The all-stock transaction, the first domestic airline combination in three years, closed after clearing its biggest and last regulatory hurdle earlier in the day -- U.S. Justice Department antitrust review.
Justice officials cited the likelihood of "substantial and credible efficiencies" without harming consumers or competition.
Government approval was expected. Industry vigorously made the case to regulators earlier this year, when airline finances were rockier than they are now, that consolidation was an important tool for remaining viable with fuel prices high and the economy worsening.
"The airline industry faces a very difficult economic environment around the world and this merger gives Delta increased flexibility to adapt to the economic challenges ahead," said Richard Anderson, the Delta chief executive who will head the combined entity.
The new, larger Delta will be an international powerhouse with unparalleled scheduling and pricing strength with service to 375 cities worldwide, experts said. The company estimates a combined $2 billion in cost savings and revenue enhancements annually.
An ambitious plan is to link the long-established strength of Northwest in Asia with Delta's expanding overseas network, and leverage benefits from the transatlantic SkyTeam alliance that includes AirFrance/KLM.
"There are global corporations but no global airlines. The race to become the first truly global airline has an incredible reward to it," said consultant Darryl Jenkins. "The revenue potential is something that we have not seen yet. That's the synergy that will make this very lucrative."
Jenkins and other experts said the deal's potential may reignite merger fever, which burned this year until fuel prices started their dramatic rise this summer to record heights and prompted sharp airline cost cutting.
Doug Parker, chief executive of US Airways Group and a long-time proponent of consolidation, said last week that he still believes mergers are right for the industry. US Airways failed last year in its bid for Delta.
Calyon Securities analyst Ray Neidl said that economic wild cards could impede consolidation. A credit crunch and fuel price volatility must diminish before airlines can explore mergers, he said.
"Down the road, there will be more consolidation or attempts," Neidl said.
Northwest's history dates to 1926 and its common stock first traded in 1941. But the company now operates as a wholly owned subsidiary of Delta until the two fully integrate their operations. That process is expected to take up to two years and cost no more than $600 million.
Integration can be tricky. For instance, US Airways Group Inc has yet to fully combine its work force after merging with America West in 2005.
Delta said customers should continue to check-in and do business directly with the airline operating their flights just as they did before the merger.
For the time being, the carriers will maintain separate web sites as well as two reservation systems and loyalty programs.
The new company will retain the Delta brand and be headquartered in Atlanta, where Delta is based. The new Delta begins operations with 75,000 employees.
In the coming days, Delta will distribute an equity stake to substantially all U.S.-based employees with international employees participating through cash payments in lieu of stock. The pilots' unions of both airlines have agreed to a unified contract but still must negotiate a seniority arrangement, a detail that almost derailed merger prospects earlier this year.
The new Delta has said no frontline employees will be involuntarily furloughed as a result of the merger and that no hubs will be closed. The old Delta's strength was in the South while Northwest operations are based in the northern cities of Minneapolis and Detroit.
As approved by shareholders at both companies earlier this year, Northwest stockholders will receive 1.25 Delta shares for each Northwest share they own. Based on Delta's closing stock price on Wednesday, this exchange ratio is the equivalent of $9.99 per Northwest common share.
Delta shares closed down 2.1 percent at $7.99 on Wednesday on the New York Stock Exchange, while Northwest finished 0.6 percent higher at $9.90.
Government approval of the deal comes as airline finances begin to improve with fuel prices falling sharply off record highs. But carriers are now cutting back service to save money as travel demand softens due to economic weakness.
Northwest posted a $317 million third-quarter loss due to writedowns on its fuel hedging. Without the adjustment, the company earned $93 million and beat Wall Street share price estimates. Delta's third-quarter loss was $50 million.