[JURIST] The US Department of Justice Antitrust Division [official website] on Wednesday approved [press release] a merger of Delta Airlines and Northwest Airlines [corporate websites] after determining the deal would not significantly decrease competition. The department said the merger would likely decrease operational costs for the carriers that would benefit customers, and was not likely to harm the industry:
The two airlines currently compete with a number of other legacy and low cost airlines in the provision of scheduled air passenger service on the vast majority of nonstop and connecting routes where they compete with each other. In addition, the merger likely will result in efficiencies such as cost savings in airport operations, information technology, supply chain economics, and fleet optimization that will benefit consumers. Consumers are also likely to benefit from improved service made possible by combining under single ownership the complementary aspects of the airlines' networks.Northwest will now be a subsidiary of Delta and will form the world's largest airline. In a statement on the merger [press release], Delta said it expected annual savings of more than $2 billion because of the deal. AFP has more.
Delta and Northwest had previously faced financial trouble, and in 2005 both filed [JURIST report] for Chapter 11 bankruptcy protection [SEC backgrounder]. Because of its bankruptcy, Delta was able to settle a lawsuit [JURIST report] brought by pilots after it announced that it would be ending its pension plan. Northwest also successfully gained concessions from both flight attendants and pilots [JURIST reports] after its filing.