The Delta and Northwest Airlines Merger
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Case Details:
Case Code : BSTR319
Case Length : 20 Pages
Period : 2008-2009
Pub Date : 2009
Teaching Note :Not Available
Organization : Delta Air Lines Inc./ Northwest Airlines Inc.
Industry : Aviation
Countries : US
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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.
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Excerpts
Background Note
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DELTA AIR LINES
The history of Delta can be traced back to 1924, when The Huff Daland Dusters was founded in Macon, Georgia. This was the first commercial agricultural flying company in existence. In 1928, the company was renamed as Delta Air Service...
NORTHWEST AIRLINES
The Northwest was founded in 1926 as an air mail service between Minneapolis/St. Paul and Chicago. The next year, the passenger service was started. In February 1941, the common stocks of Northwest were publicly traded for the first time...
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The Merger and its Rationale
In 2008, both Delta and Northwest continued facing financial problems. In the first quarter of 2008, Delta reported a net loss of US$ 274 million in comparison with its net loss of US$ 6 million in the first quarter of 2007, excluding special and reorganization items. The US$ 268 million year over year increase in net loss was mainly because of the US$ 585 million increase in costs due to higher fuel price...
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The Response
The announcement of the merger between Delta and Northwest airlines evoked mixed reactions from industry experts. While some analysts welcomed the merger, some were apprehensive about its effect on the US aviation industry...
Birth of the Largest Airline
On June 24, 2008, Delta announced that the ALPA units at Delta and Northwest airlines' had reached a tentative agreement on a joint contract that would bring together both pilot groups under one pilot working agreement... |
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