(Agencies)
Updated: 2008-04-15 14:36

Four small airlines have ceased flying in recent weeks and another, Frontier Airlines (FRNT.O), filed for Chapter 11 bankruptcy on Friday. Major airlines are expected to report quarterly losses in the coming weeks.

Delta and Northwest said the deal promises to generate $1 billion in annual revenue and cost benefits. Anderson said cost savings will be derived from a reduction in operating expenses, more efficient use of technologies, cutting administrative costs, and bargaining power with vendors.

Initially, the deal will remove no capacity from the system because Delta and Northwest currently have very little overlap in their routes. But Anderson declined to say there would not be capacity cuts, if the deal moves forward.

Related readings:  Delta, Northwest airlines agree to combine  Delta, Northwest may unveil merger

Market concentration will be the central focus of Justice Department antitrust officials, who must clear the deal. A review could take months, but experts see few roadblocks.

Delta pilots will get a 3.5 percent equity stake in the new airline and expressed support for the proposal on Monday.

But the leadership of Northwest pilots said it would use "all resources available to aggressively oppose" the deal after the two unions could not agree on how to work under one seniority umbrella -- which determines when pilots work, what they fly and how much they get paid.

Anderson said Delta aims to fully integrate its two pilots' groups as soon as possible.

THE BIG CARRIER

In addition to pilots, US-based non-pilot employees of both airlines would be given a 4 percent equity stake.

The deal will combine Delta's strong Atlanta hub and its trans-Atlantic route network with Northwest's extensive Asian presence, including a hub in Tokyo. There will be no hub closures, Delta said.

Mann said it would be tricky for Delta to deliver on its promise to retain all hubs. "It would be nice if it were true," he said.

Northwest CEO Doug Steenland will have a seat on Delta's board. The new Delta would overtake American Airlines, a unit of AMR Corp's (AMR.N), as the largest US airline.

The last big airline merger created US Airways Group Inc (LCC.N) from the combination of old US Airways and America West Airlines in 2005.

US Airways CEO Doug Parker predicted that wider US airline consolidation would not occur unless Delta took the first step. Delta fended off a hostile bid by US Airways last year.

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