Mergers, Acquisitions and Takeovers Case Study

Delta-Northwest Merger: US Airlines’ Consolidation Moves

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Abstract:
The airlines in the US were facing tremendous pressure on their profit margins due to a rapid rise in fuel prices. Apart from the fuel prices, the airlines had to combat changing industry structure because of rising dominance of low-cost airlines and entry of new foreign airlines into the US market. Delta Air Lines, the third largest airline in the US in terms of revenue in 2006, and Northwest Airlines, the 6th largest airline, announced their intention to merge in order to combat this situation. However, the pilot union at Northwest opposed the move. The case highlights the rationale of the merger in the given situation, and the challenges that the combined entity would have to face in the post merger integration in the wake of the dynamic competitive scenario in the US airline industry.

Pedagogical Objectives:

• To understand the dynamics of airline industry
• To understand the competitive challenges for the combined entity in post-merger integration.

Keywords : Delta Aitlines, Northwest Airlines, Industry Consolidation, Merger, Post-merger Integration, Mergers,Acquisitions,Alliances Case Study; US Airline Industry, Richard Anderson, Douglas Steenland, Fuel Price, Competitive Dynamics, Low-cost Airlines

Contents : 
The US Airline Industry
New International Airlines Starting Operations in the US
Delta and Northwest Merger: Issues and Challenges
Market Share of US Airlines After the Merger
Delta’s growth story