Northwest pilots still a stumbling block

The merger of Delta Airlines (DAL) and Northwest Airlines (NWA) is finally in the books. Delta agreed late Monday to buy Northwest for $3.09 billion in stock, creating the biggest airline in the United States. “Today, we’re announcing a transaction that is about addition, not subtraction, and combines end-to-end networks that open a world of opportunities for our customers and employees,” Delta chief Richard Anderson said. “We believe by partnering with our employees, including providing equity to U.S.-based employees of Delta and Northwest, this combination is off to the right start.”

Getting off to the right start certainly took long enough. The deal comes more than two months after news of serious talks between the companies emerged. In February, when the Delta-Northwest linkup first appeared imminent, the market was a much more hospitable place for airline stocks: Shares of both companies traded as much as 80% above their recent levels of $10-$11 each. Since then, while Delta and Northwest have tried to work out pilot seniority arrangements, crude oil prices have hit new highs and the Federal Aviation Administration has cracked down on airplane maintenance practices, forcing big airlines such as AMR’s (AMR) American Airlines to take hundreds of planes out of service for repairs. Meanwhile the U.S. economy continues to weaken, potentially weighing on demand for travel.

That aside, the biggest question mark for this deal is whether Delta can bring the Northwest pilots union on board. Delta said Monday it has reached agreement with Delta pilots to exteand an existing collective bargaining agreement through the end of 2012. The airline said it will “use its best efforts to reach a combined Delta-Northwest pilot agreement, including resolution of pilot seniority integration, prior to the closing of the merger.” But the last two months show it won’t be easy.