By PETER PAE
Los Angeles Times
Published: April 15, 2008
Delta Air Lines Inc. and Northwest Airlines Corp. agreed to a merger Monday, creating the world's largest airline and triggering what is expected to be a long-awaited industry consolidation.
The oft-delayed pact came amid one of the industry's most-tumultuous periods as three airlines collapsed in one week and American Airlines, the current largest carrier, canceled thousands of flights because of missed aircraft inspections.
Delta and Northwest said the merged company, which will be called Delta, will be better able to withstand rising fuel costs and a looming recession.
The company's headquarters will be in Atlanta, where Delta has its largest airport hub. In hopes of winning political support in Minneapolis, Northwest's home base, the combined airline would keep a major presence there, including maintaining Minneapolis-St. Paul International Airport as a major hub.
"Together, we are creating America's leading airline, an airline that is financially secure, able to invest in our employees and customers, and built to thrive in an increasingly competitive marketplace," said Delta Chief Executive Richard Anderson, who will head the combined airline.
Harlan Platt, a professor of finance who tracks the airline industry at Northeastern University in Boston, said the deal is a matter of necessity.
"I think it's necessary for these two carriers to survive," Platt said. "They know they need to grow their networks while cutting back capacity. A merger of this scope completes that."
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