Delta Air Lines Inc is set to emerge from 19 months of bankruptcy protection in another sign that one of the bleakest chapters for the US airline industry may be coming to an end.
The third-largest US carrier could exit Chapter 11 bankruptcy as early as today after a judge approved the final details of reorganization, leaving Delta with some US$2.5 billion in financing.
Delta and Northwest Airlines filed for creditor protection on the same day in September 2005, which at the time left four of the top six carriers in bankruptcy.
Since that time, the remaining carriers with the exception of Northwest Airlines Corp have emerged from court supervision and the financial picture of the industry has markedly improved.
"This is an exciting day for everyone at Delta," Delta chief executive Gerald Grinstein said after winning court approval of the exit plan.
"Achieving a turnaround of this magnitude in little more than 19 months would not have been possible without the hard work and dedication of Delta people worldwide and the leadership, the vision and the flawless execution of our plan by our outstanding management team," he said.
Delta lost US$6.2 billion last year amid a hefty US$5.4 billion charge for reorganization.
The carrier posted a much narrower US$130 million loss in the first quarter of this year, but sees its financial picture improving after major cost-cutting efforts.
"Delta has fundamentally transformed into a thriving industry leader," Grinstein said.
"We are stronger -- financially, operationally, and in spirit -- and Delta is ready to return to its traditional leadership position in this highly competitive industry," he said.
The US airline industry has been struggling with its worst-ever crisis since the Sept. 11, 2001 attacks triggered a slump in air travel and carriers were hit with record-high fuel prices.
The Air Transport Association of America (ATA), a trade organization of the leading US airlines, is projecting an overall net profit of approximately US$4 billion for passenger and cargo airlines this year after earnings of between US$2 billion and US$3 billion last year.
A profitable last year and this year would be the first back-to-back period of profitability since 1999 to 2000. US airlines lost a total of US$10 billion in 2005.
"In addition to a healthy revenue environment, US airlines are seeing the results of painstaking, ongoing cost reduction efforts and balance-sheet repair," said ATA chief economist John Heimlich, who nonetheless said caution is warranted.
"Although the industry is optimistic and well positioned to move forward, the reality is that events beyond airlines' control could easily push them off course," he said.
The traditional full service airlines such as Delta have been hurt by competition from low-cost startups like Southwest and JetBlue, which do not have "legacy" pension and health care costs and often have lower wages as well.
To streamline, Delta has trimmed some US$5 billion from operating costs compared to 2002 levels. This has included pay cuts amounting to US$1 billion, including concessions from pilots and a reduction in the workforce from 66,500 in 2005 to 47,000.
Delta rejected a takeover bid last year from US Airways Group Inc -- which itself emerged from bankruptcy in a deal that merged with low-cost carrier America West -- preferring to continue as a stand-alone company.
Standard & Poor's rating service said Delta's prospects are improving but that the airline will still have a low "B" credit rating.
"Delta's relatively rapid and successful reorganization should leave the airline with lower operating costs, improving revenue generation and a reduced debt load," S&P analyst Philip Baggaley said.
"Still, the airline's credit profile and its anticipated `B' corporate credit rating continue to reflect also risks associated with participation in the price-competitive, cyclical and capital-intensive airline industry; on below-average, albeit improving, revenue generation; and on significant intermediate-term debt and capital spending commitments," he said.
ROLLER-COASTER RIDE: More than five earthquakes ranging from magnitude 4.4 to 5.5 on the Richter scale shook eastern Taiwan in rapid succession yesterday afternoon Back-to-back weather fronts are forecast to hit Taiwan this week, resulting in rain across the nation in the coming days, the Central Weather Administration said yesterday, as it also warned residents in mountainous regions to be wary of landslides and rockfalls. As the first front approached, sporadic rainfall began in central and northern parts of Taiwan yesterday, the agency said, adding that rain is forecast to intensify in those regions today, while brief showers would also affect other parts of the nation. A second weather system is forecast to arrive on Thursday, bringing additional rain to the whole nation until Sunday, it
LANDSLIDES POSSIBLE: The agency advised the public to avoid visiting mountainous regions due to more expected aftershocks and rainfall from a series of weather fronts A series of earthquakes over the past few days were likely aftershocks of the April 3 earthquake in Hualien County, with further aftershocks to be expected for up to a year, the Central Weather Administration (CWA) said yesterday. Based on the nation’s experience after the quake on Sept. 21, 1999, more aftershocks are possible over the next six months to a year, the agency said. A total of 103 earthquakes of magnitude 4 on the local magnitude scale or higher hit Hualien County from 5:08pm on Monday to 10:27am yesterday, with 27 of them exceeding magnitude 5. They included two, of magnitude
CONDITIONAL: The PRC imposes secret requirements that the funding it provides cannot be spent in states with diplomatic relations with Taiwan, Emma Reilly said China has been bribing UN officials to obtain “special benefits” and to block funding from countries that have diplomatic ties with Taiwan, a former UN employee told the British House of Commons on Tuesday. At a House of Commons Foreign Affairs Committee hearing into “international relations within the multilateral system,” former Office of the UN High Commissioner for Human Rights (OHCHR) employee Emma Reilly said in a written statement that “Beijing paid bribes to the two successive Presidents of the [UN] General Assembly” during the two-year negotiation of the Sustainable Development Goals. Another way China exercises influence within the UN Secretariat is
Taiwan’s first drag queen to compete on the internationally acclaimed RuPaul’s Drag Race, Nymphia Wind (妮妃雅), was on Friday crowned the “Next Drag Superstar.” Dressed in a sparkling banana dress, Nymphia Wind swept onto the stage for the final, and stole the show. “Taiwan this is for you,” she said right after show host RuPaul announced her as the winner. “To those who feel like they don’t belong, just remember to live fearlessly and to live their truth,” she said on stage. One of the frontrunners for the past 15 episodes, the 28-year-old breezed through to the final after weeks of showcasing her unique