By DAVID HO
Cox News Service
Friday, September 26, 2008
NEW YORK — Northwest Airlines shareholders overwhelmingly approved a combination with Delta Air Lines on Thursday, agreeing to meld their 82-year-old company into what may become the world's biggest carrier.
Later, shareholders of Delta Air Lines Inc. meeting near Atlanta voted their own approval of the merger by agreeing to the issuance of new stock.
Nearly all Northwest investors voting — 98 percent — decided in favor of the Delta acquisition. The proposed merger now faces a Justice Department antitrust review.
"We're making the case to them and we think the case is a very compelling one," Northwest Chief Executive Doug Steenland said in New York. He told reporters he is confident government approval will come in time for the deal to close this year.
About 60 people attended the annual meeting, which Steenland said is likely the last for Eagan, Minn.-based Northwest. Under the merger, the combined airline would be called Delta with headquarters in Atlanta.
"We came to the conclusion as a board, working with our shareholders, that it was in Northwest's collective, long-term interest to pursue consolidation,"Steenland said. "Having a financially sound and stable airline is the best source of job security."
But many Northwest employees are less certain.
"If the merger does goes through, it inevitably is going to result in massive job loss, dislocation, consolidation and closures, which will have a devastating affect on airline employees, their families," said Stephen Gordon, directing general chair for the International Association of Machinists unit that covers Northwest. TheIAM is the airline's largest union, representing 12,500 baggage handlers, reservation agents and other ground workers.
A skeptical Gordon told Steenland and Northwest board members that Delta executives say no airline hubs will be closed and no employees will be laid off. He said similar promises have been broken in other recent airline mergers.
"Delta's Atlanta hub and Northwest's Memphis hub are less than 400 miles apart. Delta has a hub in Cincinnati while Northwest has one 300 miles away in Detroit," Gordon said. "Are we really expected to believe that Memphis and Cincinnati won't be closed?"
Later, Steenland said, "This is an end-to-end merger where there's little overlap."
"Five years from now, I'm confident we'll still see all the (cities) will still be strong viable hubs for the merged carrier," he said.
Under the deal, Northwest shareholders would receive 1.25 shares of Delta stock for each share they own.
New Yorker Ken Kaminski, one of the few shareholders to attend the meeting, said "notoriously bad labor relations" have affected the carrier's service, and he worries that will extend to Delta.
Northwest is heavily unionized, while pilots are the only major Delta union. Delta has agreed with pilots of both airlines on a joint contract, although they are still dealing with seniority issues.
Outside the Manhattan meeting, dozens of demonstrators representing Northwest flight attendants and ground workers gathered around a giant, inflatable rat, chanting: "What do we want? No merger!"
They held signs that read: "Save my airline from another bankruptcy."
Gordon and other union representatives criticized Delta at the meeting for ignoring them and planning to sacrifice employees to make the merger work.
"Delta, with its headquarters in the deep South, intends to continue to battle unionization and will stop at nothing to maintain their plantation-style management," Gordon said. "There will not be labor peace from theIAM until we're recognized by Delta."
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