US carriers Delta Air Lines and Northwest Airlines have agreed a $5 billion merger, in a move likely to provoke consolidation among rivals.
The share-swap deal will create the world’s biggest carrier, to be called Delta, with a staff of 75,000 and income of $35 billion. The merged parent company will be called Atlanta, after Delta’s home base.
However, the merger will face stiff opposition from unions as well as requiring regulatory approval.
Substantial job cuts and rationalisation appear certain, with Delta already committed to cutting 2,000 staff this year and passenger numbers in the US declining. Unions representing Northwest Pilots and ground workers have already said they will oppose the deal.
Delta chief executive Richard Anderson, who will head the merged airline, said: “Merging is the most effective way to offset higher fuel prices and improve efficiencies.”
The oil price hit a new high above $112 a barrel this morning, more than five times its price in 2003.
Delta and Northwest are already partners in the SkyTeam airline alliance, alongside Air France-KLM. The announcement may hasten talks on merger between United Airlines, US Airways and Continental Airlines.