Deal done, the hard sell begins

ATLANTA — Delta and Northwest airline officials roamed the East Coast Tuesday, trying to convince Wall Street-types, employees, politicians and reporters that creating the world's biggest airline and basing it in Atlanta is a good idea.

Their well-orchestrated road show courted Wall Street analysts and the national media in New York City, and Delta employees in Atlanta. And, in between, executives had politicians in Georgia, Minnesota and Washington on the other end of their cellphones.

"It's an important day for Atlanta. It's an important day for Delta. It's an important day for aviation in the United States," Delta CEO Richard Anderson announced to a gaggle of local reporters and cheering Delta employees at Hartsfield-Jackson International Airport.

Wall Street wasn't as merry. Delta shares fell nearly 13 percent to $9.05 per share, and Northwest dropped a little more than 8 percent, to $10.28, on the first day of trading after the airlines announced plans to create a mega-carrier to be headquartered in Atlanta and called Delta.

Before the merger can take place, stockholders and federal regulators must approve the union — hence the massive sales blitz that in coming weeks will make its way to major hub cities and Washington. Executives will visit with editors of local and national newspapers and chat with business talk show commentators across the nation. The carriers have set up a sophisticated Web site, www.newglobalairline.com, that has information for employees, customers and communities affected by the proposed merger.

It will be an exhausting parade that could stretch nearly to the end of the year, when the companies expect their deal to close.

On Tuesday alone, Anderson, Delta President Ed Bastian and Northwest CEO Doug Steenland showed up on CNN, CNN International, the business network CNBC and the "Today" show.

In a 9 a.m. conference call with industry analysts, Bastian said the merger will reward all "stakeholders" — ranging from higher returns for investors to better employee job security — without hurting competition.

"We've done this in a fashion that's truly unique," said Bastian, who will be the combined company's president and chief financial officer, the same role he has at Delta.

But as the price of jet fuel rose to a new record in response to oil prices that neared $114 a barrel, investors seemed skeptical. Most airline stocks dropped, although Delta and Northwest took the biggest dive.

At a 3 p.m. press conference in Atlanta, Bastian told reporters that the companies' stocks likely fell because of fuel prices and because analysts wanted Delta and Northwest to announce hub closings. The carriers have said they will not close any hubs or lay off any front-line employees, such as flight attendants, ticket agents or pilots.

At about the same time in Washington, House Transportation Committee Chairman James Oberstar unleashed an attack, saying the merger would be "the worst development in aviation history."

Congress does not have the power to stop a merger, but powerful congressmen do have the power of persuasion.

"We will marshal all the forces we can" to persuade the U.S. Department of Justice to reject the deal on antitrust grounds, Overstar said.

The airlines' executives say pressures on the industry, such as mounting fuel costs, can be partly offset through consolidation.

Delta and Northwest say they expect the merger to produce about $1 billion annually in increased revenues or lower costs, resulting in a boost to earnings within the first year after the merger is approved. That forecast does not count up to $1 billion in cash costs from repainting planes and other merger-related costs.

The airline would have combined revenues of $35 billion and about 75,000 to 80,000 employees, the companies said.

Meanwhile, Continental's top executives signaled that the Houston-based airline may look at a merger as well. In a message to employees, Continental Chief Executive Larry Kellner and Jeff Smisek, Continental's president, said the airline will look at "strategic alternatives" now that the planned Delta-Northwest merger has altered the "competitive landscape."

Such a deal would create an even larger carrier than the Delta-Northwest proposal.

Delta and Northwest officials went to great lengths to dispel the idea that consolidation could harm competitors and drive up fares.

Anderson told reporters in Atlanta that there are "no competitive issues" on domestic routes and predicted the merger will be approved. "We're not really concerned about that," Anderson said.

The airlines also have to win over some opponents closer to home. Northwest's pilots union said its members will oppose the merger. Northwest pilots were not part of a tentative contract Delta forged solely with its 6,000 pilots; it offers them a 3.5 percent equity stake in exchange for contract changes that give the merged carriers more flexibility.

The carriers' executives said they hope to reach a similar deal with Northwest's pilots later this year, while the proposed merger is undergoing antitrust review by regulators in the United States and European Union.

Meanwhile, Northwest pilots already have begun lobbying against the deal in Washington.

The airlines have "a substantial amount of time," said Steenland, to get a deal with Northwest's 5,000 pilots over the next eight months.

But for Delta employees, whose company is taking the lead role in the merger, a Tuesday question-and-answer meeting with top executives turned into something of a pep rally.

Hundreds of Delta workers gathered at the old Georgia International Convention Center near the airport to hear from Anderson and Bastian.

Speakers blared "Celebration" and "Don't Stop Thinking About Tomorrow" as Delta workers snapped group photos with their cellphones.

Lee Moak, who heads Delta's pilot union, got on stage.

"This merger is a global merger," Moak told the crowd. " It creates a strong airline. This merger has our competitors scared. This merger is not a Wall Street scheme. This merger is good for each and every one of us."

Russell Grantham and Jim Tharpe write for The Atlanta Journal-Constitution. Journal-Constitution writers Tammy Joyner in Atlanta and David Ho in New York contributed to this report.