28 customers sue Delta, Northwest over merger

Delta Air Lines Inc. and Northwest Airlines Corp. were sued Wednesday by customers seeking to block the airlines' merger because they said the transaction violates antitrust laws.

Twenty-eight customers from 10 states filed a complaint in federal court in San Francisco, claiming Delta's acquisition of Northwest, which would create the world's largest carrier, would hurt passengers because it would reduce flights, eliminate air service to small communities, increase airline-ticket prices and lead to more airline mergers.

Delta, the third-biggest U.S. airline by passenger traffic, said April 14 that it had agreed to buy Northwest in an all-stock transaction. The value of the deal was $1.89 billion based on Wednesday's closing share prices for the two airlines. Delta on Wednesday said it would cut U.S. seats by 13 percent because of high fuel prices.

"They are going to get rid of some hubs, get rid of a lot more flights and crowd more people onto flights than usual," said Joseph Alioto, a San Francisco attorney representing the customers. "It's plainly unlawful."

The lawsuit seeks a court order blocking the acquisition.

The combined airline, which would keep the Delta name, would control about 25 percent of the U.S. air-travel market, according to Ray Neidl, an analyst at Calyon Securities in New York.

Delta spokeswoman Betsy Talton on Wednesday affirmed Delta's commitment to the merger.

"Delta is confident that our end-to-end merger with Northwest is pro-consumer and is the most compelling way to build a strong long-term business plan that can improve service for customers, especially given the record-high fuel costs we face," she said in an e-mail.

Tammy Lee, a spokeswoman for Northwest, said the lawsuit was frivolous.

"The end-to-end combination of these two carriers enhances, not diminishes, consumer preference and choice," Lee said in an e-mailed statement.

The two airlines carried 176 million passengers last year. The merger still must be approved by shareholders and federal antitrust regulators.

The latest cutbacks by Atlanta-based Delta go beyond the target set in April for an 11 percent reduction, in response to record jet-fuel costs. The reductions will begin in the second half of the year.

Northwest, based in Eagan, Minn., said earlier this year that it would cut seats by 5 percent. Northwest's cuts were updated Tuesday to as much as 9.5 percent of seating capacity. Jet fuel prices surged 83 percent in the past year.

Both companies said in April that they won't shut any hubs.