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Delta Air Lines and Northwest Merge, Creating Premier Global AirlineOctober 30, 2008 By: George Dooley
Customers can expect "business as usual" with no immediate changes in operations from today’s merger of Delta Air Lines and Northwest Airlines, Inc. The merger creates a premier global airline with service to nearly all of the world’s major travel markets. The new airline, called Delta, will be headquartered in Atlanta and operate in 66 countries and more than 375 worldwide cities. Delta has 75,000 worldwide employees.
In light of the announced merger, Delta sent out an advisory to its frequent flyers to assure them that their miles are safe and their status is secure. Delta reminded them that they may continue to earn miles as normal with Delta and its partners; redeem miles with the three-tier Award Travel structure and via the SkyMiles Online Auction and Medallion Marketplace; receive uninterrupted access to Crown Room Clubs (if a member); and receive complimentary upgrades when flying Northwest if they're a Medallion member.
“The airline industry faces a very difficult economic environment around the world and this merger gives Delta increased flexibility to adapt to the economic challenges ahead,” said Delta CEO Richard Anderson. “With much of the work to bring our airlines together well under way, the new Delta will be at the front of the pack in achieving the benefits of consolidation and is well positioned to navigate the tough waters ahead in a difficult economy.”
With the completion of the merger, Northwest Airlines is now a wholly owned subsidiary of Delta. Customers should continue to check-in and do business directly with the airline operating their flight just as they did before the merger. Delta will continue operation of the airlines’ separate websites, www.delta.com and www.nwa.com, as well as the two airlines’ reservations systems and loyalty programs.
Delta’s formal press release on the merger reiterated the advisory on frequent flyer miles as well as the steps companies will take to integrate over the next 12-24 months, including:
* The addition of Delta’s code to nearly all of the Northwest system by the end of 2008, creating thousands of additional connecting opportunities.
* Immediate complimentary upgrade reciprocity for elite members of both airlines’ loyalty programs, with airport lounge reciprocity continuing as usual.
* The launch of a fully consolidated worldwide flight schedule in advance of summer 2009.
* The introduction of elements of Delta’s brand throughout the Northwest system beginning in spring 2009, including Delta’s popular Richard Tyler designer uniforms, Delta’s livery, “signature cocktails,” enhanced in-flight entertainment and other onboard amenities.
* The consolidation of the Delta and Northwest loyalty programs, ultimately including the ability to combine miles from SkyMiles and WorldPerks accounts at a one-to-one ratio.
* The full integration of Delta and Northwest websites, kiosks, and customer-facing technology to ensure a consistent worldwide travel experience.
Delta has already invested significant resources to ensure a seamless transition for customers, including receiving clearance from the Federal Aviation Administration (FAA) of the airline’s plan to achieve a Single Operating Certificate over the next 14-16 months; adding extra staffing and technology at check-in counters and kiosks to provide added customer assistance beginning today; and posting complete merger information at www.delta.com and www.nwa.com to provide customers added assistance.
The closing of the Delta-Northwest merger brings together two of the industry’s most financially secure airlines to produce a best-in-class cost structure and an industry-leading balance sheet, Delta said. The transaction is expected to generate $2 billion or more in annual revenue and cost synergies from more effective aircraft utilization, a more comprehensive and diversified route system, and cost synergies from reduced overhead and improved operational efficiency. The company expects to incur one-time cash costs not exceeding $600 million to integrate the two airlines.
“In today’s economic climate, this merger makes even more sense because we can capture $2 billion in annual synergies and build the foundation for profitable growth through improved revenues, a best-in-class cost structure and a strong liquidity position,” said Edward Bastian, Delta’s president and chief financial officer, and the new CEO and president of NWA. “As we have proven, this is a different type of merger for the industry thanks to the complementary nature of the two airlines and the caliber of the people who will make this the most successful merger in airline history.”
Delta closed the merger after receiving notice from the Department of Justice that it would not challenge the merger after reviewing its competitive impact. Earlier this year, the merger also received clearance from the European Commission.