Delta May File For Bankruptcy On Thursday

FWAAA said:
Because your thread is off-topic for the AA forum, that's why.   And adding the ridiculous "Will AA seek concessions?" to a news story about DL doesn't convert your wind-up post into anything on-topic, that's why.

AA isn't in any toilet.   $3 billion plus in cash and current on its pension contributions.   In case you haven't noticed, AA is cash flow positive, unlike DL.   AA is nowhere near asking for more concessions nor filing for Ch 11.
[post="299433"][/post]​


With all the smoke and mirrors propaganda eminating from tulsa, both the smell and content appear more like a toilet everyday.

Given the upcoming increased cost of medical insurance, some will say #### when they see their paychecks after January 1st.

Why don't the airline's raise the ticket price to offset medical cost like they do fuel? Instead, they send the employee earnings to the toilet.

Maybe you're correct AA isn't in the toilet, just the airline employees are.
 
  • Thread Starter
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  • #17
September 14, 2005
Two Major Airlines Seen Near Filing for Bankruptcy
By MICHELINE MAYNARD
Two of the nation's biggest and most troubled airlines, Northwest and Delta, appeared likely to file for bankruptcy protection as soon as today, people briefed on the airlines' plans said yesterday.

Both airlines have been hit hard by the spike in jet fuel prices this month and by the relentless competition in the industry.

Filings by Northwest and Delta would mean that four of the seven major airlines would be operating under court protection, with the others being United and US Airways. Also, when several smaller bankrupt carriers are included, half the seats available on flights in the United States would be operated by bankrupt airlines, according to an estimate by Standard & Poor's Ratings Services.

Court protection would have little immediate impact on either airline's routes and flights, and frequent-flier programs would remain in place. But consumers may eventually see reduced service to some cities, as the airlines shift their focus to destinations where they can make money.

And if the experience at the other major airlines in bankruptcy is a guide, workers at Northwest and Delta can expect significant job cuts, reductions in wages and benefits and termination of their traditional pension plans as the companies streamline their operations.

Both companies were completing bankruptcy plans yesterday. Officials at each airline said a final decision had not been made to seek Chapter 11 protection.

A filing by Northwest would need the approval of its board, which is set to meet today, its pilots' union said in a statement yesterday. The union has a representative on Northwest's board. Delta's board met last Friday.

Any filing by either airline would be made in United States Bankruptcy Court in New York. Delta's filing has been anticipated for weeks, but any Northwest move was not expected for several more weeks as it continued to try to win the $1.4 billion in concessions from its labor unions that it said it needed to avoid a court filing.

But the jump in fuel prices in the wake of Hurricane Katrina moved the company's timetable forward, people with direct knowledge of Northwest's position said last night. Still, a lively debate was expected at the board meeting over whether to file now or wait, these people said.

Bankruptcy filings give companies a chance to overhaul their operations and negotiate lower payments to creditors as well as streamline in ways they could not accomplish outside of court protection.

But for these airlines, bankruptcy would not eliminate the challenge posed by low-fare carriers, like Southwest and JetBlue, which now carry one-third of passengers on flights within the United States.

They can charge less for tickets because they operate at much lower costs than their major competitors, employing fewer workers for each airplane and having much quicker turnaround times at airports. That, in turn, allows them to make more flights a day than big airlines.

The low-fare airlines' growing presence, up from just 6 percent of passengers in 1990, has kept the big airlines from passing along the punishing rise in the price of jet fuel.

The airlines use 19 billion gallons of fuel a year, and,

even before Hurricane Katrina, they were paying 50 percent more for it than in 2004. Prices jumped 25 percent in the days after the storm, although they have since moderated slightly.

Northwest and Delta, like most of their competitors, have no financial protection to shield them from the higher fuel prices, meaning they must immediately pay more in cash when prices go up.

The struggles of inefficient airlines and the rise of low-fare carriers are exactly what was envisioned when President Jimmy Carter ordered the deregulation of the industry in 1978, freeing the airlines from government controls on routes and fares, said Alfred E. Kahn, chairman of the Civil Aeronautics Board at the time.

"This is the continued working out of the restructuring that deregulation promised and made inescapable," Mr. Kahn said yesterday. He added, "I don't know where it is going to end."

At Northwest and Delta, at least, a way of life is coming to an end for employees.

United, which set off the biggest default in the history of the federal pension agency this year when it scrapped its traditional retirement plans, has obtained two deep rounds of cuts from its workers under bankruptcy protection, and it eliminated 25,000 jobs.

US Airways, which had 46,500 workers before the September 2001 terrorist attacks led to deep declines in travel, now has just 22,000. Its workers took three rounds of cuts in its two bankruptcies.

"For American workers, it's an unrelentingly grim scenario," David Gregory, a professor of labor law at St. John's University, said yesterday.

But even though both companies warned repeatedly that they might have to seek bankruptcy protection, workers at each have resisted cutbacks, especially those at Northwest, which has lost $3.6 billion since 2001.

It has been trying for three years to win concessions from its pilots, flight attendants, baggage handlers and other employees, raising its demand for cuts from $900 million to $1.4 billion in that time.

