delta_8k-041408.htm
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM 8-K
CURRENT
REPORT
Pursuant
to Section 13 OR 15(d) of the
Securities
Exchange Act of 1934
Date of
Report (Date of earliest event reported):
April 18, 2008
(April 14, 2008)
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DELTA
AIR LINES, INC.
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(Exact
name of registrant as specified in its
charter)
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Delaware
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001-05424
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58-0218548
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(State
or other jurisdiction
of
incorporation)
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(Commission
File
Number)
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(IRS
Employer
Identification
No.)
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P.O. Box 20706, Atlanta,
Georgia 30320-6001
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(Address
of principal executive offices)
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Registrant’s
telephone number, including area code: (404)
715-2600
Registrant’s
Web site address: www.delta.com
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (see General Instruction A.2. below):
Item 1.01. Entry into a Material Definitive
Agreement.
Agreement
and Plan of Merger
On April
14, 2008, Delta Air Lines Inc., a Delaware corporation (“Delta”), entered into
an Agreement and Plan of Merger (the “Merger Agreement”) with Nautilus Merger
Corporation, a Delaware corporation and wholly-owned subsidiary of Delta
(“Merger Sub”), and Northwest Airlines Corporation, a Delaware corporation
(“Northwest”). The Merger Agreement provides that, upon the terms and subject to
the conditions set forth in the Merger Agreement, Merger Sub will merge with and
into Northwest, with Northwest continuing as the surviving corporation and as a
wholly-owned subsidiary of Delta (the “Merger”). The Merger has been
approved by the board of directors of both Delta and Northwest.
Under the
terms of the Merger Agreement, each outstanding share of Northwest common stock
(including those shares held in the reserve established pursuant to Northwest’s
plan of reorganization under Chapter 11) will be converted into the right to
receive 1.25 shares of Delta common stock. Northwest stock options
and other equity awards will generally convert upon completion of the Merger
into stock options and equity awards with respect to Delta common stock, after
giving effect to the exchange ratio.
The
Merger Agreement also provides that upon consummation of the Merger, the board
of directors of the combined company will be made up of thirteen members,
consisting of (1) seven members of the Delta board of directors (which will
include Daniel A. Carp, the current Chairman of the Delta board of directors,
and Richard H. Anderson, the current Chief Executive Officer of Delta), (2) five
members of the Northwest board of directors (which will include Roy J. Bostock,
the current Chairman of the Northwest board of directors, and Douglas M.
Steenland, the current Chief Executive Officer of Northwest and three members of
the current Northwest board of directors) and (3) one representative designated
by the Air Line Pilots Association, International (“ALPA”).
Under the
Merger Agreement, upon completion of the Merger, Daniel A. Carp will serve as
non-executive chairman of the board of directors of the combined company,
Richard H. Anderson will serve as chief executive officer of the combined
company and Roy J. Bostock will serve as a non-executive vice chairman of the
board of directors of the combined company. Edward H. Bastian will
serve as President and Chief Financial Officer of the combined
company.
The
Merger is intended to qualify as a tax-free reorganization for U.S. federal
income tax purposes, so that none of Delta, Merger Sub, Northwest or any of the
Northwest stockholders generally will recognize any gain or loss in the
transaction, except that Northwest stockholders will recognize gain with respect
to cash received in lieu of fractional shares of Delta common
stock.
Delta and
Northwest have made customary representations, warranties and covenants in the
Merger Agreement, including, among others, covenants (i) with respect to
the conduct of their respective businesses during the interim period between the
execution of the Merger Agreement and consummation of the Merger, (ii) not
to engage in certain kinds of transactions during such period, (iii) that
Northwest will convene and hold a meeting of the stockholders of Northwest to
consider and vote upon the adoption of the Merger Agreement, (iv) that
Delta will convene and hold a meeting of stockholders of Delta to consider and
vote upon the approval of the issuance of Delta common stock required to be
issued in the Merger and (v) that, subject to certain exceptions, the
Northwest board of directors and Delta board of directors will each recommend
the adoption of the Merger Agreement and the issuance of Delta’s common shares,
respectively, by their stockholders. In addition, Delta and Northwest have made
certain additional customary covenants not to, including, among others,
(i) solicit or knowingly facilitate inquiries or proposals relating to
alternative business combination transactions or (ii) subject to certain
exceptions, engage in discussions or negotiations regarding, or provide any
non-public information or data in connection with alternative business
combination transactions.
