Delta-Northwest merger: What comes next?

Now the fun begins.

With the final clearance of federal regulators to go ahead with its merger with Northwest Airlines, Delta Air Lines now faces roughly a two-year effort to combine the two carriers into one company.

It will be a project of mammoth proportions involving tasks ranging from blending up to 75,000 employees with differing cultures, work rules and union status to making sure computer systems work smoothly and planes fly on schedule.

If it goes well, Delta can count roughly $2 billion in annual cost savings and extra revenues from combining the two carriers’ complementary route networks, which would span the United states, Europe and Asia, say experts.

“Those cost and revenue synergies are real,” said Vaughn Cordle, chief analyst at Airline Forecasts in Washington, D.C.

But such integration efforts are notoriously full of pitfalls, including computer glitches and labor problems, and few airlines have been able to complete mergers according to plan.

“The challenge is to rationalize the entire system as an entire entity,” said Cordle, a former airline pilot who founded his own airline consulting business.

It’s akin to fixing an airplane while it’s in the air. Cordle said he believes Delta has “very high odds” of succeeding, but will have its share of stumbles.

Delta and Northwest had teams of employees working on various pieces of the integration project soon after the airlines announced the planned merger, said Darryl Jenkins, a longtime airline consultant. Still, he expects them to take a deliberate pace that could last 18 months to two years.

“I don’t think anybody is in a hurry to do it incorrectly,” said Jenkins. “The process is so complicated and time-consuming that if you rush it, you just increase the odds of something going wrong.”

But of the six airline mergers he has followed over the years, he added, “I think this one has the best chance of the integration being done smoothly.” One of the reasons, experts said, is that Delta CEO Richard Anderson is a former CEO of Northwest.

Still, “integrations are very difficult,” he said. “You integrate a product that’s moving at 60 mph. …Whatever goes wrong is magnified a thousand-fold.”

Among the tasks Delta must complete:

• Combining reservation and scheduling systems: Airlines often have very public mess-ups because of software glitches, resulting in lost luggage, cancelled flights and angry customers. “Your baggage may go astray for a day,” said Jenkins.

• Obtaining a single operating certificate: The Federal Aviation Administration has accepted the carriers’ plans to seek a single certificate. It involves such things as harmonizing operating manuals that are “tens of thousands of pages long,” said Jenkins. Delta hopes to get the FAA’s approval of its combined day-to-day operations in less than a year.

• Combining work forces: Often a big stumbling block. Delta’s employees are mostly non-union. Much of Northwest’s employees are unionized. The toughest task could be getting the two airlines’ pilots, who are in separate units of the Air Line Pilots Association, to agree to a seniority list, which affects each pilot’s pay, vacation and work schedules.

The two unions are now in arbitration hearings on the seniority issue, but have agreed to a joint contract on other issues.