Danny Chan La, Deseret News
Two Northwest and Delta Air Lines planes taxi to a departure runway before taking off from Salt Lake City International AIrport.

Delta Air Lines Inc. and Northwest Airlines Corp. shareholders gave the go-ahead Thursday to a combination that would create the world's biggest carrier, deciding that given the volatile industry, they like their chances better together than on their own.

The stock-swap deal announced April 14 still requires Justice Department approval. One other potential hurdle is a federal lawsuit seeking to block the deal that is set for trial Nov. 5 in San Francisco.

Delta Chief Executive Richard Anderson, who will keep his position after the combination, would not discuss the lawsuit, but he indicated the carrier maintains its goal of completing the deal by the end of the year.

"We are still focused on that timeline and believe we can accomplish the timeline as stated," Anderson told reporters after the Delta shareholder vote.

At a Delta meeting near Atlanta, 99 percent of shares voted were in favor of issuing new stock as part of the transaction. Earlier in the day, at a meeting in New York, 98 percent of Northwest shares voted were in favor of Delta acquiring Northwest.

The deal was not trumpeted by everyone, however. A few retired Delta pilots complained that current employees will get equity when the deal is completed, but retired pilots won't. They suggested Delta consider reinstating the defined benefit pension plan for pilots that the airline terminated while the carrier was under bankruptcy protection.

Anderson said he understood the retired pilots' concerns, but he was firm that the pension termination was final.

"I think we've been clear we're not going to reopen that issue," Anderson said.

Delta has a hub at Salt Lake City International Airport and employs about 3,400 people there.

Paul Tanner, a Delta flight attendant based in Salt Lake City, said the shareholders' votes in favor of the merger were expected. Tanner has participated in a movement among Delta flight attendants to unionize. The most recent election over unionization was in May, but not enough flight attendants participated for it to count.

The first election was in 2001, which was also unsuccessful. Tanner believes that it's more likely for Delta flight attendents to be represented by a union with Northwest flight attendants as their co-workers.

"I look forward to working with Northwest flight attendants, hopefully under a collective bargaining agreement," he said.

Sen. Orrin Hatch, R-Utah, examined the Delta-Northwest merger as a member of the Senate Judiciary Committee's Antitrust Committee. He said in a prepared statement released Thursday that he supports the deal.

"With a hub remaining in Salt Lake City, the combined airline will continue to be a significant employer and contributor to Utah and the surrounding region," Hatch said. "It will be good for our economy and for travelers to and from Utah."

Northwest shareholders will get 1.25 shares of Delta stock for each share they own if the combination is completed. That values Northwest at roughly $2.8 billion, based on Delta's current stock price and the 277 million Northwest shares outstanding or still to be issued as part of its bankruptcy reorganization plan. That's about $800 million less than the value when the deal was announced.

The combined airline would be called Delta and keep its Atlanta headquarters. Northwest would become a wholly owned subsidiary of Delta during the integration process. Delta hopes to obtain a single Federal Aviation Administration operating certificate in 15 to 18 months.

Delta Chairman Daniel Carp would become chairman of the new board of directors and Northwest Chairman Roy Bostock would become vice chairman. The new board would be made up of 13 members — seven from Delta's board, five from Northwest's board, including Northwest CEO Doug Steenland, and one from the Air Line Pilots Association. A current Delta pilot would take the pilots' seat on the board.

If the deal is completed, Delta plans to issue a nearly 13.4 percent equity stake in the combined airline to employees. Delta's shareholders approved at their meeting Thursday a proposal to amend the company's performance compensation plan to allow Delta to issue the equity to employees.

Delta has already reached an agreement with pilots of the two airlines on a joint contract, though a deal to integrate the seniority lists of the two pilot groups remains elusive. Arbitration hearings on the seniority issue are set to begin Oct. 2 in Los Angeles. The pilots are the only major union at Delta, while Northwest is heavily unionized.

The new airline would be the biggest in the world in terms of traffic and biggest in the U.S. in terms of annual revenue, which was a combined $31.7 billion at the end of last year.

The only real potential obstacle to the merger is the Justice Department, which is scrutinizing the Delta-Northwest plan for antitrust considerations. On Thursday, Steenland said the airlines still expect to get approval and close the deal by the end of this year.

Several dozen Northwest ground workers and flight attendants rallied outside the building where the shareholders meeting was held.

Northwest's unions have been split on the Delta deal — pilots support it, flight attendants have been neutral as they try to win representation of Delta's nonunion flight attendants. But the deal is opposed by Northwest's largest union, the International Association of Machinists and Aerospace Workers, which represents some 12,500 baggage handlers, reservations clerks, and other ground workers.


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