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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Please note:

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 Contd...

Post-Merger Integration

On October 29, 2008, Delta's management announced that Delta and Northwest would integrate their operations over the next 12 to 24 months (Refer Box II to know more about the integration process of Delta and Northwest).

The merged entity was expected to incur a one-time cost not exceeding US$ 600 million to integrate the airlines. It was expected to generate US$ 2 billion in annual revenue and cost synergies.

On December 02, 2008, Delta announced that it would reduce its consolidated system capacity by between 6 and 8 percent in 2009, compared to 2008...

The Road Ahead

On January 07, 2008, Delta reported passenger traffic for December 2008. Delta's domestic traffic had decreased 3.7 percent year over year while international traffic had increased by 9.2 percent year over year. Northwest's domestic traffic had decreased 4.7 percent year over year and international traffic had decreased by 2.0 percent year on year (Refer to Exhibit V(A) for Delta's passenger traffic data and Exhibit V (B) for Northwest's passenger traffic data)...

Exhibits

Exhibit I: Delta - Highlights of Plan of Reorganization
Exhibit II: World's Top Ten Airlines by Revenues (As of April 2008)
Exhibit III: World's Top Ten Airlines by Traffic (As of April 2008)
Exhibit IV: A Note on the US Aviation Industry
Exhibit V (A): Passenger Traffic Data of Delta
Exhibit V (B): Passenger Traffic Data of Northwest
Exhibit VI: Delta's Consolidated Statement of Operations (1) (Unaudited)


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