Bankruptcy memo spurs Delta stock plunge
Delta Air Line stock continued to plummet after another warning from the CEO saying its cost-cutting would not be enough to save it from bankruptcy.
CEO Gerald Grinstein’s comments echoed earlier he made statements last week.
In the most recent memo, Mr Grinstein said the airline had made progress in its attempt to cut $5 billion in costs. “What is also clear is that it is not enough,” he added.
The airline’s shares fell more than 25% immediately.
Mr Grinstein said the nation’s third-largest airline is still working hard to avoid a Chapter 11 filing but he said it remained a risky proposal.
Mr Grinsten cited the impact of high fuel prices and the interest on the company’s huge debt as problem areas.
“We have been candid about the risk that a number of factors, some of which are beyond our control, will affect our ability to avoid a Chapter 11 filing,” he told employees.
He said in a memo that high fuel prices and intense air-fare competition, especially along the East Coast, are overwhelming cost cutting efforts that were expected to save $2.7 billion a year.
Some airline analysts said Delta seems to be preparing for the worst, even while it attempts to keep that from happening.
The Atlanta-based Delta last week reported a $388 million second-quarter loss. It has lost nearly $10 billion since early 2001.
In the past, Mr. Grinstein, who came out of retirement to lead the company, has repeatedly maintained Delta can be restructured to stay in business.
Delta this week is expected to announce new cost-saving changes and other steps.
In an attempt to gain some competitive advantage, the airline this week announced it would offer customers who buy tickets on the Delta Web site the chance to cancel some flights without penalty under certain circumstances.
Report by David Wilkening
David
Vegas’s Billion-Dollar Secrets – What They Don’t Want Tourists to Know
Visit Florida’s New CEO Bryan Griffin Shares His Vision for State Tourism with Graham
Chicago’s Tourism Renaissance: Graham Interviews Kristin Reynolds of Choose Chicago
Graham Talks with Cassandra McCauley of MMGY NextFactor About the Latest Industry Research
Destination International’s Andreas Weissenborn: Research, Advocacy, and Destination Impact
Graham and Don Welsh Discuss the Success of Destinations International’s Annual Conference
Graham and CEO Andre Kiwitz on Ventura Travel’s UK Move and Recruitment for the Role
Brett Laiken and Graham Discuss Florida’s Tourism Momentum and Global Appeal
Graham and Elliot Ferguson on Positioning DC as a Cultural and Inclusive Global Destination
Graham Talks to Fraser Last About His England-to-Ireland Trek for Mental Health Awareness
Kathy Nelson Tells Graham About the Honour of Hosting the World Cup and Kansas City’s Future
Graham McKenzie on Sir Richie Richardson’s Dual Passion for Golf and His Homeland, Antigua
ADS PRO 
TAP Air Portugal to operate 29 flights due to strike on December 11
Qatar Airways offers flexible payment options for European travellers
Airlines suspend Madagascar services following unrest and army revolt
Air Mauritius reduces frequencies to Europe and Asia for the holiday season
Major rail disruptions around and in Berlin until early 2026