Let the matchmaking in the skies begin.

With Delta Air Lines and Northwest Airlines finally sealing a deal, a long-awaited burst of consolidation is expected to erupt.

For years, investors and industry officials have pointed to a need for airlines, with their high cost structures and razor-thin margins, to combine in order to cut expenses, eliminate overlapping routes, and take seats away, enabling them to raise fares. With fuel prices soaring, the industry is expected to lose as much as $9 billion this year. And any airline will want to get a deal done when the merger-friendly Bush administration is still in power.

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First on the deal runway will be United Airlines and Continental Airlines. The Delta-Northwest merger frees Continental from an earlier agreement that gave Northwest a veto over any deal involving Continental.

Jeff Bailey and Micheline Maynard of the New York Times report that the two airlines "now may try to get the deal wrapped up within the next 30 days."

Deutsche Lufthansa has been rumored to be looking at taking a stake in a combined United-Continental. Lufthansa acquired a 19 percent stake in JetBlue late last year.

A new Open Skies treaty frees where airlines in the United States and the European Union can fly on both continents. While U.S. law still prevents foreign investors from controlling an airline, there may be more minority stakes, like Lufthansa's in JetBlue, that could pave the way for operational alliances.

It's unclear if American Airlines, the longtime leader of U.S. aviation, will try to disrupt the Delta-Northwest or United-Continental deals or seek alliances of its own.

Earlier this year, the TheDeal.Com noted that Southwest Airlines had signaled it was interested in acquisition opportunities, but that it was more likely to seek gates and other assets rather than merger deals.

It is important to note that no deal is a certainty. Delta and Northwest reached their agreement without the support of their powerful pilots' union. Its deal and others will face political challenges and regulatory scrutiny.

Under terms announced Monday evening Delta agreed to swap 1.25 of its shares for each Northwest share. Based on Delta's closing price of $10.48 a share on Monday, the offer values each Northwest share at $13.10, a 16.8 percent premium over their close Monday.

Based on Northwest's recent disclosure that it has 236.43 million shares outstanding, the Delta offer values Northwest at $3.097 billion.

Delta and Northwest acknowledged the effect of higher oil prices when they announced their intention to merge.

"Record fuel prices have fundamentally changed the economics of the airline industry," they said in a statement. "Fuel is the highest single expense for Delta and Northwest, significantly eroding the financial benefits of restructuring and placing the airlines' newfound strength and stability at long-term risk."

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