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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"There's real synergy between the two networks. It's, arguably, from a geographic standpoint, from a network standpoint, the best possible merger."1

- Richard Aboulafia, Aviation Consultant at the Teal Group Corporation,2 in April 2008.

"The Delta-US Airways merger idea was a total fiasco. It would have reduced competition for probably two dozen cities, down to nothing."3

- Mike Boyd, Aviation Analyst, in February 2008.

Introduction

On April 14, 2008, Delta Air Lines Inc. (Delta) and Northwest Airlines Inc. (Northwest) announced merger plans pending the necessary approvals from the US Department of Justice (DOJ)4 and the European Commission5.

The approvals were received on October 29, 2008, after which the two airlines started the merger integration process. The merger gave birth to the world's largest airline in terms of revenue passenger kilometers6.

With this merger, Northwest became a wholly-owned subsidiary of Delta. The new airline retained the name Delta and was headquartered in Atlanta.

The Delta and Northwest Airlines Merger - Next Page>>

1] Kenneth Musante, "Delta-Northwest Deal May Launch Fare Hikes,"http://www.money.cnn.com, April 14, 2008.
2] The Teal Group Corporation, headquartered in Fairfax, Virginia, was founded in 1987. It offers industry research and consulting services to defense, aerospace, electronic and engineering, and aircraft industries.
3] Kevin Featherly, "NWA-Delta Merger Means a Triple Whammy for State,"http://www.minnpost.com, February 19, 2008.
4] The United State Department of Justice was formed in 1870. It was a Cabinet Department in the US government and was responsible to enforce the law of the US.
5] The European Commission (formally the Commission of the European Communities) was responsible for proposing legislation, implementing decisions, upholding the European Union's treaties and the general day to day running of the Union (Source: http://en.wikipedia.org).
6] Revenue Passenger Kilometers (RPK) are computed by multiplying the total number of passengers by the kilometers they travel.

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