Delta and Northwest airlines appear close to a merger agreement that would give their pilots and European carrier Air France ownership stakes in what would be the world's biggest airline
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The Air Line Pilots Association, the union representing 12,000 pilots at both carriers, is seeking a stake of at least 5% of the merged airline, and a seat on the board of directors, according to three sources briefed on the talks who can't speak publicly because the deal isn't final. Delta and Northwest declined to comment on the talks, as did the union and Air France.
In exchange for the stake in the combined airline, the pilot groups would help speed up the integration by agreeing in advance to contract terms, and by resolving issues related to job seniority at their current airlines. If these issues can be resolved quickly, the merger could be announced next week, the sources said.
Air France, which already has a marketing partnership with Delta and Northwest in Europe, would buy a stake in the new airline for nearly $1 billion in cash, the sources said. No payment would be made between the principal airlines. Air France's investment would give the merged carrier an operating cushion. The Air France stake would be within the limits on foreign ownership of U.S. airlines set by federal law.
A merger between Delta, the USA's No. 3 carrier, and No. 5 Northwest would create the world's largest carrier, eclipsing No. 1 American Airlines. (AMR) The "new" Delta would have headquarters in Atlanta, where Delta is based, the sources said. Delta CEO Richard Anderson, at one time Northwest's CEO, would be chief executive.
The deal would be closed through an exchange of stock, with shareholders of Delta and Northwest trading stock for shares in the new company.
No deal could go forward without approval of the U.S. Departments of Justice and Transportation, as well as both carriers' shareholders. The federal reviews would take several months at least.
Delta operates hubs in Atlanta, New York John F. Kennedy, Cincinnati and Salt Lake City. Northwest has hubs at Minneapolis, Detroit, Memphis and Tokyo Narita airport. Plans do not call for closing or significantly reducing any right away, the sources said. That would mean few if any near-term job losses for frontline airline or airport employees.
A Delta-Northwest deal would be the first merger among major U.S. carriers since America West acquired US Airways (LCC) out of Chapter 11 bankruptcy in 2005. Industry experts say a merger as large as Delta-Northwest would quickly prompt other major carriers such as American, United (UAUA) and Continental (CAL) to pursue mergers to stay competitive.
A securities filing Wednesday said Anderson has offered to give up any extra compensation he otherwise would receive after a merger.
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The Air Line Pilots Association, the union representing 12,000 pilots at both carriers, is seeking a stake of at least 5% of the merged airline, and a seat on the board of directors, according to three sources briefed on the talks who can't speak publicly because the deal isn't final. Delta and Northwest declined to comment on the talks, as did the union and Air France.
In exchange for the stake in the combined airline, the pilot groups would help speed up the integration by agreeing in advance to contract terms, and by resolving issues related to job seniority at their current airlines. If these issues can be resolved quickly, the merger could be announced next week, the sources said.
Air France, which already has a marketing partnership with Delta and Northwest in Europe, would buy a stake in the new airline for nearly $1 billion in cash, the sources said. No payment would be made between the principal airlines. Air France's investment would give the merged carrier an operating cushion. The Air France stake would be within the limits on foreign ownership of U.S. airlines set by federal law.
A merger between Delta, the USA's No. 3 carrier, and No. 5 Northwest would create the world's largest carrier, eclipsing No. 1 American Airlines. (AMR) The "new" Delta would have headquarters in Atlanta, where Delta is based, the sources said. Delta CEO Richard Anderson, at one time Northwest's CEO, would be chief executive.
The deal would be closed through an exchange of stock, with shareholders of Delta and Northwest trading stock for shares in the new company.
No deal could go forward without approval of the U.S. Departments of Justice and Transportation, as well as both carriers' shareholders. The federal reviews would take several months at least.
Delta operates hubs in Atlanta, New York John F. Kennedy, Cincinnati and Salt Lake City. Northwest has hubs at Minneapolis, Detroit, Memphis and Tokyo Narita airport. Plans do not call for closing or significantly reducing any right away, the sources said. That would mean few if any near-term job losses for frontline airline or airport employees.
A Delta-Northwest deal would be the first merger among major U.S. carriers since America West acquired US Airways (LCC) out of Chapter 11 bankruptcy in 2005. Industry experts say a merger as large as Delta-Northwest would quickly prompt other major carriers such as American, United (UAUA) and Continental (CAL) to pursue mergers to stay competitive.
A securities filing Wednesday said Anderson has offered to give up any extra compensation he otherwise would receive after a merger.
