Delta Air files for Chapter 11 protection

[brooklynite]

Delta Air Lines Inc. which has struggled to avoid bankruptcy for several months, on Wednesday filed for Chapter 11 protection, brought down by high oil prices and steep competition from low-cost carriers.

The No. 3 U.S. airline, which earlier this year said it did not have enough cash to meet its liquidity needs in 2005, filed for Chapter 11 protection in the U.S. bankruptcy court in the Southern District of New York.

http://today.reuters.com/news/NewsArticle.aspx?type=businessNews&storyID=2005-09-14T204728Z_01_MOR452096_RTRIDST_0_BUSINESS-AIRLINES-BANKRUPTCIES-DC.XML
- - -
I suspect there's going to be a lot of sorting out of the airline industry in the next six months or so.

[whistle]

1. Lovely, 125,000 employee pensions dumped on the American

....tax payer again!

[iamtechus]

5. Dumped on the American taxpayer again?

Or did you mean that the pensions of american taxpayers were dumped again?

[whistle]

9. However it works, federally backed company pension insurance

....like those of the last airline that went bust is guaranteed by the federal government, even if reduced to say 50 cents on the dollar. So we tax payers pick up the tab for that, correct? Otherwise, I guess Delta employees won't get a boarding pass.

[crispini]

23. Delta tried to keep funding their employee pension--

they were a key sponsor of the Pension Benefits Protection act of 2005. I don't think it passed, though.

[mike_c]

32. I'd rather see my taxes bail out worker pension funds...

...than pay for an illegal war against Iraq! I have NO PROBLEMS whatsoever with helping to pick up that tab. I just wish the airline execs who ran their companies into the ground could be made to share the pain a little.

[sarcasmo]

2. Average citizens can no longer file for Bankruptcy.

Corporate Amerika still can. Welcome to Fascist Corporate Amerika.

[brooklynite]

7. Actually, I think part of the impetus...

is to get those bankruptcty filings on the record before the new law kicks in in October.

[sarcasmo]

21. The new law only implies to the average citizen not Corporations.

[Psephos]

22. You're wrong

There are provisions of the law that apply to corporate bankruptcies as well. The one that put the scare in Northwest and Delta, due to take effect Oct. 17, is that drafting of reorganization plans may no longer be extended past 18 months (United is in month 33, currently). This provision has some serious implications for the debtor-in-possession financing packages that allow bankrupt airlines to continue operations while restructuring. In short, this makes continuing operations considerably more difficult, and liquidation more likely.

There are plenty of articles about this on the web. Here's one:

http://www.msnbc.msn.com/id/9159527/

Peace.

[sarcasmo]

24. I may be wrong but who do you think it will be easier for to file.

after October 17th. Myself or a Corporate Amerika.

[Psephos]

27. Yourself

Much less paperwork.

Peace.

[LeahD]

26. Not true. n/t

[no name no slogan]

3. Northwest is next

they missed a big debt payment last month, and they're in the middle of a big labor dispute with their mechanics.

It could even happen this week. Stay tuned...

[whistle]

10. All of the large airlines are going this route.....

[no name no slogan]

18. Just happened

So long, mechanics union. Hello, outsourced repairs. Just hope more crap doesn't fall off the planes...

[amandabeech]

35. I wonder how high aviation fuel will have to go before the Costa Rica

mechanics will no longer be cost effective. That's a long run for service, especially if there are actual fuel shortages this winter.

[recidivist]

33. Blame Jimmy Carter.

Or, like me, praise Jimmy Carter for airline deregulation. But whether you think airline dereg merits blame or praise, it made the old-line carriers' business models obsolete. The only reason some of them have managed to struggle on so long is that they control most of the slots at the airports. This creates a barrier to entry that has slowed the ascendancy of the discount carriers, but one by one, the dinosaurs are dying anyhow. The process is just slower than it needed to be.

FWIW, I think dereg was a good thing. Flying is cheaper -- often in nominal terms, let alone adjusted for inflation -- than it was 30 years ago. The old system was a classic rape-the-consumer cartel in which management and labor both looted the public blind. Good riddance.

[no name no slogan]

38. Not unless you're in a hub

Like I am, in MSP. NWA has a virtual monopoly on the airport, controlling 70%+ of the gates. It is damn near impossible for a smaller airline to compete in this market because the big carriers have effectively blocked off their access.

And not all fares are cheaper, either. The more popular, busier routes are cheaper, but if you're trying to fly from, say, Minneapolis to Billings, MT, prepare to get raped. It's often cheaper to fly to London, UK, first and connect to Billings than it is to fly direct.