But only Northwest's pilots have agreed to cuts, and the airline is in the third week of a strike by 4,430 members of its mechanics' union, who walked out Aug. 20 over the airline's request for $176 million in concessions.

Northwest has kept operating with 1,900 supervisors, contractors and replacement workers. Yesterday, it began offering permanent jobs to some replacement workers. If the strike is settled, Northwest will not have to rehire workers it permanently replaced.

Northwest shares lost half their value yesterday, after The New York Times reported on its Web site that the company was considering filing for bankruptcy protection today. Northwest shares fell $1.74, or 52 percent, to $1.57.

Delta shares, meanwhile, fell 7 cents, to 78 cents. Delta asked its pilots yesterday for another round of deep cuts, on top of the $1 billion in concessions obtained a year ago, when Delta was on the verge of seeking bankruptcy protection.

Delta and its regional airlines operate about 3,000 daily flights. The airline, based in Atlanta, has about 52,000 employees. Northwest and its regional carriers operate 1,500 daily flights. Northwest, based in Eagan, Minn., has about 40,000 employees.

Leaders of the Air Line Pilots Association, Delta's only unionized group, said they would start a three-day meeting next Monday to decide whether to negotiate with the company.

But by then, Delta may be in bankruptcy, a fate that its chief executive, Gerald Grinstein, has tried desperately to avoid. Mr. Grinstein, 72, took charge of the airline 20 months ago, and has since tried to cut $5 billion in costs under a restructuring plan that included the elimination of 7,000 jobs.

Last week, Delta, which has lost nearly $10 billion since 2001, sold Atlantic Southeast Airlines, one of its commuter airlines, to SkyWest for $450 million. And Delta has been arranging the financing it will need to operate in bankruptcy, believed to be about $1.7 billion, with lenders like GE Corporate Financing.

This week, however, came signs that the airline was running out of time. As it was seeking more cuts from the pilots, Delta did not make an interest payment on its corporate debt, taking advantage of a grace period that gives it more time.

A Delta spokeswoman, Chris E. Kelly, said the airline believed that the move was "a prudent step to take" while it decided whether to seek bankruptcy protection. Delta faces another debt payment on Monday.

Meanwhile, Northwest disclosed in a regulatory filing yesterday that it must make a $65 million pension payment tomorrow, which it cannot skip unless it has filed for bankruptcy protection. Yesterday, the Treasury Department rejected a request by Northwest to delay the payment, saying it was limiting relief to corporations in the gulf region.

Northwest also disclosed that it had delayed $42 million in debt payments. These, and the pension payment, would diminish Northwest's cash, which dwindled to $1.7 billion this month from $2.1 billion at the end of June.

But even that smaller amount could be enough to finance the airline's operations in the first months of bankruptcy protection, serving as the equivalent of debtor-in-possession financing, said Philip A. Baggaley, an airline analyst at S.& P. That would explain why the airline has apparently not sought outside financing as Delta has done.

One advantage for Northwest is that many of its senior executives have experience with airline bankruptcies, particularly its chief executive, Douglas M. Steenland, 53, a lawyer who took part in cases involving Continental Airlines and Eastern Air Lines.

And because Mr. Steenland is said to believe that his airline's bankruptcy case may take more than 18 months, that is probably one reason Northwest as well as Delta may file today.

Federal bankruptcy laws change on Oct. 17; after that management will have only 18 months to draft a restructuring plan.

Companies that file before Oct. 17 can have more time if they can persuade a judge to grant it. United, for example, has been operating under bankruptcy protection for nearly three years, and does not expect to emerge until February.

Ron Adams, a member of the mechanics' union at Northwest, said he was not surprised to hear the airline was contemplating a bankruptcy filing. But he said that did not make him any more willing to accept the cuts.

"I want to keep my job, but if they want to replace me, more power to them," Mr. Adams said yesterday while walking the picket line at Detroit Metropolitan Airport, one of the airline's hubs.

Jeremy Peters contributed reporting from Detroit for this article.
 
B.O.B. said:
This about Delta and Northwest.  Move it to their board.
[post="300468"][/post]​

To paraphrase Donne, "No airline is an island."

To quote Donne, "never send to know for whom the bell tolls; it tolls for thee".

We are all affected by the turbulence of the industry. Remember Crandall and his constant quoting of "market rate"?

.
 
When Delta and NWA file it will be all the more reason for AA to want more concessions in order to compete with all the carriers who no longer have labor agreements. It is just a matter of time before we get the BOHICA without further ratification. :blink:
And the GODS of the Air Transport Division will tell you that you are lucky to have a job. :huh:

Bury them all in Bankruptcy and change the color on the tail. :up:
 
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  • #22
B.O.B. said:
This about Delta and Northwest. Move it to their board.
[post="300468"][/post]​

The bottom line here is that AA should not stay out of BK court while all the other majors enjoy this protection. The others will continue to languish there while driving prices down.

AA must then match these prices by seeking concessions.

Or

AA should be prepared to consume both DL and NW in BK, by introducing a DIP.

Take the best, and scuttle the rest.

Sad, but this is the road that we're all on. :(
 

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