Delta Air, Northwest Bankruptcies Deepen Airline Industry Woes
The bankruptcies of Northwest Airlines Corporation and Delta Airlines Inc. have deepened the worst crisis facing the U.S. airline industry since the failures of the early 1990s.
Delta, the third-biggest U.S. carrier, and number-four Northwest sought protection from creditors in U.S. bankruptcy court in New York this week amid soaring fuel costs, high labor expenses and competition from low-fare rivals such as Southwest Airlines Co.
The Chapter 11 filings mean four of the seven biggest U.S. airlines are operating in bankruptcy for the first time since 1991, when Eastern Air Lines Inc., Braniff Inc., Continental Airlines Inc. and Pan Am Corp. were under court protection. The carriers will use the courts to trim costs and wrest concessions from unions.
“The industry is in the process of a radical overhaul,´´ said George Hamlin of Merge Global, a transportation consulting firm in Arlington, Virginia. “It is the bleakest time.”
Delta and Northwest follow United Airlines parent UAL Corp., which has been operating under court protection since 2002, and US Airways Group Inc. into Chapter 11. Atlanta-based Delta listed debt of $28.3 billion and Northwest, based in St. Paul, Minnesota, had $17.9 billion.
With $21.6 billion in assets, Delta´s bankruptcy is the biggest of the year and the second-biggest in the U.S. airline industry, behind United. Northwest, which saw its mechanics go on strike last month, ranks third, with $14.4 billion of assets.
