bbeliko
09-23-2008, 08:37 PM
I know there's a thread on this already but i think this deserves it's own thread:
Northwest Airlines and Delta Air Lines late Monday announced their plan to merge, a deal meant to create the world's largest airline and the boldest attempt yet to set a new course for U.S. aviation.
Delta, the nation's third-largest carrier, is betting that in acquiring No. 5 Northwest it can fashion an airline of such reach and financial staying power that it can break free of the instability that has marked the industry for decades.
For Minnesota, the price of creating that larger carrier would be the loss of the airline that has connected it to the rest of the world for decades. However, Delta CEO Richard Anderson and Northwest CEO Doug Steenland said in a joint interview with the Star Tribune that the merged carrier would preserve a strong presence in Minnesota.
"The commitment starts with maintaining the hub and creating a global network that will allow the hub to thrive and grow," Steenland said.
Northwest employs about 11,500 people in Minnesota, with about 1,050 of them based at the Eagan headquarters. The combined company would be named Delta, Anderson would be CEO and the airline's headquarters would be in Atlanta, though it would have some executive offices in the Twin Cities. It was unclear what levels of management would operate from here.
Under a current agreement with the Metropolitan Airports Commission, the new Delta could be forced to immediately pay off $245 million in bond debt if the Northwest headquarters in Minnesota is closed.
However, Anderson said, "We think we can fulfill the spirit of those [MAC] covenants." He anticipated that airline executives will meet with the MAC over the next 18 months to renegotiate Northwest's agreement with the MAC.
The two executives said they expect the regulatory review of the merger to take six to eight months. If the federal government gives its OK, the two companies would still operate separately for a year afterward as they plan their transition.
Steenland, who would be a board member, said that future air service in Minnesota will be enhanced by joining together with another carrier to build a powerful global enterprise.
The combined airline would redefine what it means to be a major U.S. carrier. Together, Delta and Northwest would be half again the size of American Airlines, the largest U.S. carrier. However, the Justice Department could require the merged carrier to divest itself of some assets, such as gates at certain airports.
The merger would marry Delta's route network to Europe and Latin America with Northwest's major presence in Asia. On the domestic front, Northwest's hubs, including the Twin Cites and Detroit, would complement Delta's operations, including those based in Atlanta, New York and Salt Lake City. The merger does not contemplate closure of any hubs.
The two airlines are submitting the deal for antitrust review now in the hope that it can be completed before a new president takes office. U.S. Rep. Jim Oberstar, D-Minn., intends to fight the merger by holding hearings in the House Transportation and Infrastructure Committee, which he leads.
Sen. Amy Klobuchar, D-Minn., said Monday night that she would hold the executives' "feet to the fire" to ensure that consumers, airline employees and communities are protected. Sen. Norm Coleman, R-Minn., expressed similar concerns and stressed that he would look out for the "best long-term interests of Minnesota."
Gov. Tim Pawlenty said Monday that he "will be closely scrutinizing the impact of the merger and will strongly stand up for Minnesota's interests."
If the merged carrier doesn't live up to prior commitments to the state, "they either are going to owe us a substantial amount of money, or we will expect them to renegotiate those commitments in a way that's favorable to Minnesota for jobs, for flight operations and for hub status," Pawlenty said.
Northwest Airlines and Delta Air Lines late Monday announced their plan to merge, a deal meant to create the world's largest airline and the boldest attempt yet to set a new course for U.S. aviation.
Delta, the nation's third-largest carrier, is betting that in acquiring No. 5 Northwest it can fashion an airline of such reach and financial staying power that it can break free of the instability that has marked the industry for decades.
For Minnesota, the price of creating that larger carrier would be the loss of the airline that has connected it to the rest of the world for decades. However, Delta CEO Richard Anderson and Northwest CEO Doug Steenland said in a joint interview with the Star Tribune that the merged carrier would preserve a strong presence in Minnesota.
"The commitment starts with maintaining the hub and creating a global network that will allow the hub to thrive and grow," Steenland said.
Northwest employs about 11,500 people in Minnesota, with about 1,050 of them based at the Eagan headquarters. The combined company would be named Delta, Anderson would be CEO and the airline's headquarters would be in Atlanta, though it would have some executive offices in the Twin Cities. It was unclear what levels of management would operate from here.
Under a current agreement with the Metropolitan Airports Commission, the new Delta could be forced to immediately pay off $245 million in bond debt if the Northwest headquarters in Minnesota is closed.
However, Anderson said, "We think we can fulfill the spirit of those [MAC] covenants." He anticipated that airline executives will meet with the MAC over the next 18 months to renegotiate Northwest's agreement with the MAC.
The two executives said they expect the regulatory review of the merger to take six to eight months. If the federal government gives its OK, the two companies would still operate separately for a year afterward as they plan their transition.
Steenland, who would be a board member, said that future air service in Minnesota will be enhanced by joining together with another carrier to build a powerful global enterprise.
The combined airline would redefine what it means to be a major U.S. carrier. Together, Delta and Northwest would be half again the size of American Airlines, the largest U.S. carrier. However, the Justice Department could require the merged carrier to divest itself of some assets, such as gates at certain airports.
The merger would marry Delta's route network to Europe and Latin America with Northwest's major presence in Asia. On the domestic front, Northwest's hubs, including the Twin Cites and Detroit, would complement Delta's operations, including those based in Atlanta, New York and Salt Lake City. The merger does not contemplate closure of any hubs.
The two airlines are submitting the deal for antitrust review now in the hope that it can be completed before a new president takes office. U.S. Rep. Jim Oberstar, D-Minn., intends to fight the merger by holding hearings in the House Transportation and Infrastructure Committee, which he leads.
Sen. Amy Klobuchar, D-Minn., said Monday night that she would hold the executives' "feet to the fire" to ensure that consumers, airline employees and communities are protected. Sen. Norm Coleman, R-Minn., expressed similar concerns and stressed that he would look out for the "best long-term interests of Minnesota."
Gov. Tim Pawlenty said Monday that he "will be closely scrutinizing the impact of the merger and will strongly stand up for Minnesota's interests."
If the merged carrier doesn't live up to prior commitments to the state, "they either are going to owe us a substantial amount of money, or we will expect them to renegotiate those commitments in a way that's favorable to Minnesota for jobs, for flight operations and for hub status," Pawlenty said.
