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Northwest, Delta reach merger deal

MINNEAPOLIS -- Northwest Airlines, the Eagan, Minn.-based airline that was founded as a U.S. mail carrier in 1926, agreed Monday to be acquired by Delta Air Lines of Atlanta in an all-stock deal worth $17.7 billion, including debt.

MINNEAPOLIS -- Northwest Airlines, the Eagan, Minn.-based airline that was founded as a U.S. mail carrier in 1926, agreed Monday to be acquired by Delta Air Lines of Atlanta in an all-stock deal worth $17.7 billion, including debt.

As expected, the new airline would be named Delta and would be based in Atlanta, meaning the loss of a major corporate headquarters in the Twin Cities, where Northwest is based. But the airlines said Delta would maintain "executive offices" in the Twin Cities.

Northwest pilots and the union representing most of Northwest's ground workers immediately announced they would fight the combination.

The new airline would be the largest in the world, with more than $35 billion in annual revenue, a fleet of nearly 800 aircraft and more than 75,000 employees worldwide.

Richard Anderson, Delta's chief executive, would be CEO of the combined airline. Northwest CEO Doug Steenland would get a seat on Delta's board of directors, and Northwest Chairman Roy Bostock would be vice chairman.

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"Together, we are creating America's leading airline, an airline that is financially secure, able to invest in our employees and customers, and built to thrive in an increasingly competitive marketplace," said Anderson, who would head the combined airline. "Delta and Northwest are a perfect fit."

In a joint news release at 7 p.m. CDT on Monday, the airlines said no hubs would close. Current hubs would be maintained at Atlanta, Cincinnati, Detroit, Memphis, Minneapolis-St. Paul, New York, Salt Lake City, Amsterdam and Tokyo.

The two companies said that the new airline would offer employees more job security, an equity stake in the merged carrier and a more stable company for future growth.

The deal requires approval from U.S. antitrust regulators; the airlines said they expect the antitrust review to be completed later this year.

But the deal faces significant hurdles from consumer organizations, which are fearful of rising ticket prices; small communities worried about losing air service; and several powerful members of Congress. Rep. Jim Oberstar, D-Minn., the chairman of the House Committee on Transportation and Infrastructure, has vowed to block the merger.

Delta said it reached an agreement with that airline's pilots to extend their existing collective bargaining agreement through 2012. The agreement gives Delta's pilots a 3.5 percent equity stake in the new Delta. In addition, non-pilot U.S. employees will get a 4 percent equity stake.

About Northwest's pilots, Delta said it would "use its best efforts" to reach a combined agreement covering all its pilots, including former Northwest pilots, after the closing of the merger.

Dave Stevens, chairman of the Northwest branch of the Air Line Pilots Association, said in a prepared statement, "The risk to Northwest Airlines and to the Northwest pilot group from letting this merger proceed, as it is now structured, is simply too great."

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Northwest didn't consult with the union that represents its baggage handlers, ramp workers and ticket agents, said Joseph Tiberi, a spokesman for the International Association of Machinists and Aerospace Workers.

"If the airline wanted the support of their employees they should have brought us in and discussed it with us earlier," he said.

Lee Moak, head of Delta's pilots union, said Delta hopes cooler heads will prevail.

"It takes two to fight," Moak said. "We don't see a fight here. We see a cooperative relationship with the Northwest pilots to bring everybody to parity as soon as possible."

The Association of Flight Attendants issued a statement neither endorsing nor opposing the merger. The union said its top priority was negotiating a combined contract for Northwest and Delta flight attendants. Delta's flight attendants are non-union.

The Associated Press and the Los Angeles Times contributed to this report.

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