Delta Air Lines Inc. (Delta), headquartered in Atlanta, Georgia, U.S., was the world’s second-largest airline providing air transportation for passengers, cargo, and mail. Delta operated an extensive domestic and international network across all continents in the world except Antarctica. It was also a founding partner of the SkyTeam airline alliance.
Delta had used mergers and acquisitions (M&A) successfully to solidify its strong position as a leader in the airline industry. It had gone through five M&As since 1953, including the most recent acquisition of Northwest Airlines (Northwest), which turned Delta into an airline with major operations in every region of the world. On the other hand, the Northwest merger took a toll on Delta’s financial position by contributing to its high long-term debt.
In 2012, top management was cautiously exploring opportunities for entering new markets, routes, and partnerships in order to boost market share. The airline industry was known for being extremely competitive with significant market share volatility, strong price competition, and low brand loyalty. Management was also searching for ways to reduce costs and expenses in an industry that was rapidly consolidating into fewer major national and international players.