The planned Delta buyout of Northwest cleared a significant hurdle this afternoon, with the US Department of Justice announcing that they had approved the plans. The government has found that the merger “is likely to produce substantial and credible efficiencies that will benefit U.S. consumers and is not likely to substantially lessen competition,” according to the statement issued on the topic. I think that they’re crazy if they really think that this is going to be a great thing for either consumers or the airlines’ employees, but this was the expected result from them so no major surprises.
The carriers still have to overcome a lawsuit filed by passengers who feel that the merger will stifle competition and violate antitrust law, but today’s ruling suggests that the suit has very very slim chances of going much of anywhere. Still, it will be heard in San Francisco starting next week. Shareholders have already approved the deal so at this point the lawsuit is the last hurdle to the carriers closing the deal.
Once that happens there will be a domino effect of moves in the industry. First off, Continental will be able to start their nine month countdown clock on their planned move out of SkyTeam and into Star Alliance. In addition Delta and Northwest will immediately begin shifting their fleets and routes around to maximize profit while taking advantage of their new status as the largest carrier in the world by passenger volume. They also expect to be operating on a single certificate, which will further streamline their operations, in 12-18 months. They already have a general agreement from their pilot unions to make that move which is a good thing. And they’ve already started aligning their frequent flyer programs, so that’s moving along pretty well, too.
This was inevitable and I’m actually glad it has finally happened. Now we can move on with all the various other things that come out of this move. Let’s get rolling…
Update: Apparently the lawsuit in California has settled, though no details have been released. If so that puts the two even closer to finally closing the deal.
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