Delta, Northwest to create largest airline

Delta Air Lines Inc will buy Northwest Airlines Corp for more than $3
billion under a proposal unveiled Monday to create the world's biggest airline,
as carriers seek to counter skyrocketing fuel prices and a weak economy.

After racking up $35 billion in losses and finally emerging from a
five-year slump in 2006, U.S. airlines are hoping mergers could lead to higher
fares as combined carriers reduce flights and use their increased market power
to raise prices.

The all-share deal will give Northwest shareholders 1.25 Delta shares
for each Northwest share they own, a 17 percent premium to Northwest's closing
price of $11.22 on the New York Stock Exchange. Delta shares closed up 4.7
percent at $10.48.

"It's a very optimistic view on an industry that's been very dismal for
the last couple of weeks," said airline consultant Robert Mann.

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In a market that hasn't been doing very well, this attempt to reverse the downward trend is understandable. Although this merger will lower competition, the new Delta airlines will still have a great deal of competition. Overall, this merger will probably not affect the average consumer greatly.

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