What’s it mean to me?

Bob CollinsBob Collins Apr 14, 2008
3

The merger of Northwest and Delta is a done deal. I’m resisting the urge to go buy Northwest Airlines trinkets to sell 20 years from now on EBay, and instead am turning my attention to monitoring your most pressing questions on the merger. We started this the last time we thought the merger was at hand.

Delta, for the record, took honors for announcing the merger. As of 7:30 p.m., the airline had set up a section on its Web site about the merger. NWA.com, by contrast, had zip.

Submit the questions and we’ll do our best to get them answered as details spill out on Tuesday. A news conference is planned for 9:30 a.m.

Here are the main questions submitted so far:

  • What happens to my frequent flier miles?

    Probably nothing. Delta and Northwest already are partners in the Skyteam alliance. So you can fly on Delta and have points added to your WorldPerks account.

    This evening, Northwest sent the following out to WorldPerks members:

    You can be assured that your WorldPerks miles and Elite program status will be unaffected by this merger. In addition, you can continue to earn miles through use of partners like WorldPerks Visa®. And once the new Delta Air Lines emerges you can look forward to being a part of the world’s largest frequent flyer program with expanded benefits.

  • I own Northwest stock. What do I get out of the deal?

    You will get 1.25 shares of Delta stock for every share of Northwest stock you own. As of the close of business on Monday, a share of Northwest stock was worth $11.22. Delta closed at $10.48. That’s $1.88 premium per share of Northwest stock.

  • Will this end the virtual monopoly at MSP airport?

    Probably not. One of two cities is more likely to feel the pain: Detroit or Cincinnati, according to Pardus Capital, a hedge fund that owns about seven million Delta shares and was the driving force behind forcing Delta to seek a merger. It said in November that the merger could save $1.5 million a year, mostly by combining hubs. Detroit (Northwest) and Cincinnati (Delta) are two likely candidates to be combined as well as Memphis (Northwest) and Atlanta (Delta).

    However, in the announcement — and you have to take this with a grain of jet fuel — the new airline said hubs in Atlanta, Cincinnati, Detroit, Memphis, Minneapolis/St. Paul, New York-JFK, Salt Lake City, Tokyo-Narita, and Amsterdam would be maintained.

  • Will this open the door to Southwest to move into Minnesota?

    It depends on whether the MSP stays as a hub, and early indications — mostly the plan to keep executive offices in Minneapolis — are that it will.

  • Why would this merger make it through Justice Department review, especially given the collapse of the United and USAir merger?

    Tune in Tuesday. Clearly the new airline is concerned. It’s organizing a letter-writing campaign on its Web site.

    Gary Chaison, a labor studies professor at Clark University, gives it a 50-50 chance. See interview or just listen to his answer to the question.

  • What’s the next domino?

    This one, of course, is speculation. But airline analyst Robert Mann says a United-Continental marriage will follow soon. That would leave American looking for a suitor.