Completion
of the Merger is subject to customary conditions, including (i) adoption of
the Merger Agreement by the holders of Northwest common stock,
(ii) approval of the issuance of Delta common stock required to be issued
in the Merger, (iii) absence of certain laws or orders of governmental
authorities prohibiting the closing, (iv) regulatory clearance under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 and the applicable merger
control laws of the European Commission and (v) obtaining exemptive authority
required from the Department of Transportation for any de facto route
transfers. Each party’s obligation to consummate the Merger is also
subject to certain other conditions, including (i) subject to certain
exceptions, the accuracy of the representations and warranties of the other
party, (ii) performance in all material respects of the other party of its
obligations, (iii) the delivery of customary opinions from counsel to Delta
and counsel to Northwest that the Merger will qualify as a tax-free
reorganization for federal income tax purposes and (iv) the absence of certain
bankruptcy events.
The
Merger Agreement contains certain termination rights for both Delta and
Northwest. The Merger Agreement further provides that, upon
termination of the Merger Agreement under specified circumstances, Northwest may
be required to pay to Delta, or Delta may be required to pay to Northwest, a
termination fee of $165 million.
The
foregoing description of the Merger and the Merger Agreement does not purport to
be complete and is qualified in its entirety by reference to the Merger
Agreement, which is filed as Exhibit 2.1 hereto, and is incorporated into this
report by reference. The Merger Agreement and the above description of the
Merger Agreement have been included to provide investors and security holders
with information regarding the terms of the Merger Agreement. It is not intended
to provide any other factual information about Delta, Northwest, or their
respective subsidiaries and affiliates. The Merger Agreement contains
representations and warranties of each of Delta and Merger Sub, on the one hand,
and Northwest, on the other hand, made solely for the benefit of the other. The
assertions embodied in those representations and warranties are qualified by
information in confidential disclosure schedules that the parties have exchanged
in connection with signing the Merger Agreement. The disclosure schedules
contain information that modifies, qualifies and creates exceptions to the
representations and warranties set forth in the Merger Agreement. Moreover, the
representations and warranties in the Merger Agreement were used for the purpose
of allocating risk between Delta and Merger Sub, on the one hand, and Northwest,
on the other hand. Accordingly, you should read the representations and
warranties in the Merger Agreement not in isolation but only in conjunction with
the other information about Delta and Northwest and their subsidiaries that the
respective companies include in reports, statements and other filings they make
with the Securities and Exchange Commission.
Northwest
and Delta and certain of their respective subsidiaries are parties to domestic
marketing alliance, codeshare and related agreements.
Transaction
Framework Agreement
On April
14, 2008, Delta reached agreement on the Transaction Framework Agreement (the
“Framework Agreement”) among Delta, the Delta Master Executive Council (the
governing body of the Delta unit of ALPA) (the “Delta MEC”) and
ALPA.
The
Framework Agreement addresses, among other things, a tentative agreement that
will amend in certain respects the collective bargaining agreement (the “Delta
CBA”) applicable to Delta pilots. The tentative agreement to amend
the Delta CBA is subject to ratification by Delta pilots and would become
effective on the closing date of the Merger. Subject to the
terms and conditions of the Framework Agreement, the Delta MEC has agreed to (i)
recommend that the Delta pilots ratify the amendments to the Delta CBA and (ii)
use its reasonable best efforts to cause a ratification vote by the Delta pilots
within 90 days. The Framework Agreement does not apply to pilots of
Delta subsidiaries or Northwest.
