Delta Air Lines gave the green light on a tentative agreement for a merger with Northwest Airlines, which will ultimately create the world's largest carrier, according to news reports.
The proposed merger is in advanced talks and may be announced next week, Bloomberg reported. If the deal goes through, pilot's income will be raised and will be receive an equity stake in the new combined airline and Delta's name will be kept, along with its Atlanta headquarters.
Delta, the third-largest U.S. carrier by traffic, and No. 5 Northwest, had intended to announce merger plans in mid-February, but was postponed due to a stalemate in deciding on a ranking system.
The Air Line Pilots Association, which represents the carriers' pilots, failed to agree how seniority rankings among the pilots should be protected after the merger.
The Department of Transportation on Wednesday said it plans to grant antitrust immunity to Delta and Northwest, together with their SkyTeam partners Air France, Alitalia, Czech Airlines, and KLM, allowing them to coordinate their services and act as a single carrier for U.S.-Europe services.
The Department tentatively concluded that the proposed alliance is in the public interest because it features a proposed new and highly integrated joint venture that will likely produce efficiencies and provide consumers with additional price and service options, such as lower fares and more nonstop and connecting flights, DOT said in a statement.
Delta jumped 84 cents, or 9.4 percent, to end at $9.75 while Northwest rose $1.22, or 13 percent, to $10.87.
The merged company would surpass AMR Corp.'s American Airlines as the world's biggest carrier, which is currently struggling with inspections and has canceled 2,400 flights this week.