WASHINGTON - The Justice Department on Wednesday approved a much-anticipated merger between Delta and Northwest, clearing the way for creation of the world's largest airline.
After a six-month investigation, government lawyers concluded the merger would likely drive down costs for consumers without curbing competition.
The proposed merger 'is likely to produce substantial and credible efficiencies that will benefit U.S. consumers and is not likely to substantially lessen competition,' the Justice Department said in a statement issued by its Antitrust Division.
The merger should create cost savings by combining airport operations, information technology and other efficiencies, ultimately driving down prices for fliers, the regulators said.
The decision caps a six-month Justice Department investigation, which was closed without Justice Department objection to the deal.
The combined airline would be called Delta and keep its Atlanta headquarters and its chief executive, Richard Anderson.
Northwest would become a wholly owned subsidiary of Delta during the integration process.
Another hurdle remains ahead, however: a federal lawsuit seeking to block the deal. Trial is set for Nov. 5 in San Francisco.
The lawsuit was filed in June by 28 airline passengers who believe a merger would violate antitrust law and substantially decrease competition.
Atlanta-based Delta Air Lines Inc. and Eagan, Minn.-based Northwest Airlines Corp. have insisted there will still be plenty of competition in the airline industry after they combine, and they have noted the two carriers have relatively few overlapping routes.
On that point, the Justice Department agreed.
'The two airlines currently compete with a number of other legacy and low cost airlines in the provision of scheduled air passenger service on the vast majority of nonstop and connecting routes where they compete with each other,' the department said in the statement.
Delta hopes to obtain a single Federal Aviation Administration operating certificate in 15 to 18 months.
Shareholders approved the merger late last month.
The two airlines had 85,071 combined full-time employees as of June 30, the last time they reported the figures to the Securities and Exchange Commission.
Earlier this year, each carrier announced plans on their own for job cuts. Delta said it would shed 4,000 jobs, while Northwest said it wanted to cut 2,500 jobs.
The new airline would be the biggest in the world in terms of traffic and biggest in the U.S. in terms of annual revenue, which was a combined $31.7 billion at the end of last year.