Pursuant
to the terms of the Framework Agreement, Delta has agreed to issue shares of its
common stock equal to 3.5% of the fully-diluted shares outstanding of Delta
(after giving effect to the shares of Delta common stock issued in connection
with the Merger) (the “Delta Pilot Shares”) to Delta pilots, effective on the
closing date of the Merger and subject to ratification by Delta pilots of the
tentative agreement to amend the Delta CBA.1 The Framework
Agreement provides for customary registration rights with respect to the Delta
Pilot Shares.
1 On April
14, 2008, Delta announced its intention to issue shares of its common stock
equal to 4% of the fully-diluted shares outstanding of Delta (after giving
effect to the shares of Delta common stock issued in connection with the Merger)
to U.S. based non-pilot employees of Delta and Northwest upon the closing of the
Merger.
Nomination
Letter Agreement
On April
14, 2008, in a letter agreement among Delta, the Delta MEC and ALPA (the
“Nomination Letter Agreement”), Delta agreed (1) to cause the
election to its board of directors of a Delta pilot designated by the Delta MEC
who is not a member or officer of the Delta MEC or an officer of ALPA (“Pilot
Nominee”); (2) at any meeting of stockholders at which the Pilot Nominee is
subject to election, to renominate the Pilot Nominee, or nominate another
qualified Delta pilot designated by the Delta MEC, to be elected to the board of
directors, and to use its reasonable best efforts to cause such person to be
elected to the Board; and (3) in the event of the death, disability,
resignation, removal or failure to be elected of the Pilot Nominee, to elect
promptly to the Board a replacement Pilot Nominee designated by the Delta MEC to
fill the resulting vacancy. Pursuant to the Nomination Letter
Agreement, the board of directors elected Kenneth C. Rogers to the Board on
April 14, 2008.
Forward-Looking
Statements
This
document includes “forward-looking statements” within the meaning of the safe
harbor provisions of the United States Private Securities Litigation Reform Act
of 1995. Words such as “expect,’ “estimate,” “project,” “budget,”
“forecast,” “anticipate,” “intend,” “plan,” “may,” “will,” “could,” “should,”
“believes,” “predicts,” “potential,” “continue,” and similar expressions are
intended to identify such forward-looking statements. These
forward-looking statements include, without limitation, Delta's and Northwest’s
expectations with respect to the synergies, costs and charges and
capitalization, anticipated financial impacts of the merger transaction and
related transactions; approval of the merger transaction and related
transactions by shareholders; the satisfaction of the closing conditions to the
merger transaction and related transactions; and the timing of the completion of
the merger transaction and related transactions.
These
forward-looking statements involve significant risks and uncertainties that
could cause the actual results to differ materially from the expected results.
Most of these factors are outside our control and difficult to
predict. Factors that may cause such differences include, but are not
limited to, the possibility that the expected synergies will not be realized, or
will not be realized within the expected time period, due to, among other
things, (1) the airline pricing environment; (2) competitive actions taken by
other airlines; (3) general economic conditions; (4) changes in jet fuel prices;
(5) actions taken or conditions imposed by the United States and foreign
governments; (6) the willingness of customers to travel; (7) difficulties in
integrating the operations of the two airlines; (8) the impact of labor
relations, and (9) fluctuations in foreign currency exchange
rates. Other factors include the possibility that the merger does not
close, including due to the failure to receive required stockholder or
regulatory approvals, or the failure of other closing conditions.
Delta cautions that the foregoing list
of factors is not exclusive. Additional information concerning these and other
risk factors is contained in Delta’s and Northwest’s most recently filed Forms
10-K. All subsequent written and
oral forward-looking statements concerning Delta, Northwest, the merger, the
related transactions or other matters and attributable to Delta or
Northwest or any person acting on their behalf are expressly qualified in their
entirety by the cautionary statements above. Delta and Northwest do not
undertake any obligation to update any forward-looking statement, whether
written or oral, relating to the matters discussed in this document.
