Delta, Northwest Say New Airline Will Be a Global Winner

NEW YORK — Delta and Northwest airlines executives touted their newly proposed merger to create the world's biggest airline on Tuesday, even as Wall Street sent shares of their companies sharply down.

Atlanta-based Delta saw its stock fall 12.6 percent to $9.16, while Northwest shares slipped 8.4 percent to $10.28.

But the stock drop shouldn't be seen as a response to the proposed merger, said Michael Boyd, president of the Boyd Group aviation consulting firm.

The declines led a broader hit on the airline industry as the price of jet fuel continued to climb.

Record fuel costs is a driving reason for the merger, Delta and Northwest executives said Tuesday at a Manhattan news conference, a day after announcing the deal.

Delta CEO Richard Anderson said fuel is the highest expense for both airlines, and the combined company will be better able to endure price volatility.

"We're creating an airline that can effectively compete and win in the global marketplace," Anderson told reporters. "It's really a combination about addition, not subtraction, one that will be very beneficial to our employees long term, to our customers, to the communities we serve and to our shareholders."

At Anderson's side, Northwest CEO Doug Steenland described the merger as defensive.

"Over the last several years, the U.S. airline industry as a whole has lost billions and billions of dollars. The focus of the industry has really been on survival," he said. "The primary goal of this combination is to create a strong, viable airline that is better able to withstand the constant stream of industry challenges."

Steenland said a financially stronger airline can invest more in employee training and other measures to improve the experience for air travelers.

The combined airline would keep the Delta name, a headquarters in Atlanta and be run by Anderson. It would have $35 billion in revenues, nearly 800 planes and about 75,000 employees.

The airlines expect the deal to create about $1 billion in annual revenue and cost savings, boosting earnings within the first year after merger approval.

The proposed deal faces opposition from Northwest unions representing pilots and ground workers and some Washington lawmakers.

While the merger still must win shareholder and regulatory approval, executives said they are confident about the deal's prospects and aim to close it by the end of this year.

However, if the merger does not go through "both companies can survive very well on their own," Boyd said.

There were signs Tuesday that the Delta-Northwest merger could be just the beginning of consolidation in the airline industry.

Houston-based Continental Airlines Inc. said the proposed deal alters the competitive landscape and is prompting it to review its "strategic alternatives."

The Delta and Northwest executives spoke and answered questions for about 30 minutes at a hotel about a dozen blocks from Times Square.

Steenland said a bigger airline will bring benefits, such as enhancing the domestic support for service to Asia.

Northwest, which had to end nonstop service between New York and Tokyo several years ago, will reinstate that service thanks to Delta's resources, he said.

Ed Bastian, president of the current and proposed Delta, said the merger will create a "scale and scope unprecedented here in the United States."

He said that will allow for more efficiency as the company deals with suppliers, partners, and caterers and streamlines corporate operations.

On the Web:

Merger site: www.newglobalairline.com