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Delta, Northwest approve merger

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  • NEW: NWA pilots union says agreement "disadvantages NWA pilots"
  • Officials: New airline would provide employees great job security, stability
  • Officials: Customers stand to benefit with competitive fares, more flight choices
  • Delta, Northwest emerged from bankruptcy protection last year
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ATLANTA, Georgia (CNN) -- The directors of Delta Air Lines and Northwest Airlines reached agreement on a merger deal that -- if approved -- would create the world's largest airline.

The Atlanta-based combined airline will have $17.7 billion enterprise value, according to the statement on Monday. Delta CEO Richard Anderson will head the merged carrier, which will retain the Delta name.

Both airlines emerged from bankruptcy protection last year.

Delta also announced on Monday it reached an agreement with its pilot union to extend the existing collective bargaining agreement through the end of 2012. The agreement, subject to a vote by the pilots, provides Delta pilots a 3.5 percent equity stake in the new company and other enhancements to the current contract.

Officials said the new airline would provide employees great job security and stability in the face of rising fuel costs and competition. Video Watch what the merger deal faces, prior to approval »

Customers also stand to benefit from the merger with competitive fares and more flight choices, officials said.

"We said we would only enter into a consolidation transaction it is was right for all of our constituencies," Anderson said in a statement. "Delta and Northwest are a perfect fit."

Northwest CEO Doug Steenland said the combined airline "will be able to overcome the industry's boom-and-bust cycles."

But Northwest's pilots' union quickly announced that it opposed the proposed merger, complaining that Delta and its pilots' union had come to their agreement without input from the Northwest pilots.

"This agreement clearly disadvantages NWA pilots both with respect to economic issues and seniority list integration," said union chairman Dave Stevens. "A merger built on this unstable foundation is likely to put the combined airline in a position similar to that of US Airways.

Stevens said that such a labor relations scenario would combine with current economic problems -- including the rising price of oil -- "to place the Northwest pilots and all other Northwest employees at greater risk than as a stand-alone carrier."

Combined, the airline and its regional partners will offer flights to nearly 400 destinations in 67 countries.

Officials say they expect to generate more than $1 billion in annual revenue through more effective use of aircraft, a comprehensive and diversified route system, reduced overhead and improved operational efficiency.

Front-line employees of Delta and Northwest will be provided seniority protection, and U.S.-based non-pilot employees of both companies would be provided a 4 percent equity stake in the new airline upon closing.

Company officials said they expect no involuntary furloughs of front-line employees as a result of the merger and that the existing pension plans for employees from both companies would be protected. Front-line employees include flight attendants, baggage handlers and others who deal directly with the public.

No hub closures are expected to result from the merger.

Last month, Delta offered voluntary retirement and buyout packages to about 30,000 employees and is slashing domestic capacity by an extra 5 percent this year to deal with record high fuel costs and a weakening U.S. economy.


The airline announced plans to cut 2,000 front-line, administrative and management positions through attrition, retirement and limited hiring.

Employees can apply for the retirement and buyout packages, which won't be offered to pilots, between April 14 and May 12, according to a memo sent in March. E-mail to a friend E-mail to a friend

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