The effects of Delta's bankruptcy also hurt other prominent companies. More than 50 prominent American companies own airplanes that they lease to Delta at interest rates ranging from 9 percent to 12 percent or more. The companies include Altria Group Inc. subsidiary Philip Morris Capital Corp., The Walt Disney Co., Verizon Corp. subsidiary Bell Atlantic Credit Corp., and subsidiaries of AT&T Corp. and Bank of America N.A.
Walt Disney Chief Financial Officer Tom Staggs said today the entertainment giant may have to write down $100 million of Delta aircraft leases that it holds.
I thought this was the "Delta Effect".
If you would like to play loose with terminology, then the WN effect was entering markets post deregulation with costs that were well below what the legacy carriers had which were accumulated during the first 40 years of the US airline industry when WN didn't even exist.
Congress deregulated the airline industry and also provided bankruptcy laws so you take up your frustration with them just as much as some of us would argue with the way deregulation allowed airlines that were more focused on highlighting female skin as part of their service package as the legacy carriers were focused on showing the breadth of their networks.
BTW, debt in BK is not "wiped away" but rather exchanged for equity. A company that swapped debt for DAL stock in BK would have received very good compensation given that DAL is now one of the highest valued airlines in the world and has been one of the best investments among ALL stocks.
the lower interest rates reflect what was in effect at the time of DL's restructuring. other companies, including WN, have restructured and refinanced their debt outside of BK as part of the normal course of business. If you think that refinancing debt is an advantage that airlines gained in BK but which other companies could not, go study basic finance.
The real fear which you and WN have is that WN no longer has the cost advantage over the legacy carriers it once had, WN is now forced to compete in the largest domestic markets where the legacy cariers have and will continue to maintain an advantage, and that the legacy carriers have the advantage of much larger networks and service offerings which they can use to win over business. Further, WN cannot continue to pay its employees huge premiums to the rest of the industry when WN is losing much of its cost and revenue generating advantages and also must directly compete and not run or hide from competition which is exactly what their zeal to expand under the AA divestiture process was and which was funded by service reductions in key markets such as ATL and SLC where WN continues to reduce capacity.
The sole reason why fares will go down in the N. Texas metroplex is because AA has enjoyed government sanctioned market protection and which is now falling which means that AA's above average fares will have to face intense competition.
good for WN for building on one last bastion of high fare legacy carrier pricing and exploiting one last protected market in which they can grow.
When WN has built out DAL and gotten as much as they can out of it, they will be right back to having to compete against healthy legacy carriers like DL which have figured out how to very successful compete with whatever carriers show up in its markets - and that is precisely why WN's size where DL and WN compete in DL's key markets continues to shrink.
