Record number of US airlines now in backruptcy
Both Delta and Northwest filing for bankruptcy on the same day revealed the serious plight of the US’s big airlines, which have lost more than $30 billion in just four years.
“We are reading the first page in a thriller that will end either in resurrection or the death and burial of an entire industry as we know it today,” William Rochelle, an airline bankruptcy lawyer, told the Associated Press.
The filings in New York put four of the seven largest US airlines in Chapter 11 at once, which is unprecedented in the industry. Delta, Northwest, United and US Airways are all in Chapter 11.
Delta and Northwest both said passengers should not expect to see any immediate effects from the filing.
The bankruptcy protection will allow the airlines to pursue cuts in wages, restructure their debt and make changes to expensive pension plans and health benefits.
Delta, the nation’s third-largest carrier, has lost nearly $10 billion over the last four years.
Northwest, the US’s fourth-largest airline, had been in better financial shape than many of its competitors. Observers say that was due to its extensive Asian network and cargo business, both of which were thought to be profitable.
By filing for bankruptcy now, the two airlines beat an 11 October deadline when the law will become more restrictive and make it harder to cancel debts.
Report by David Wilkening
David
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