Deregulation has led to lower prices for some, true, but it has also led to greater consolidation and less competition in the industry, overall.

[amandabeech]

34. Yes, they missed a payment to their prime regional carrier, Meseba.

I fly Mesaba whenever I visit my family in a somewhat remote area of West Michigan. They run every Saab turboprop with a Northwest tail.

A Northwest bankruptcy will really affect Detroit, Minneapolis and Memphis, their main hubs. I expect Minneapolis and Memphis will attract more business, but I worry about Detroit. It's not the hot destination, except for some Japanese auto makers, and it built a very nice, new airport just a couple of years ago, principally for Northwest. This is not what Detroit needs.

Of course, I'm a Michigander, and no matter where I live, the Great Lakes State is my home.

[napi21]

4. Don't say that! My son has worked for them for 15 years!

Delta is not the only airline in deep trouble because of fuel prices. They got lots of concession srom their employee, including the pilots, and things were actually looking a bit better. Then the price of fuel skyrocketed, and if you think about what it's done to you just filling up your 1 or 2 cars, think about how that converts to a fleet of commercial jets!

I knnow several other airlines have filed for bankruptcy. Some survived, and some haven't. Please say a prayer (if you pray) for all the employees there. Most are very hard workers and good people. not to mention what the death of an employer this size will do to our already depressed economy!

[MADem]

14. Delta flight attendants have been slammed three times with pay cuts

...the pilots only once. And MANAGEMENT? Management just keeps a - growing, there are tons of overseers and damn few servants. Also, Delta had no money to hedge fuel prices, so they are screwed even more as prices go up.

I have friends who work for them, they are all sad and distressed. "Management" (or mismanagement) is herding them all to meetings this week to tell them the situation, it will probably be something along the lines of "Keep smiling, and bring your own Vaseline."

[Alpharetta]

6. Boeing will tumble next

Once the US airlines stop buying, then Airbus gets the new orders for international routes.

[Rainscents]

13. Yep, Boeing will be next. I use to work for Boeing and I still have

many friends who still work there, they all feel the same way. They're out on strike right now.

[NoAmericanTaliban]

17. So Boeing's Defense Dept. cronies will not help them?

[Alpharetta]

40. Yeah, they probably will.

But it's like McDonnellDouglassMartinEtcetera, I expect Boeing to get consolidated into GeneralDynamicsWhatever

[Mister Mark]

8. it's about time

Most analysts say that at least one American airline needs to go. Maybe Delta will be the one. If not Delta, perhaps Northwest.

[NickB79]

11. Canaries in the coal mine as oil becomes scarce

Airliners were predicted to be the first to go down when Peak Oil began to hit, and here they go. Delta, next maybe Northwest, it's all beginning to hit the fan now.

[Psephos]

25. The problem is high costs per mile compared to low-fare carriers

The fuel price spikes have hurt everyone equally; it's the high fixed costs that have doomed the traditional airlines. Notice that Southwest is posting good profits, as usual.

The industry no longer supports high-fixed-cost carriers; consumers have voted for low-fare carriers with their wallets. How about you?

Peace.

[SW FL Dem]

12. Sh*t - wonder what happens to my Frequent Flyer miles :(

It's taken me years to accumulate them - I have over 100K and was hoping to use them for a long awaited trip to Europe.

[MADem]

15. Use 'em or lose 'em, I suspect n/t

[adadem]

19. Won't lose them

I was worried because we have over 100,000, too

According to Delta nothing will change

http://www.delta.com/about_delta/deltas_restructuring/index.html

[CabalPowered]

31. They did change the way they handled "old" miles

I have about 50k in "old" miles that were never to expire. I received email notification on Monday that "old" miles are rolling into the existing schema, which means they can now expire.

[NoAmericanTaliban]

16. This was expected

Once the republican executives guaranteed their pensions it was just a matter of time when Delta went bankrupt. They may have been trying to save the company, but the oil prices & mis-management all but doomed Delta. This will hurt the economy, especially in Atlanta. Another example of privatizing profits and making costs - such as pensions - public. I pray for the hard working employees of Delta.

[NoAmericanTaliban]

20. Northwest Airlines Corp. just filed for Chapter 11 as well

sad,sad, day for America and all those employees now out of work with their pensions in jeopardy.

[doc03]

29. The PBGC is already underfunded, now they dump

more pensions on them. Instead of trying to destroy SS the * Administration should be trying to figure out how to fund the PBGC which is essentially bankrupt (now). I haven't heard any Democrat either that will touch this subject. I wonder if I will ever get anything out of my two pensions that were dumped on the PBGC when I reach 62. A couple years ago when the steel industry was in trouble we tried to get the government to take over our health plans and the response was why should we bail you out when many other taxpayers have no insurance. I worry when the s--- finally hits the fan on the PBGC we will get the same response on that..

