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.
People can preregister to receive their NT$10,000 (US$325) cash distributed from the central government on Nov. 5 after President William Lai (賴清德) yesterday signed the Special Budget for Strengthening Economic, Social and National Security Resilience, the Executive Yuan told a news conference last night. The special budget, passed by the Legislative Yuan on Friday last week with a cash handout budget of NT$236 billion, was officially submitted to the Executive Yuan and the Presidential Office yesterday afternoon. People can register through the official Web site at https://10000.gov.tw to have the funds deposited into their bank accounts, withdraw the funds at automated teller
PEACE AND STABILITY: Maintaining the cross-strait ‘status quo’ has long been the government’s position, the Ministry of Foreign Affairs said Taiwan is committed to maintaining the cross-strait “status quo” and seeks no escalation of tensions, the Ministry of Foreign Affairs (MOFA) said yesterday, rebutting a Time magazine opinion piece that described President William Lai (賴清德) as a “reckless leader.” The article, titled “The US Must Beware of Taiwan’s Reckless Leader,” was written by Lyle Goldstein, director of the Asia Program at the Washington-based Defense Priorities think tank. Goldstein wrote that Taiwan is “the world’s most dangerous flashpoint” amid ongoing conflicts in the Middle East and Russia’s invasion of Ukraine. He said that the situation in the Taiwan Strait has become less stable
FRESH LOOK: A committee would gather expert and public input on the themes and visual motifs that would appear on the notes, the central bank governor said The central bank has launched a comprehensive redesign of New Taiwan dollar banknotes to enhance anti-counterfeiting measures, improve accessibility and align the bills with global sustainability standards, Governor Yang Chin-long (楊金龍) told a meeting of the legislature’s Finance Committee yesterday. The overhaul would affect all five denominations — NT$100, NT$200, NT$500, NT$1,000 and NT$2,000 notes — but not coins, Yang said. It would be the first major update to the banknotes in 24 years, as the current series, introduced in 2001, has remained in circulation amid rapid advances in printing technology and security standards. “Updating the notes is essential to safeguard the integrity
REASSURANCE: The US said Taiwan’s interests would not be harmed during the talk and that it remains steadfast in its support for the nation, the foreign minister said US President Donald Trump on Friday said he would bring up Taiwan with Chinese President Xi Jinping (習近平) during a meeting on the sidelines of the APEC Summit in South Korea this week. “I will be talking about Taiwan [with Xi],” Trump told reporters before he departed for his trip to Asia, adding that he had “a lot of respect for Taiwan.” “We have a lot to talk about with President Xi, and he has a lot to talk about with us. I think we’ll have a good meeting,” Trump said. Taiwan has long been a contentious issue between the US and China.
RSS