Katrina Assures That Delta Won't Be Alone

[Beer Guzzler]

Katrina has already been called one of the most powerful hurricanes ever. 1/3 of Gulf of Mexico oil production has already been taken down and it is very likely that some of that capacity will be damaged and cannot be quickly returned to service after the storm passes. Oil will certainly be the first flight for takeoff on Monday morning. Oil in the mid-$70s is almost certain and $80 is not at all out of the realm of possibililty.

Those kind of oil prices will ensure that Delta will not be the only airline filing chapter 11 in the near future; in fact, AA and CO might not want to get too comforable on the sidelines.

[post="293717"][/post]​

I read an interesting article about this today: Hurricane, high oil prices deal double blow to airlines. There are some very good points about the impact this will have on DL.

 

[WorldTraveler]

You can bet that the petroleum infrastructure (and shipping from the Port of New Orleans although that is less of an issue to the airlines) will return to service as quickly as possible. Oil companies will make money by returning capacity to service, although prices could continue to go up. We still haven't heard any reports on damage to oil production facilities offshore so that is still a big wildcard.

All of this only confirms that DL will be in bankruptcy soon but so will alot of other airlines. The events of this summer and esp. this last week will have a lasting impact on the economy; it may well be that airlines that go into service now will fare better than those that wait.

 

[Ch. 12]

I'm sure their equity shareholders aren't too eager see a bankruptcy. Doesn't mgmt have a fiduciary responsibility to the owners of the company?

[post="293971"][/post]​

Actually...this is exactly what AQ did as they were competing one-on-one with HA in the most highly traveled US markets (intra-Hawaii) and HA had the cost advantage of BK. I don't believe AQ was in a dire situation but they were at a disadvantage. So would be AMR/CAL, etc if DAL/NWA also enter BK. As an equity holder, I would actually see the VALUE of a ch. 11 in that situation.