[DemoTex]

30. When Clinton left office the PBGC was $7-billion in the black.

Now, after five years of Bu$hco, the PBGC is $24 billion in the red. US Airways terminated my pilot pension on March 31, 2003. I will get less than 25% (from the PBGC) of what I would have retired on with the defined benefits plan. The then-CEO of US Airways, Dave Siegel, made over $10 million in bonuses and golden parachute the year he terminated my pension. That, IMHO, should be as criminal as it is immoral.

[cpamomfromtexas]

46. Yes it is immoral, since $1 per ticket would fix pensions

[DemoTex]

47. I like that idea ..

Can you back it up?

[cpamomfromtexas]

48. It's been done

A few weeks ago I read about testimony before congress and discussion of something similar to the Railroad Retirement system being suggested for airlines. It was mentioned in that testimony.

I'm fed up with pilots getting their pay and retirements cut. A few weeks ago my brother had a bomb threat on his plane, they didn't find anything so since my hubby was at the same hub, at the same time, he called my husband and said, hey be sure the threat wasn't really on your airplane.

At some point the damn job just isn't worth it.

[amandabeech]

37. Argh! When did this happen? n/t

I'm off to Midwest Airlines. Hello Milwaukee, hello BE-1900D's.

[VegasWolf]

28. Delta Air lines (DAL) trading at 71 cents a share at close. Before Bush

DAL was trading at 40 dollars a share just when Bush took over! Interesting!

[NCPatriot]

36. Cause and Effect - The race to the bottom!

Hi All - Strictly opinion here...

The two airlines that filed today cannot blame the fuel crunch for their positions.. this is merely an effect of the race to the bottom of our entire Country, with the B* leaders holding the reigns.

I work in a the Charter Airline industry - mainly for freight needs, but we handle pax charters as well. What do the independant operators do? They increase the prices to offset the expense!

The Airline's are mainly a luxury purchase for the majority of customers. Vacations, Weddings, Funerals, etc. Since a larger number of upper-middle class americans are being pulled into the race to the bottom for reasons they have no control over... (Outsourcing to foreign countries, etc) the expendable income, savings, or lack thereof, are going to be felt by the "Non-essential" services such as airlines.

For example - my mother is celebrating a birthday in 2 weeks. I planned to go see her with my three sons. 2 years ago, I had a very reliable position with one of the top 5 PC makers in the US and would not have hesitated to fly up, rent a car and see her. (They got a tax incentive, I got a pink slip) Now, it is much more cost effective for me to make the 11 hour trip in a car. ($300 +/- in gas for the round trip)

Until our representatives (Pubs and Dems alike) recognize that many of their national & foreign policies are rewarding the corporate giants at the expense of the taxpayers, more and more of these types of big ticket, non-essential purchases are going to be put on hold!

If I was a betting fool... I would guess that the next industries to begin feeling the pinch are going to be:

Cable TV Companies
Cell Phone Companies
Durable goods
Electronics

you get the picture....

Industries bring products and services to market for the public to consume. The problem we are quickly facing is that fewer and fewer consumers have the money to buy the products!

Again... Just the opinion of a Middle class 40 year old Veteran, with 3 kids, a dog, a house, and two cars...

[VegasWolf]

39. Sorry about your pink slip. I agree totally with your choices and if I

held stocks longer than ten minutes I would short those sectors. Sectors that I would bet on OTOH are oil and liquor!!!

[madmax]

41. Am I going to lose my little bitty tiny pension from Delta?

I worked for them for 14 years. Left before retirement and decided to take my few cents early, at age 52. Now what? Are they going to stop my checks? :cry:

[crispini]

42. Half.

It goes to the PBGC and you get half. My dad flew for Delta. Thankfully their house is paid for.

[madmax]

43. Thank you

FUCK!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

[crispini]

44. Yep.

Sucks.

[TankLV]

45. Sorry for it's employees, but couldn't happen to a more deserving

& crappy corporation.

As an airline, they stink.

[ladylibertee]

49. Oh Well

[Jennos20]

50. Hmm thats interesting..

I was under the impression that only foreign company's in Mexico and Canada could use chapter 11, according to the NAFTA treaty. Isn't Delta an American company? How can they use it?

[rfkrfk]

51. the employees should buy the company

Delta, symbol 'dal', has a market cap of $120 million.

The employees as a group, could easily come up with
enough money to buy a controlling interest,
and then run the company properly.

Sorry, I have no sympathy for the employees if
they fail to take matters into their own hands.