Delta Air Lines Inc. (DAL) and Northwest Airlines Corp. (NWA) are now officially one company, and together now represent the world’s largest airline carrier.
The Atlanta-based Delta bought Northwest for $3.63 billion, all in
stock, creating a single carrier with a combined enterprise value of
$17.7 billion. The landmark deal is expected to ignite an industry
consolidation wave, as small or struggling airlines go for size in
order to compete with Delta’s newfound market heft at time when a
slowing economy and soaring fuel costs are eviscerating profit margins
for marginal players.
"Expect [the] dominoes to fall," Bear Stearns Cos. Inc. (BSC) analyst Frank Boroch wrote in a note to investors.
Four smaller U.S. airlines have filed for bankruptcy in the past month - Frontier Airlines Holdings Inc. (FRNT), Skybus Airlines, Aloha Airgroup, Inc. and ATA Airlines Inc.
And now that the first major hurdle of Delta’s Northwest acquisition has been cleared, talks between UAL Corp.’s (UAUA) United Airlines and Continental Airlines Inc. (CAL) will elevate in priority.
Since 2001, U.S. carriers have shed more than 150,000 jobs and lost more than $29 billion.
