Delta makes $17 billion deal

Citing high jet fuel prices, Delta Air Lines and Northwest Airlines announced Monday that they intend to merge into what will be the world's largest airline. The proposed new airline will retain its hub at the Salt Lake City International Airport.

The proposed airline will be called Delta and will be headed by current Delta CEO Richard Anderson in Delta headquarters of Atlanta, with executive offices in Minnesota's Twin Cities, where Northwest is headquartered.

The deal, according to the announcement, is worth $17.7 billion. NWA stockholders will receive 1.25 Delta shares for each share. The result for Northwest shareholders is a 16.8 percent premium based on Monday's closing prices.

The carriers believe the deal will generate more than $1 billion in annual revenue and "cost synergies" from more effective aircraft utilization, reduced overhead and improved operational efficiency.

The merger comes at a time when Delta flight attendants will begin voting on whether to unionize with the Association of Flight Attendants, which represents Northwest flight attendants. Voting begins April 23.

Paul Tanner, a Salt Lake-based Delta flight attendant who is a volunteer union organizer, believes the timing is perfect because Delta flight attendants' seniority will be protected if they unionize before the merger is complete.

"I'm not concerned about the Northwest flight attendants," he said. "My concerns fall more at the executive level (of Delta)."

Ramp workers at Delta are also in the process of collecting signatures to petition the government to hold an election for representation by the International Association of Machinists and Aerospace Workers, but they are not as far along as the flight attendants.

Since Northwest ramp workers are unionized, they'll likely be able to help Delta's workers, Salt Lake-based Delta ramp worker Bruce Church said.

Employees who are not pilots will receive a 4 percent equity stake in the new airline.

"It would generally be pro-rated on what you make, full time or part time and years of seniority," Church said.

Perks and turbulence

With more hubs and routes available with the new airline, travelers will benefit from a merger, Delta and Northwest said in a statement.

Small communities will especially benefit because they will be connected to more cities, they argue.

International travelers also will have access to more hubs and connections with the new airline.

Customers can visit newglobalairline.com online to learn more.

But ticket prices will increase, observers say.

John Flynn, the Hugh B. Brown Professor of Law Emeritus at the University of Utah, notes that competition typically keeps fares down. With a merger, there's less competition.