities to pass on its acquisition of rival Northwest Airlines. The all-stock deal (worth $2.8 billion) creates the world's largest airline, with $35 billion in annual revenues and 75,000 employees. It will continue with the name Delta. The stock swap was set before this year's stock decline, so that Delta ended up paying a third less than originally agreed on.
The US Justice Department declared that the deal would not hurt competition (the two airlines share few routes) and would probably help on customer service (Northwest is usually cited as the worst, though Delta not much better). Meanwhile, a group of consumers is suing to have the merger stopped, claiming that prices and services will decline after the deal.
The thought is that the ruling will give a green light to other airline mergers, including British Airlines and American Airlines. However, a change to an Obama administration may bring in a different antitrust attitude. That's why GM is reportedly trying to rush its Chrysler purchase from Cerberus Capital before the election.
An AP article ("Delta completes deal to acquire Northwest Airlines", 10/30/08), quotes Kevin Mitchell, chairman of the Business Travel Coalition, as saying "A first priority of the new administration should be to reconsider the rationale behind antitrust-immunized alliances and the market power they can exercise to the detriment of consumers."
Many expect a new set of layoffs and consolidation in the new Delta. One at least temporary plus for the airline is the falling price of fuel, though that may be offset by consumer and business travel reduction due to the recession.
4:48:48 PM 
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