Delta, NWA shareholders approve combination

September 25, 2008 12:43:29 PM PDT
Delta Air Lines Inc. and Northwest Airlines Corp. shareholders gave the go-ahead Thursday to a combination that would create the world's biggest carrier, deciding that in their volatile industry they like their chances better together than on their own. The stock-swap deal announced April 14 still requires Justice Department approval. One other potential hurdle is a federal lawsuit seeking to block the deal that is set for trial Nov. 5 in San Francisco.

Delta Chief Executive Richard Anderson, who will keep his position after the combination, would not discuss the lawsuit, but he indicated the carrier maintains its goal of completing the deal by the end of the year.

"We are still focused on that timeline and believe we can accomplish the timeline as stated," Anderson told reporters after the Delta shareholder vote.

At a Delta meeting near Atlanta, 99 percent of shares voted were in favor of issuing new stock as part of the transaction. Earlier in the day, at a meeting in New York, 98 percent of Northwest shares voted were in favor of Delta acquiring Northwest.

The deal was not trumpeted by everyone, however. A few retired Delta pilots complained that current employees will get equity when the deal is completed, but retired pilots won't. They suggested Delta consider reinstating the defined benefit pension plan for pilots that the airline terminated while the carrier was under bankruptcy protection.

Anderson said he understood the retired airline would be the biggest in the world in terms of traffic and biggest in the U.S. in terms of annual revenue, which was a combined $31.7 billion at the end of last year.

Approval from shareholders at both companies had been expected, with the only real potential obstacle being the Justice Department, which is scrutinizing the Delta-Northwest plan for antitrust considerations. On Thursday, Steenland said they still expect to get approval and close the deal by the end of this year.

Steenland noted for the 50 people at the Northwest meeting in New York that this was likely the last shareholder meeting for the 82-year-old airline.

He said mergers have been part of the airline industry all along, and noted that Northwest itself grew dramatically after acquiring Republic Airlines in 1986.

Prior to that, Northwest had strong routes to Asia but was not a top domestic carrier. "Northwest looked an awful lot like Pan Am and TWA, and we know where those airlines have gone," he said.

Kenneth Kaminski of New York was among the few shareholders who attended the annual meeting held 1,000 miles away from Northwest's Eagan, Minn., headquarters. He said he owned shares of both Delta and Northwest that were wiped out after their 2005 bankruptcy filings, and has lost two-thirds of the money he invested in post-bankruptcy shares of both companies.

He said he worries that bad labor relations will hurt the new Delta. "The service is obviously affected by that," he said.

Several dozen Northwest ground workers and flight attendants rallied outside the building where the meeting was held.

Northwest's unions have been split on the Delta deal - pilots support it, flight attendants have been neutral as they try to win representation of Delta's nonunion flight attendants. But the deal is opposed by Northwest's largest union, the International Association of Machinists and Aerospace Workers, which represents some 12,500 baggage handlers, reservations clerks, and other ground workers.