Stick A Fork In 'em, They're Done

[WNrforlife]

Delta Sees Substantial Loss Ahead
Annalisa Burgos, 05.10.05, 1:20 PM ET

NEW YORK - In the headlines this afternoon, more troubles for the airlines.

Delta Air Lines (nyse: DAL - news - people ) warned it may be headed for bankruptcy. The struggling carrier expects a substantial loss for the remainder of the year and said it will need to file for Chapter 11 protection if its cash reserves fall too low or if lenders demand payments.

Meanwhile, bankrupt United Airlines (otc: UALAQ - news - people ) takes on its labor unions over employee pensions. The carrier sought court approval of its latest cost-cutting plan to have the government's pension insurer take over its defined-benefit plans. The move would be the largest-ever U.S. pension default, with United workers losing about a quarter of their total pensions.

U.S. stocks were lower at midday, amid lackluster earnings reports. U.S. Treasurys rose, while the greenback slipped against other major currencies.

In company news, shares of Morgan Stanley (nyse: MWD - news - people ) Philip Purcell told an investor conference that the Discover card spinoff would impact revenues and warned of a difficult second quarter.

May Department Stores (nyse: MAY - news - people ), which has agreed to be bought by Federated Department Stores (nyse: FD - news - people ) for $11 billion, missed Wall Street expectations. The company said first-quarter earnings plunged 46% on weak sales of its adult apparel and seasonal clearance markdowns.

In more retail news, shares of Sears Holding (nasdaq: SHLD - news - people ), parent of Sears and Kmart stores, slipped a day after it said it may sell or spin off its Orchard Supply Hardware business.

And there's more cool stuff on the Forbes.com Video Network. Ever wanted to hear your favorite songs in different parts of your house? This week, on The Digital Life, our tech guru Arik Hesseldahl has something you should hook up to.

That's it for now. We'll be back at 5:15 for the afternoon report, so stay logged on to Forbes.com.

 

[WorldTraveler]

don't be so foolish. DL needs the pension reform legislation to pass and they will keep the bad news coming until they get the help - or the gov't will get their pensions.

pretend you have a little political savvy about you - WN certainly does.

 

[Bear96]

So, Whirled Traveller, are you saying this is all a big bluff? For political purposes?

And when (oops-- if) DL ends up in Ch.11 in a few months, can we expect you to be on here 'fessing up about how, in the end, DL management is really no more competent than that other bankrupt behemoth, UAL, after all?

 

[Busdrvr]

Good luck guys, i find a no pension SWA guy rooting for your demise rather distasteful. <_<

 

[TheDog2004]

A good analogy was given to me by a buddy who still works at Delta.

"It's like the car going up a hill and it runs out of gas at the crest,
if it can coast over the crest, it will make it over the hill. "

Delta is that close to making it. They need the price of oil to come down more than anything else. Pension reform/relief would help as well. If they get those two things then they will avoid B/K.

If not, then they file and flush the pensions.

 

[local 12 proud]

USair has already terminated the pensions, UAL is seeking to rid them as we speak and i would be willing to bet they will get exactly what they ask from the Judge. the remaining Legacy carriers will soon be forced to follow in order to compete and yes that includes DAL!

 

[goingboeing]

USair has already terminated the pensions, UAL is seeking to rid them as we speak and i would be willing to bet they will get exactly what they ask from the Judge. the remaining Legacy carriers will soon be forced to follow in order to compete and yes that includes DAL!

[post="268148"][/post]​

The pensions are gone at UAL!

 

[WorldTraveler]

UA is embarking on what could be a repeat of the disastrous summer of 2000 because of their insistence on terminating the pensions of tens of thousands of loyal employees. UA had absolutely no interest in finding a solution such as what DL and NW esp. are pushing for - retain pension promises but stretch out the payments. What happened today to UA employees actually serves DL's purposes quite nicely - it provides plenty of proof as to what will happen if DL doesn't get pension relief. DL's pension underfunding is now the largest in the industry. The PBGC will inherit DL's pension plans unless laws are changed. Without a doubt, the single factor that will determine whether DL will end up in bankruptcy is whether pension reform is enacted. Obviously Washington is concerned because other industries face similar pension threats but, as in many situations, the airline industry is the first to deal with many problems.

DL can and will negotiate every other item on its balance sheet outside of bankruptcy - except for pension reform. No sane lender is going to push Delta into bankruptcy or let it run out of cash knowing full well that in bankruptcy DL has the opportunity to take drastic steps that will hurt all involved - that is just the nature of bankruptcy. More importantly, bankruptcy still has a nearly 100% fatality rate for airlines; there are only a very few sucessful outcomes.

I was the optimist a year ago that predicted a year ago that DL would stay out of bankruptcy and I stand by that prediction today - unless Washington decides they are not interested in helping the airlines preserve their pension obligations.

 

[Fly]

Welcome Back oh Dorky One.

Notice you've been missing lately...working? How convenient that United's bad news brought you out of the rafters.

 

[Bear96]

I was the optimist a year ago that predicted a year ago that DL would stay out of bankruptcy and I stand by that prediction today - unless Washington decides they are not interested in helping the airlines preserve their pension obligations.

[post="268225"][/post]​

Well, OK, but it doesn't anwer the question.

Let's just say, hypothetically, that DL does in fact have to pull the Ch.11 trigger one day.

Wouldn't that mean that in fact DL management is really not any less incompetent than the bumbling gang in Elk Grove Village you are so fond of tearing down?

And if not, why not?

After all, the bottom line for both is ... insolvency. (D'ohhh!) Speaking hypothetically, of course; I too couldn't possibly imagine the crack management team at DL would let that happen. After all, I have been reading your postings over the years so I have learned that things are going great there and they solid plans for the future that are firmly in place, and they will be able to easily handle whatever bumps may be in the road ahead.

In fact, I think I'll go invest my entire retirement savings in DL stock -- seems to be quite a deal as of this afternoon. Would you advise that?

Hmmm?

 

[Fly]

Bear,

I do believe he may be the CEO. Look how stupid he is.

 

[fix_airplanes]

FLY:

Where do you keep finding those animations for your posts?

 

[WorldTraveler]

Dorky…isn’t that precious.

Despite my hectic schedule this spring, it’s not hard to surface when UA bad news strikes – because it just keeps coming. Anytime I find time to drop in, there’s bad news from UA to respond to. I appreciate the consistency.
And, Fly, despite our sparrings, I want you to know how sad I am for you and every other UA employee and retiree. What you have suffered immeasurable. Despite our disagreements, I have to mourn with you.

Bear,
I stand by my assertion. UA and US ended up in bankruptcy because they didn’t plan. We’ll see when this whole industry restructuring is complete but I think DL will be given credit for waiting for others to crash on the rocks before making its restructuring moves. Apparently, NW is taking the same path since their costs are now at the top of the industry – EVEN HIGHER THAN DL’s despite having a much larger international operation (proportionately). They’ve got to deal with their costs if they will survive but they obviously are not wanting to follow UA and US’ scorched earth model.

No, don’t invest in DAL. I don’t think everything is fine at DL but I think a lot of people will be surprised 3-5 years from now when DL is still around and independent and other carriers (like those that start w/ U*) are not.

 

[North by Northwest]

Delta massive loss= "Simpli Dummy" fares. But that's OK...cause they have to compete with the LCC even it it means they go out of business. Sounds like a plan.

 

[TheDog2004]

yeah pricing fares beyond what people will pay would work, too.