Delta Air Lines Inc and Northwest Airlines Corp -- hobbled by soaring fuel costs and heavy debt and pension obligations -- have filed for bankruptcy protection, becoming the third and fourth major US carriers to do so since the 2001 terrorist attacks.
Wednesday's dual filings in US Bankruptcy Court in New York brought into focus the magnitude of the plight of the big US airlines, which have lost more than US$30 billion in four years even as they slashed thousands of jobs and raised questions about the viability of their employee pension plans.
A spike in fuel prices after Hurricane Katrina was the final blow for both carriers. By joining the parents of United Airlines and US Airways in bankruptcy, the four major carriers represent more than 40 percent of all available seat miles in the US, according to analysts.
Delta said it plans to reduce its fleet size and chief executive Gerald Grinstein said it was likely more job cuts will be needed on top of the 24,000 job cuts the Atlanta-based carrier has announced since 2001. "There is no painless way out of this and there will be reduction of personnel," said Grinstein, who took over Delta in January last year. He also vowed to stay with the airline through its bankruptcy process.
Northwest CEO Doug Steenland said his Eagan, Minnesota-based airline also would shrink in bankruptcy, with fewer flights and layoffs expected before the end of the year. Company officials said the 26-day strike by unionized mechanics was not a factor in the decision to seek bankruptcy court protection.
Delta listed its total debt at US$28.3 billion and assets at US$21.6 billion. The asset figure makes Delta's bankruptcy the ninth-largest in US history, according to bankruptcy tracker New Generation Research Inc. Northwest listed assets of US$14.35 billion.
Delta and Northwest said passengers were not expected to see any immediate effects from the filing. Delta also promised to honor all tickets and sent a letter to frequent-flier customers seeking to reassure them. Northwest said it would continue to operate normally its frequent flyer and WorldPerks Visa programs.
Delta and Northwest follow into bankruptcy UAL Corp., the Elk Grove Village, Illinois-based parent of United Airlines, and Arlington, Virginia-based US Airways Group, Inc, which is undergoing reorganization for the second time in three years. Fort Worth, Texas-based AMR Corp, the parent of American Airlines, the nation's biggest carrier, teetered on the verge of bankruptcy before winning deep concessions from its employees.
Continental and American are in no immediate danger of bankruptcy.
American may be the strongest financially of the traditional airlines, thanks to US$1.8 billion in annual labor concessions it won in 2003.
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