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US merger forms 'largest airline' US merger forms 'largest airline'
(10 minutes later)
Rival US companies Delta Air Lines and Northwest Airlines have agreed to merge in a $5bn (£2.5bn) deal that would create the world's biggest carrier. Rival US companies Delta Air Lines and Northwest Airlines have agreed to merge in a $5bn (£2.5bn) deal that will create the world's biggest carrier.
But the two pilots' unions did not agree on the terms of their contracts before the merger was announced. The new airline, to be called Delta, will have annual revenue of more than $35bn and employ about 75,000 staff.
The new airline, to be called Delta, will have annual revenue of more than $35bn and employ some 75,000 staff.
Analysts say the deal could prompt similar moves by other US airlines struggling with rising oil prices.Analysts say the deal could prompt similar moves by other US airlines struggling with rising oil prices.
But the stock-swap deal, which was sealed a year after both carriers emerged from Chapter 11 bankruptcy protection, could face resistance from unions. But the deal, sealed a year after both carriers exited bankruptcy protection, could face resistance from unions.
Pilots for Northwest and the union acting on behalf of most of the carrier's ground workers said they would oppose the merger.Pilots for Northwest and the union acting on behalf of most of the carrier's ground workers said they would oppose the merger.
Airlines worldwide are suffering in the wake of a consumer slowdown in the US and Europe, making it harder to raise ticket prices against the fuel-price hikes. Airlines worldwide are suffering in the wake of a consumer slowdown in the US and Europe, making it harder to raise ticket prices to offset rising fuel-prices.
Atlanta base "Merging Delta and Northwest is the most effective way to offset higher fuel prices and improve efficiencies, increase international presence and fund long-term investment in the business," said Delta chief executive Richard Anderson, who is also to lead the new airline.
'Pro-merger'
The merger agreed on Monday night will see Northwest shareholders receiving 1.25 Delta shares for each of their Northwest shares.The merger agreed on Monday night will see Northwest shareholders receiving 1.25 Delta shares for each of their Northwest shares.
The combined company, which will be headed by Delta Chief Executive Officer Richard Anderson, will be based in Atlanta. The combined company will be based in Atlanta.
An unspecified number of job cuts are expected to reduce overlap in corporate and administrative departments, Delta said.An unspecified number of job cuts are expected to reduce overlap in corporate and administrative departments, Delta said.
Before the merger, Delta had said it would eliminate 2,000 jobs this year.Before the merger, Delta had said it would eliminate 2,000 jobs this year.
The deal still requires antitrust approval. The deal still requires approval from competition authorities but it is not expected to face hurdles on that front.
"This administration has taken a very pro-merger stance," said Diana Moss, an economist at the American Antitrust Institute.