Delta in Chapter 11

[strandinthewind]

Sad - but true. As Atlanta is its base, I have many a friend who works there. Sadly, many of them were let go, but most (and we are talking lower level here) got pretty good packages in a forced retirement/exit. Good luck to Delta and its employees.
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Delta Air Lines files for bankruptcy

No. 3 airline follows United and US Airways in seeking to reorganize, Northwest could soon follow.

September 14, 2005: 5:03 PM EDT

NEW YORK (CNN/Money) - Delta Air Lines filed for bankruptcy Wednesday, making it the third major U.S. carrier to be operating under bankruptcy protection.

Delta (Research), the nation's third-biggest airline, has been hurt by the recent spike in jet fuel prices and growing competition from lower-cost, low-fare carriers -- and it may not be the last carrier to seek protection from creditors.

The board of Northwest Airlines (Research), the nation's No. 4 carrier, was set to meet Wednesday to consider its own bankruptcy filing, according to a statement late Tuesday from its pilots' union. Northwest, weathering a strike by its mechanics, said Tuesday that it's failed to make $23 million in financing payments since Saturday.

Delta follows United Airlines (Research) and US Airways into bankruptcy. United, the No. 2 airline, has been in bankruptcy court for almost three years. US Airways (Research) has been in bankruptcy court twice since the Sept. 11 terrorist attacks that shook the airline industry.

Delta said in a statement announcing the bankruptcy filing that it expects to keep flying while it seeks to cut costs and reorganize, so the impact on flyers should be minimal. It is also expected to keep its frequent flyer program intact.

The Atlanta-based airline, which has not had a profitable quarter since 2000, filed under Chapter 11 of federal bankruptcy laws. In Chapter 11, a company is protected from creditors while it tries to reorganize.

Analysts said this year's spike in jet fuel prices forced Delta's bankruptcy filing.

"Hurricane Katrina was probably the last straw," Ray Neidl, analyst with Calyon Securities, said shortly before the widely expected bankruptcy filing. "Nobody could have predicted $60-, $70-a-barrel oil. Things just developed that were uncontrollable factors."

But Delta's problems predate not only the hurricane, but the Sept. 11, 2001 terrorist attacks. The company has lost some $6.1 billion since the start of 2001 from its airline operations, according to First Call, which tracks corporate earnings.

Some analysts said that Delta waited longer than some of its rivals to trim costs. It did not win cost concessions from its pilots union until last October, after paying them the highest wages in the industry under a contract reached months before the Sept. 11 attacks.

"They are another example of a company that started out in a relatively stronger financial position than their peers, and they felt they were in better position to survive a shakeout," said Philip Baggaley, Standard & Poor's senior airline credit analyst. "They didn't pursue cost-cutting as aggressively as they would have if they were heading toward bankruptcy early in the (industry's) downturn."

The airline has nearly 60,000 employees and just under 600 planes in its mainline operations, which includes Delta, the Delta Shuttle and Song, its attempt to compete in the growing low-fare market.

Another problem for Delta is that it has less international traffic than the nation's other big carriers. That means it faces competition on more routes from low-fare carriers such as AirTran, JetBlue and Southwest than some of its rivals.

Scramble to cut costs
Delta had been scrambling through the strong summer travel season to cut costs and raise cash.

Last week it completed the sale one of its feeder airlines, Atlantic Southeast Airlines, for $425 million. It also announced it was cutting flight capacity at its Cincinnati hub by 26 percent.

But these and other cost-cutting moves made over the last year could not stem losses, which are forecast by analysts to extend into 2007. The company has not reported a quarterly profit, excluding special items, since 2000.

Delta flirted with a bankruptcy filing in October 2004, before getting the Air Line Pilots Association to agree to cut wages by about a third – a move that saved about $1 billion a year. The airline also cut some 5,000 jobs in the year ending in June, aside from the sale of Atlantic Southeast.

Its second quarter payroll costs were 18 percent below a year earlier, as the company spent nearly $300 million less on salary and benefits.

But soaring fuel costs caused ongoing losses. The amount paid per gallon soared 50 percent in the second quarter from a year earlier, and has kept climbing.

The increased costs came as Delta and other carriers found it difficult to win higher fares from passengers, who have more options with the growth of low-fare rivals.

The average amount that Delta received from passengers came to 12.24 cents a mile in the second quarter, down 1 percent from a year earlier, even as the percent of empty seats on Delta jets fell.

The final cash crisis came when the bank that was processing the airline's Visa and MasterCard ticket purchases started holding back money as protection in case of a bankruptcy filing. The airline warned in August that such a move by the bank could cost $650 million by the end of October, straining its already thin cash reserves.

Find this article at:
http://money.cnn.com/2005/09/14/news...ex.htm?cnn=yes

[estranged4life]

Originally Posted by strandinthewind

Delta Air Lines files for bankruptcy

No. 3 airline follows United and US Airways in seeking to reorganize, Northwest could soon follow.

September 14, 2005: 5:03 PM EDT

NEW YORK (CNN/Money) - Delta Air Lines filed for bankruptcy Wednesday, making it the third major U.S. carrier to be operating under bankruptcy protection.

Delta (Research), the nation's third-biggest airline, has been hurt by the recent spike in jet fuel prices and growing competition from lower-cost, low-fare carriers -- and it may not be the last carrier to seek protection from creditors.

The Atlanta-based airline, which has not had a profitable quarter since 2000, filed under Chapter 11 of federal bankruptcy laws. In Chapter 11, a company is protected from creditors while it tries to reorganize.

when I was attending Spartan School of Aeronautics in Tulsa, I along many others had a conflict with the misleading message on the sign in front of the school announcing "100,000 Aviation jobs to be created by the year 2000"....

Yeah right!!!

I felt sorry for those foolish Aeronautical students (NDT/QC students fell under the wing of the ASNT, Not the FAA...So we NDT/QC students were second class students of this joke of a school, FAA regulated students received brand new equipment through the FAA guidelines, we (NDT/QC) were lucky if our equipment even if ever worked....Thank God our instructors took their own $$$ to buy/purchase what the students needed.) who believed in that crap and attended the school in hopes of making the big 'promised upon graduation $$$' in a field that was growing ripe for we are seeing now (I remember the tour of American Airlines plant in Tulsa and having their employees laugh at us NDT/QC students who may have believed there would be a job at the plant once we graduated.)

Glad I was able to work NDT/QC in a field where there was and still no lack of jobs, the oil business.

[strandinthewind]

Northwest has filed as well. The corporate welfare is going to be sickening.

As Nothwest was a codeshare partner of Delta, I wonder if Continental will declare as well as it also is a codeshare partner.