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Mergers, Acquisitions and Takeovers Case Study

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Case Title:

Delta–Northwest Airlines: A Strategic Merger

Publication Year : 2010

Authors: D John, A Lakshmi, A Syed

Industry: Transportation

Region:US

Case Code: MAA0182IRC

Teaching Note: Not Available

Structured Assignment:  Available

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Abstract:
The aviation industry has experienced high turbulence due to the unprecedented rise in world oil prices, intense competition for major players from low cost carriers and the prolonged recession in the US economy. In this context, the merger of Delta and Northwest, two of the oldest and largest airlines in the US, assumes great significance. The $17.7 billion merger will make new Delta the biggest airline in the world. Although the two companies had emerged out of bankruptcy protection at the time of merger, many vital issues remained unresolved, including the dispute with the pilots' union of Northwest Airlines regarding the terms of merger. The case gives an insight into the unique challenges faced by Delta and Northwest and expounds on how the merger will help them tide over difficulties and emerge as a stronger and better airline. It also analyses the role of consolidation in the aviation industry to minimise losses and achieve economies of scale.

Pedagogical Objectives:

  • To understand the challenges faced by the US aviation industry.
  • To evaluate the problems of Delta and Northwest.
  • To understand the dichotomy between full service airlines and discount airlines.
  • To appreciate the role of consolidation in tackling the problems of the aviation industry.

Keywords : Airlines, Delta, Northwest, Full service airlines, Low cost carriers, Discount airlines, Mergers, Acquisition, Consolidation, Share of fuel costs, Bankruptcy, Aviation, Minimise losses, Economies of scale

Contents : 
Overview of Delta and Northwest Airlines
Delta Air Lines Income Statement
The Need for Consolidation
Status of the Major Airlines
United State Air Fares and Inflation
Delta Logo Timeline

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