-- Shareholders of Delta Air Lines DAL and Northwest Airlines NWA Thursday are expected to approve a merger creating the world's biggest airline, one step in a series of pending transactions that could reshape the airline industry.
Since Atlanta-based Delta and Minneapolis-based Northwest announced plans to merge last April, two other sets of major carriers have proposed combinations that would amount to virtual mergers across the Atlantic. In July, United Airlines, Continental Airlines and Germany based Lufthansa asked the U.S. Department of Transportation for antitrust immunity so they could jointly schedule flights and share revenues across the Atlantic.
Last month, giants American Airlines, London-based British Airways and Spanish airline Iberia applied to the DOT for antitrust immunity so they could jointly schedule flights and share in trans-Atlantic revenues.
All three proposals were announced earlier this year as prices for jet fuel — airlines' biggest expense — were reaching record highs.
Industry experts say federal approval of all three combinations would create three behemoths across the Atlantic.
"A fragmented industry no longer works — it's simply not viable," says Washington-based airline consultant Mo Garfinkle. "These combinations will be the foundation of global airlines."
Today, Delta shareholders are voting in Atlanta and Northwest shareholders are voting in New York on whether to approve the merger, but officials at both airlines expect overwhelming support. The merger proposal is under intense review by the Department of Justice's antitrust lawyers to determine whether it would be anticompetitive and harm consumers. Justice would have to go to court to block the merger.
If Justice does not block it, Delta — one of the world's leading carriers across the Atlantic — would join forces with Northwest across the Atlantic. The new Delta would become the USA's and the world's biggest airline, eclipsing Texas-based American. The new Delta would also become a stronger force within SkyTeam, the international alliance that includes Delta and Air France-KLM, Europe's biggest airline company.
Delta President Ed Bastian says that the airlines don't expect Justice to block the merger and they expect to close the deal by year-end. Wednesday, a Justice Department spokeswoman declined comment except to say the review is ongoing.