Thursday, September 15, 2005

Delta and Northwest in Bankruptcy...

Delta and Northwest Airlines have both filed for Chapter 11 (creditor protection...13 is liquidation) bankruptcy:

ATLANTA (AP) - Delta Air Lines Inc. (DAL), and Northwest Airlines Corp. (NWAC), hobbled by high fuel costs and heavy debt and pension obligations, filed for bankruptcy protection from creditors Wednesday, becoming the third and fourth major carriers to enter Chapter 11 since the 2001 terrorist attacks.

Delta's late afternoon filing included its low-fare carrier Song and was followed shortly after by Northwest's.

Delta's total debt is roughly $28.3 billion, and it listed $21.6 billion in assets, according to the filing. The asset figure would make Delta's bankruptcy the ninth-largest in U.S. history, according to bankruptcy tracker New Generation Research Inc. The ranking did not change following Delta's recent $425 million sale of feeder carrier Atlantic Southeast Airlines to SkyWest Inc. (SKYW)

Delta and Northwest said passengers were not expected to see any immediate effects from the filing.

I'm curious how this will effect my father (a pilot for American Airlines). He's currently furloughed and awaiting being called back. Other rumors are still flying around, but he expects to get called back sometime in the spring.

One interesting note is that new rules on Chapter 11 bankruptcy go into effect in October. These rules give the owner 180 days to complete a restructuring plan. If the plan has not been filed, then outside groups can make recovery offers. Currently, the owner has complete control indefinately (as United has shown with it's two full years of time in bankruptcy).

We'll see how this all plays out, but I'm wondering if my dad will be back in the air sooner than expected.


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