Thursday, December 31, 2009

Delta clears final regulatory hurdle in NWA merger
Atlanta Business Chronicle - by
J. Scott Trubey Staff Writer
Another Legacy Carrier Bites the Dust

Delta Air Lines Inc. and Northwest Airlines are now officially one.

On Thursday, the Federal Aviation Administration approved a single operating certificate (SOC) for the merged Delta, the final regulatory hurdle, which in essence, makes it one airline.

The awarding of the SOC comes 14 months after government approval for Delta (NYSE: DAL) to acquire Eagan, Minn.-based Northwest and forge the world’s largest carrier.

But plenty of work remains before Delta has completely swallowed Northwest.

“While today’s change will go unnoticed by our customers, achieving the single operating certificate paves the way for the final stages of our integration throughout next year,” Delta Chief Operating Officer Steve Gorman said in a memo to employees.

In the first quarter of the New Year, Gorman said tickets and fares will be integrated in the Delta reservation system, eliminating any distinction between buying tickets and making “every flight a Delta flight.” Northwest's Web site,, also will disappear.

“We accomplished the single operating certificate in record time and without negative impact to our daily operation,” Gorman wrote. “It is the people of Delta who continue to ensure our merger integration is thoroughly planned and well executed. Thanks for your dedicated focus and effort, and for continuing to provide excellent service to our customers.”

It has been an eventful 428 days for the airlines as they worked to integrate in the most challenging economic environment since World War II.

The combined Delta and Northwest has lost $2.6 billion (including special charges and goodwill) in the four quarters since the U.S. Department of Justice approved the merger Oct. 29, 2008. The carrier expects a $1.5 billion loss for full-year 2009.

But officials and analysts say the merger has made Delta among the strongest of U.S.-based airlines and positioned to gain more than $2 billion in annual cost savings. In 2009, the airline expects a $700 million cost benefit.

Since the carriers merged, Wall Street collapsed, setting off a global recession that gutted passenger demand among business travelers and consumers alike; the world was gripped by fears of the H1N1 flu pandemic, which further chilled demand; and just last week a Detroit-bound Northwest airliner was the subject of a foiled terrorist attack that could further shake a slowly recovering industry.

Delta has also announced a bold hub expansion into New York City, completed a groundbreaking transatlantic joint venture with Air France-KLM and made a bid to lure struggling Japan Airlines Corp. into its SkyTeam alliance away from rival American Airlines’ partnership.

The SOC allows Delta and Northwest to combine code and operate as a single entity, and in most cases its employees can work together as one. The certificate is approval of the combined Delta’s safety protocols, training, maintenance procedures, manuals, computer systems and flight dispatching.

Integrating systems as vast as two major airlines is an enormous undertaking.

The combined airline has more than 70,000 employees (many from Delta that were non-union and nearly all from Northwest that were organized), 385 manuals and scores of computer software and hardware systems, including distinct reservations platforms and Web sites.
The airlines worked aggressively for months to merge as many components as possible without the SOC.

Its frequent flyer programs have merged and more than 16,000 pre-merger Northwest employees are also now wearing Delta uniforms.

About 200, or close to 80 percent, of pre-merger Northwest mainline jets now are painted in Delta livery. More than 240 former Northwest jets sport Delta interiors.

And all but one of its 247 airport stations worldwide have been rebranded Delta’s colors. The last, Philadelphia, is expected to convert in the first quarter of 2010 following a facility upgrade.
“It’s important to have a single brand represented to our customers and a tremendous accomplishment,” Delta CEO Richard Anderson said in a call to employees Dec. 24.

No comments: