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Delta-Northwest merger to get scrutiny from Congress

From Bloomberg News

Delta Air Lines Inc. and Northwest Airlines Corp., seeking U.S. government approval for a merger to form the world's largest carrier, will face lawmaker scrutiny on whether the deal will benefit consumers, workers and communities.

The day after the companies announced their merger, lawmakers said they would hold hearings, supply information to the U.S. Justice Department and ask tough questions of the airlines' executives.

"They are looking out for Wall Street and their bottom line," Sen. Amy Klobuchar, a Democrat from Northwest's home state of Minnesota, said of the two carriers. "Someone here has to look out for Main Street."

Delta, the third-largest U.S. carrier, agreed to buy Northwest, the fifth biggest, in a $3.63 billion stock deal. The Justice Department will decide whether to approve the merger, and members of Congress plan to use their offices to weigh in.

"The devil is always in the details," said Sen. Johnny Isakson, a Republican from Atlanta-based Delta's home state of Georgia. "We need to be sure we understand the competitive issues."

Because the carriers have little overlap there should be "little threat" of job cuts, while "substantial" pressure forced them to consider a merger, Isakson said. "I tend to be favorably inclined" toward the deal, he said.

Klobuchar said she's "very concerned" that the merger plan will remove the carrier's Northwest name and its Eagan headquarters from her state. "I don't like it," she said.

Her role will be to use Senate hearings to disclose details of the Delta-Northwest proposal, supply information to the Justice Department and pressure the carriers to take actions that benefit people in her state, Klobuchar said.

Rep. Jerry Costello, chairman of the House aviation subcommittee, said he is concerned that the combination may mean having fewer carriers and choices for consumers, higher fares and reductions in the number of airline employees.

The two airlines "have a responsibility to the flying public and the American people to answer the pertinent questions," said Costello (D-Illinois). "It will be up to them to convince the Congress and to convince the Justice Department."

The Senate antitrust subcommittee plans hearings to "carefully examine" the merger plan and its effect on consumers, said Sen. Herb Kohl, a Wisconsin Democrat who is chairman of the panel.

"We are especially concerned with the consequences of this deal for travelers in small and mid-sized markets, many of whom already have the fewest choice for air carriers today," Kohl said.

Delta fell $1.43, or 14%, to $9.05 in afternoon trading, the biggest decline in a month. Northwest slid $1.10, or 9.8%, to $10.12.

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