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News :: Economy |
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High Fuel Costs Send Airline Industry Spiraling Into Bankruptcy |
Current rating: 0 |
by Washington Post via Joe Futrelle
Email: futrelle (nospam) shout.net (verified) |
05 Aug 2005
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Chap. 11 likely for Northwest, Delta airlines
Keith L. Alexander
Washington Post
Aug. 2, 2005 12:00 AM
WASHINGTON - Northwest and Delta Air Lines are likely to file for Chapter 11 bankruptcy protection in mid-September, a month before a new, more restrictive bankruptcy law goes into effect, bankruptcy experts and airline insiders say. |
The airlines are expected to delay any action until around the Labor Day weekend to avoid distressing employees during the busy summer.
Northwest and Delta continue to post significant losses while trying to cut costs and adjust to record-high fuel costs.
Last week, Northwest reported a second-quarter loss of $225 million, compared with a loss of $182 million for the same quarter in 2004. The airline is trying to get its employees to agree to $1.1 billion in pay and benefit cuts. So far, it has secured cuts of about $265 million from its pilots and $35 million from its management and salaried workers. The carrier is losing about $4 million a day.
In a conference call with reporters last week, Douglas Steenland, Northwest's president and chief executive, refused to speculate if or when the airline would have to file for bankruptcy. But he said a new bankruptcy law taking effect on Oct. 17 would be "one of the factors" in the decision-making process.
Delta's chief executive, Gerald Grinstein, last week told workers in a memo that the airline's efforts to cut about $5 billion were not enough to avoid a possible bankruptcy filing.
Congress passed the new bankruptcy law in April in part to force companies to reorganize quicker.
The new regulations were drawn up against the backdrop of two current airline bankruptcies: United Airlines' parent company and US Airways. |
See also:
http://www.azcentral.com/arizonarepublic/business/articles/0802airlines02.html
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