Merging Delta, Northwest Promise the World

Tempt Travelers With Visions of Global Reach, but Any Marketing Plans on Hold Until Feds Approve Marriage

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NEW YORK ( -- Just hours after Delta Air Lines and Northwest Airlines announced a $3.1 billion merger that would create the world's largest airline, they are already working to convince their customers that bigger is better.
Delta and Northwest, which are the country's third and fifth largest carriers, respectively, estimated the value of the new company to be $17.7 billion.
Delta and Northwest, which are the country's third and fifth largest carriers, respectively, estimated the value of the new company to be $17.7 billion. Credit: AP

If the marriage is approved by the Justice Department, the new company would be called Delta, employ 75,000 people globally and manage a fleet of almost 800 aircraft making some 6,400 daily flights. Combined with their regional partners, the merged airlines would provide access to 390 destinations in nearly 70 countries. In a statement, Delta and Northwest, which are the country's third and fifth largest carriers, respectively, estimated the value of the new company to be $17.7 billion.

Tomorrow, the world
The airlines began targeting their customers almost immediately with an e-mail that provided further evidence that the logic behind the pairing is to expand the partners' global presence. "Our combined airline will offer unprecedented access to the world," the e-mail read. "The combined Delta Air Lines will serve more U.S. communities and connect to more worldwide destinations than any global airline. ... In addition, building on both airlines' proud, decades-long history of serving small communities, we plan to enhance global connections to small towns and cities across the U.S."

Neither airline offered insight into immediate marketing plans. As for the relationships with their agency partners, Kristin Baur, corporate communications for Northwest, said any changes to those relationships will be announced after the merger is approved. Approval may take up to eight months. "In the meantime [Delta and Northwest] will continue to build on the relationships they currently hold with any outside agencies," she said.

Wes Brown, partner at Iceology, a consumer-trend consulting firm based in Los Angeles, said any advertising the new Delta initiates needs to communicate that the merger means nothing but improvement for the passengers of each airline.

Time for reassurance
"Not business as usual, but business better than usual," Mr. Brown said. "Because of the general negative sentiment consumers have [about domestic airlines], most will look at this merger with very strong skepticism. Delta customers must be reassured that service will maintain and get better, and let Northwest customers know that things are going to be tremendously different for them, in a good way."

Many analysts believe the combining of Delta and Northwest could spur a flurry of merger activity, with the most likely candidates being United Airlines and Continental Airlines. William Swelbar, an airline researcher at MIT who highly expects United and Continental to now be players in the merger game, said the move by Delta and Northwest will likely have little impact on the competitive landscape domestically.

"If we think about the forces of globalization, this is no longer about Duluth -- it's a lot more about Dubai," Mr. Swelbar said. "They clearly said this is about the global marketplace, and that's what's going to make other airlines step back and wonder how this will impact them internationally."

Mr. Swelbar believes the merger will serve as a positive for the industry. "It's a good piece of news in that we are beginning a process to address industry structure," he said. Referring to recent troubles at Aloha, ATA and Skybus, he said, "The last few weeks we have seen consolidation through liquidation. Now we'll see it through some M&A possibly." But he went on to say that he doesn't think we have seen the last of the bankruptcies.

Mr. Brown said becoming so big could lead to problems for Delta. "When companies become too big, it becomes difficult to react to the market environment properly," he said. "If you weren't able to be nimble at your previous size, what makes you think you are going to be that much more nimble when you get bigger?"

Staying on board
Richard Anderson, Delta's current CEO, would retain that title within the new company. Delta's current chairman, Daniel A. Carp, would also retain his title, while Northwest's chairman, Douglas M. Steenland, would no longer have a role in the day-to-day operations but only a seat on the board.

Roy J. Bostock, a Northwest board member, would become vice chairman. This is the second high-profile merger that Mr. Bostock -- a former ad executive at Bcom3 and D'Arcy Masius Benton & Bowles -- has found himself in the middle of in the past few months. He is the chairman of Yahoo and has played a role in the negotiations taking place between the search engine and Microsoft.

The new airline will maintain seven major hubs across the globe in Atlanta, Cincinnati, Detroit, Memphis, Minneapolis/St. Paul, New York, Salt Lake City, Amsterdam and Tokyo. The global headquarters of the company will be in Atlanta with executive offices in Minneapolis/St. Paul.
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