Delta, NWA begin selling the deal, but skeptics abound

Announcing the deal
Richard Anderson (L), CEO of Delta, and Doug Steenland, President and CEO of Northwest Airlines, at a press conference Tuesday to discuss details of the two carriers' merger agreement.
Chris Hondros/Getty Images

Northwest and Delta are casting their merger as a deal with virtually no downside for anyone or any community the airlines serve. They say the transaction provides unprecedented benefits for employees, customers and communities.

The airlines are vowing to maintain all their hub airports and it appears, at least for now, the airlines would not cut any flying as a result of the merger.

Northwest CEO Doug Steenland says most employees will be protected from layoffs, and they'll receive pay hikes and stock grants. Their jobs will be more secure. The opportunity for advancement and improved compensation will be better.

For customers, there will be more dependable service.

Key measures for Northwest and Delta
Combined, Northwest and Delta would be the biggest U.S. airline by several measures, including passengers and revenue.
MPR Graphic/Martin Moylan

"No longer for airlines, for this airline, will the playbook be the survival playbook," Steenland said. "But it will be the playbook of how do we take the profits we're earning, plow them back into the business and become the best customer service airline out there. "

With pitches like that, Delta and Northwest are working hard to sell the merger. They've created a web site - newglobalairline.com - that attempts to detail the merger's value to every state in the nation.

And the site urges citizens to contact elected leaders to voice support for the merger.

Shortly after the merger was announced Monday night, Northwest sent e-mails to nine million customers assuring them their frequent flier miles would be unaffected.

Delta CEO Richard Anderson
Richard Anderson, CEO of Delta, at a news conference Tuesday to discuss Delta's acquisition of Minnesota-based Northwest Airlines.
Chris Hondros/Getty Images

And Northwest also told those customers that within a year they would be served by an airline, the world's biggest, that could take them to just about any major destination on the planet.

The airline would be led by current Delta CEO Richard Anderson. It would have about 75,000 employees, more than 1,400 planes and reach about 400 destinations in nearly 70 countries.

Steenland said the combined airline would have the size and scope needed to ride out the boom-and-bust cycles that plague the aviation industry.

It sounds impressive. But Gov. Tim Pawlenty, U.S. Sen. Amy Klobuchar,D-Minn., and other state political leaders are worried about Northwest breaking promises to keep its headquarters, hub operations and thousands of jobs in Minnesota.

Atlanta airport
Delta Air Lines planes line up at Atlanta's Hartsfield-Jackson International Airport. The boards of Delta Air Lines and Northwest Airlines Corp have approved the merger between the two carriers.
Barry Williams/Getty Images

Northwest employs about 11,600 Minnesotans, including some 2,300 at its Eagan, Minn., headquarters campus.

Steenland said Eagan will lose the headquarters, for sure.

The combined airline will be headquartered in Atlanta. But Steenland said many of the folks at the Northwest headquarters will keep their jobs. But he said it's not possible to specify how many just yet.

"We want to be in a position to make commitments on those topics, and we have indicated to the elected officials here that as the transition plans develops, and we can be more specific, we'd like to sit down and have that conversation," he said.

But a day of selling the merger plan apparently did little to block criticism from many quarters.

Pilots opposed to deal
Pilot union chairman Dave Stevens spoke at a news conference today about the acquisition of his company, Northwest Airlines, by Delta. He was critical of an agreement the Delta pilots reached before the merger announcement. "It's a deal I would not have made," he said.
MPR Photo/Tim Nelson

Unions for Northwest's pilots and ground workers said they will fight a merger, at this point.

The Northwest pilots are upset Delta gave its pilots a new contract and pay raises to win their support for the merger. The Northwest pilots say they'll oppose the deal, unless the new carrier treats them as well as the Delta pilots.

Northwest pilot's union chairman Dave Stevens said the airlines are trying to ignite a fight between the Northwest and Delta pilots.

"The labor discord that will result from the current structure of this merger is likely to overwhelm the potential economic positives. We will not tolerate being a b scale airline due to an unfair contract," Stevens said.

Steenland, though, said he's confident an accommodation can be reached with the Northwest pilots, addressing their concerns about pay, seniority and other issues.

Then there's the matter of satisfying Wall Street. Shares of both Northwest and Delta fell after news of the acquisition.

Morningstar airline analyst Brian Nelson said the investment community is not impressed with the transaction, and is showing its disappointment with the airlines' failure to make big cuts in flying.

Northwest and Delta stock prices
Investors in Northwest and Delta airlines have not done well. The stocks have plummeted over the past year.
MPR Graphic/Martin Moylan

Analysts figure that'd save airlines money on fuel and give them greater power to raise fares. And Nelson said the investors wanted to see a resolution of labor issues.

"Wall Street was looking for more insight in terms of how to integrate these disparate pilot unions onto a single labor agreement," Nelson said. "I don't think Delta came out and said it would be aggressive enough with their capacity reduction to really help this industry move forward. And, of course, there's going to be $1 billion in integration costs.

In coming weeks, the Northwest-Delta deal will likely undergo intensifying political and regulatory scrutiny, and efforts by opponents to scuttle the deal.

But the two airlines expect they will get the deal approved by regulators in six to eight months. They insist their merger won't harm competition in the industry, and therefore should be a slam-dunk for regulatory approval.

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