Posted on 09/14/2005 2:48:36 PM PDT by BurbankKarl
Northwest Airlines, its financial condition worsening, filed for bankruptcy-court protection Thursday in U.S. Bankruptcy Court in New York, a first in the history of the 79-year-old company and a fate it narrowly averted in the early 1990s. The filing, which was preceded by defaults on some payments due in the past few days, is expected to help the nation's fourth-largest airline by traffic reduce its towering labor costs and restructure its aircraft lease payments and other expenses.
Delta Air Lines, the No. 3 carrier, also sought protection from its creditors Thursday. (See related story.) The two join UAL Corp.'s United Airlines, US Airways Group Inc., and ATA Holdings Corp.'s ATA Airlines in Chapter 11, boosting to 51.5% the capacity flying in bankruptcy of the top 12 U.S. airlines. The industry, hammered by high costs, record fuel prices and competition from growing low-cost carriers, now seems to find bankruptcy the only way to restructure and quit bleeding money, at least for the older hub-and-spoke airlines.
Northwest, St. Paul, Minn., faces a $65 million pension payment Friday, and apparently didn't want to fork over that money if it didn't need to. Being in Chapter 11 means Northwest won't have to make payments on its unsecured debt from Thursday, and it may be able to avoid payments on some of its secured debt as well, according to David LeMay, a bankruptcy lawyer for Chadbourne & Parke. And it will have a 60-day payment holiday on many of its planes, after which it will have to make up the missed payments to keep the planes, give them back to their owners or reach new consensual terms, he said.
(Excerpt) Read more at online.wsj.com ...
Wow, an airline in financial trouble. Why didn't you post this in Breaking News?
So has Delta: http://www.freerepublic.com/focus/f-news/1484563/posts
Hmm, they both filed THURSDAY. Did I lose a day?
As I understand it, apart from Southwest and JetBlue, most other major airlines are financial basket cases - either bankrupt, or about to go bankrupt. Why would anyone in their right mind buy airline stock or otherwise extend credit to an airline?
Delta and Northwest airlines was supposed to merge into one airline come November.. I wonder what they will do now..
I am a time traveler.
All these airlines in bankruptcy...it's the fault of labor (particularly the pilots), not management and any of their decisions. Right? Oh come on, freepers...don't let your bias show thru-
Actually, Continental has been able to turn a profit in the second quarter of 2005, as they were cutting costs and shedding unnecessary labor long before 9/11. Southwest and JetBlue were founded as low cost carriers and Southwest hedged their fuel costs. Why would anyone in their right mind buy airline stock or otherwise extend credit to an airline?
Low interest rates=easy money. If you are GE Capital, keeping the second generation 737s or 757s that you own in the air with a carrier that is still flying is better than having to reposess said aircraft in the event of liquidation.
As I have consistently said on these threads, we really need at least one carrier (I'm hoping for two myself) to exit the market and reduce capacity for airlines to start making money again. Overcapacity is a much bigger issue, IMHO, than fuel costs.
I hope you're kidding. My husband is making more money flying in the Marine Corps than he is at the airlines. And we all know how generous (cough cough) Washington is with paying our military.
Never mind lose a day, did I just lose money? I have a ticket from them for a round-trip flight later on...
Yep, I was just kiddin'....I know exactly what you mean.
I have a flight tomorrow afternoon! Maybe I don't have to get all that laundry done to pack after all.
LOL!! Let me know how it all works out for you! ;o)
This is simply disastrous for anyone who committed his or her life toward a career as a pilot. The majority of people do not understand all the years of flying, training and money that are invested. Dh has been downgraded in seniority and in aircraft, and his salary and benefits have been cut several times.
This topic makes me sick, but it is our every day reality.
How does this affect their big order of Boeing 787's?
It's that "creative destruction" of free market capitalism. Pilots are not alone -- e.g. there are all the IT folks whose jobs are going to India.
But the airline situation is particularly bad, since they tend to go on and on in bankruptcy zombie land for ever, instead of winding up the business, selling the assets and discharging the employees to either obtain work with another airline or make a more drastic career change.
Boeing is on strike....dont know!
Fewer pilot jobs, but those few that will remain will pay well, albeit not as high as Delta's Captains make. Average salary at UPS (client of mine) right now is $175,000 for 60 hours per month of work. I would love to have such a job but my vision is awful!
Maybe in the middle of the night they can stealth away the third worlder's and the freight boys some of those 747-200's, DC-10's, and 727-200's!
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