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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 will create the world's biggest carrier. | |
The new airline, to be called Delta, will have annual revenue of more than $35bn and employ about 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 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 to offset rising fuel-prices. | |
"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 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 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. |