Now the work begins for Delta, Northwest

updated 7:19 p.m. ET April 15, 2008

Delta and Northwest executives want to smoothly complete their deal to create the world’s largest airline by the end of the year. But investors reacted negatively Tuesday, amid word there are no plans for further domestic flight cuts as well as the challenges of integrating companies with contrasting cultures, planes and labor relations.

The two airlines have very different relationships between management and workers, which was reflected as soon as Delta’s acquisition of Northwest was announced Monday. Delta pilots support it. Northwest pilots oppose it. Fifteen minutes after the announcement, the union representing many Northwest ground workers pledged to fight it.

Northwest is heavily unionized, while Delta’s pilots are the only major work group at Delta to be part of a union. Delta flight attendants begin voting April 23 whether to join a union.

“Sometimes, they’re a little overly optimistic,” industry expert Terry Trippler said of the airlines’ executives.

Airline consultant Darryl Jenkins acknowledged that there will be challenges, but he believes the deal will go through.

“For all practical purposes, this deal is done,” Jenkins said. “The things that would derail this deal are all regulatory, and I think this is one of the easier deals to sign off on that I’ve ever seen.”

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The unions can’t kill the deal, but they can put pressure on other groups that have a say — like shareholders and regulators — to stop it.

Investors already appeared nervous, punishing the stocks of both airlines Tuesday and shaving $400 million off the value to Northwest shareholders if the agreement to be acquired by Delta were to close now. Oil prices hit yet another record Tuesday, nearing $114 a barrel, and investors were disappointed that the deal may not yield as much in cost savings or higher revenue as Wall Street expected.

The carriers said they have no current plans to cut more U.S. flights beyond what they have disclosed separately — something analysts see as limiting the cost savings or higher fares the airlines could reap from the deal. Delta and Northwest also don’t plan to close any of their hubs. They didn’t rule out further capacity cuts in the future if fuel prices continue to rise.

Executives said they are confident they will be able to consummate the deal and integrate the two carriers.

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