Delta files for bankruptcy protection

Atlanta Journal-Constitution ^ | 9-16-2005 | Russell Grantham

[Turbopilot]

This is a comprehensive article by the AJC's Delta reporter. Much more in-depth than the heading-only article previously posted.

[Pukin Dog]

....BUT THEY'LL NEVER TAKE....OUR FREEDOM!!!!!!!!

[southernnorthcarolina]

Northwest just filed for Chapter 11, also.

[Turbopilot]

To clarify some issues that the average Freeper may wonder about:

Nothing will change immediately regarding operations. You don't need to cancel your tickets, get a refund, rebook on another airline, etc. Show up for your flight and your ticket will be honored.

It remains to be seen what will happen with your FF miles. They could disappear, or nothing could happen. It seems most likely that they may be somewhat devalued, but it's entirely possible they could retain full value.

Delta is not "folding" or going out of business.

This is not the fault of "unions"; only the pilots of Delta are unionized and they have and will continue to make concessions. The rest of the nonunion employees also have and will continue to make concessions.

This is not the fault of present management. Blame Ron Allen, but the current team has been very proactive in the face of enormous external obstacles.

If you want to "blame" any single factor, look at fuel prices. A distant second is labor, but Delta has and is continuing to cut those costs. But with fuel at a speculation-free $30-$35/barrel, Delta would be profitable.

[Pukin Dog]

only the pilots of Delta are unionized and they have and will continue to make concessions.

Uh.......nope.

[Eric in the Ozarks]

Truck lines and the railroads are demanding 13-20 percent fuel surcharges and getting them. Guess I don't understand why airlines don't raise their fares.

[mn-bush-man]

It's called over-capacity. There needs to be a purging of extra seats. Reorganization is just going to prolong the problem, IMO.

[NYorkerInHouston]

And so it begins...

Between pension funds, unions, higher fuel prices capped off by Katrina. Delta and Northwest may be the first post-Katrina casualties but they will likely not be the last.

[Turbopilot]

only the pilots of Delta are unionized and they have and will continue to make concessions.

Uh.......nope.

They won't like it, but IIRC they are still paid slightly above the industry average. I think it's a shame, but they won't really have a choice. It'll come down to a choice of either a moderate negotiated concession or a severe court-ordered one, and other pilots' unions in that situation have taken the lesser hit.

[Jeff Gordon]

Northwest just filed for Chapter 11, also.

Score another killed for the socialist unions.

[StolarStorm]

Sure has been a great few years in the ol' airline industry. It's funny, because I can't think of any other industry whose companies declare bankrupty with BILLIONS in the bank.

[magellan]

"Guess I don't understand why airlines don't raise their fares."

Bingo!

You sell your product for less than it costs to provide it, and you lose money. Delta has efficient airplanes, they have already obtained labor concessions, and they have plenty of passengers (just flew them Sunday, the planes were 100% full).

It is just Delta and the other players are charging a fare that is below their costs. Fuel is more expensive. It costs more to drive our cars. Why should it not cost more to fly?

[StolarStorm]

It's a race to the bottom. If/when Delta concessions come through, they will then be below industry average. And then the rest of the airlines will force additional concessions by pleading poverty and then the cycle starts again. Where it will stop, nobody knows.

Employees have to take stand at some point. Make the execs reduce capacity and raise ticket prices.

[elfman2]

I suspect they are raising prices. But they were probably holding out some in order to force their wobbling competitors into bankruptcy first.

And as I recall, Delta was hemorrhaging when oil was below $30 per barrel. I think that all Airlines were losing money this time last year except SW and another discounter or two, but Delta was in worse shape than others. I forget the numbers, but Southwest had an extraordinarily small ratio of employees per plane compared to the others, something like 40% less.

[PositiveCogins]

I'll bet the ceo's and exects don't make any concessions either.

[ordinaryguy]

I can't think of any other industry whose companies declare bankrupty with BILLIONS in the bank.

And accounts payable of twice as much as they have in the bank. The business has lots of cashflow.

[Turbopilot]

Employees have to take stand at some point. Make the execs reduce capacity and raise ticket prices.

Which employees would volunteer to get laid off to realize the cost savings from reducing capacity?

[Young Scholar]

I'll bet the ceo's and exects don't make any concessions either.

It depends. If they're bringing in new execs who are experts at dealing with this sort of thing, it would be hard to ask them to make "concessions" for the sake of the company, since they could just go somewhere else. The reason the airlines can (and have to) ask the unions for concessions is that the unions have artificially inflated wages above market levels.

[PositiveCogins]

Add insurance companies to your list.

[ATOMIC_PUNK]

Eliminate ,liquidate ,Cleanse ,Rebuild.