Additional
Information
In connection with the proposed merger,
Delta will file with the Securities and Exchange Commission (“SEC”) a Registration Statement on Form S-4
that will include a joint proxy statement of Delta and Northwest that also
constitutes a prospectus of Delta. Delta and Northwest will mail the joint
proxy statement/prospectus to their stockholders. Delta and
Northwest urge investors and security holders to read the joint proxy
statement/prospectus regarding the proposed merger when it becomes available
because it will contain important information. You may obtain copies of all
documents filed with the SEC regarding this transaction, free of charge, at the
SEC’s website (www.sec.gov). You may also obtain these documents, free of
charge, from Delta’s website (www.delta.com) under the tab “About Delta” and then under the heading “Investor Relations” and then under the item “SEC Filings.” You may also obtain these documents,
free of charge, from Northwest’s website (www.nwa.com) under the tab
“About Northwest” and then under the heading “Investor Relations” and then under the item “SEC Filings and Section 16
Filings.”
Delta,
Northwest and their respective directors, executive officers and certain other
members of management and employees may be soliciting proxies from Delta and
Northwest stockholders in favor of the merger. Information regarding the persons
who may, under the rules of the SEC, be deemed participants in the solicitation
of Delta and Northwest stockholders in connection with the proposed merger
will be set forth in the proxy statement/prospectus when it is filed with the
SEC. You can find information about Delta’s executive officers and directors in
its Annual Reports on Form 10-K (including any amendments thereto), Current
Reports on Form 8-K and other documents that have previously been filed with the
SEC since April 30, 2007 as well as in its definitive proxy statement to be
filed with the SEC related to Delta’s 2008 Annual Meeting of Stockholders. You
can find information about Northwest’s executive officers and directors in its
Annual Reports on Form 10-K (including any amendments thereto), Current Reports
on Form 8-K and other documents that have previously been filed with the SEC
since May 31, 2007 as well as in its definitive proxy statement to be filed with
the SEC related to Northwest’s 2008 Annual Meeting of Stockholders. You can
obtain free copies of these documents from Delta and Northwest using the contact
information above.
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Item
5.02
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Departure
of Directors or Certain Officers; Election of Directors; Appointment of
Certain Officers; Compensatory Arrangements of Certain
Officers.
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(d) As
described in Item 1.01 above, Kenneth C. Rogers has been elected to the Delta
board of directors pursuant to the Nomination Letter Agreement. As an
employee of the company, Mr. Rogers will not receive separate compensation for
his service on the Delta board of directors. Mr. Rogers’ compensation
as a Delta pilot is determined under the collective bargaining agreement between
Delta and ALPA. During Delta’s Chapter 11 bankruptcy case, ALPA
agreed to amend its collective bargaining agreement to reduce Delta’s pilot
labor costs. In exchange for this amendment, ALPA received certain
consideration from Delta, including a claim against Delta’s bankruptcy estate,
which ALPA distributed among eligible pilots. During 2007, Mr. Rogers
received $349,358 as a Delta pilot, including $233,865 from the distribution
from ALPA.
Mr.
Rogers is not expected to be named to any committees of the Delta board of
directors at the present time.
Item 9.01 Financial
Statements and Exhibits
(d) Exhibits
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Exhibit
2.1
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Agreement
and Plan of Merger, dated as of April 14, 2008, by and among Delta Air
Lines, Inc., Nautilus Merger Corporation, and Northwest Airlines
Corporation (the schedules and exhibits have been omitted pursuant to Item
601(b)(2) of Regulation S-K)
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SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
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DELTA
AIR LINES, INC.
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By: /s/
Edward H.
Bastian
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Date: April
18, 2008
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Edward
H. Bastian
President
and Chief Financial Officer
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EXHIBIT
INDEX
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Exhibit
Number
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Description
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Exhibit
2.1
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Agreement
and Plan of Merger, dated as of April 14, 2008, by and among Delta Air
Lines, Inc., Nautilus Merger Corporation, and Northwest Airlines
Corporation (the schedules and exhibits have been omitted pursuant to Item
601(b)(2) of Regulation S-K)
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