Delta, Northwest Agree to Merger
By SUSAN CAREY and PAULO PRADA
April 14, 2008 8:32 p.m.

Delta Air Lines Inc. and Northwest Airlines Corp., after three months of twists and turns, Monday received approval from their boards to merge in a deal that would create the world's largest airline by traffic -- if the agreement can pass regulatory muster and overcome potentially serious employee resistance.

The transaction is expected to unleash a wave of consolidation as fragmented U.S. carriers try to bulk up through mergers to weather deteriorating industry conditions caused by record fuel prices, the weakening economy and the credit crunch. The thinking is that fewer, larger airlines would enjoy better pricing power, be able to cut marginal routes and seats and expand their international reach, a way of attracting more high yielding business travelers and boosting revenues. In theory, mergers also would help carriers compete with deep-pocketed international carriers that have expanded rapidly with new aircraft.

UAL Corp.'s United Airlines, a long-time proponent of consolidation, is expected to try again to interest Continental Airlines Inc. is a merger. Northwest's signature on a Delta merger document will allow Continental to redeem a "golden share" Northwest holds in Continental. That preferred stock allowed Northwest to block Continental from merging with another carrier.