Delta-Northwest merger announcement expected, key lawmaker opposes plan
After months of talks, Northwest and Delta have agreed to join forces and become the world's largest airline.
The boards of both companies agreed last evening to a $17.7 billion stock swap. The new airline will be called Delta and no hubs would be closed.
That's good news for travelers who fly Northwest from Wisconsin to Minneapolis, where they catch larger flights worldwide.
However, the deal could have a huge impact in Milwaukee, where Northwest bought almost half of Midwest Airlines a year ago to keep Florida discounter Air-Tran from taking Midwest over.
Northwest teamed up with a Texas capital firm to take Midwest private.
Midwest insists it's still competing with Northwest, but they have worked together to buy fuel and things that save them money.
Analysts disagree on whether Northwest will have to sell its 47-percent share of Midwest in order to get the Justice Department to approve the merger with Delta.
If so, that could bring Air-Tran back into the picture.
Midwest has more than half the business at Milwaukee's Mitchell International Airport. Northwest is a distant second with 13 percent. Air-Tran has about 6 percent.
The next step is an anti-trust review by the Justice Department and the companies hope to have federal approval by the end of the year.
Minnesota Governor Tim Pawlenty says he'll scrutinize the review process. He'll do what he can to maintain Northwest's hub in the Twin Cities, used by travelers throughout the Midwest, including Wisconsin.
Pawlenty also wants the maximum number of airline jobs kept in Minnesota. He says if Northwest does not honor its prior commitments, it will owe the Gopher State $240 million for lease concessions at the Minneapolis-St. Paul Airport.
Meanwhile, federal lawmakers say they'll keep a close eye on the merger proceeding and U.S. Rep. Jim Oberstar, D-Minn., says he'll oppose it.
Oberstar chairs the House Transportation panel. He plans hearings on the merger, saying it could eventually lead to higher air fares and less service to individual communities.