Delta Bankruptcy Soon

[Walmartgreeter]

And as we all know from a couple rounds of bankruptcy filings at US, the judge almost always sides with the company and their request for relief.

Traveler, just to keep the record straight, the Judge in the first U BK (same judge now) at no time imposed any paycuts or contract changes on any employees. Only NOW has he been asked to do just that...and he, to the surprise of many...is taking his time. We are about to see if BK can be used to invalidate airline labor contracts.....laws were passed almost 20 years ago to prevent just that. As far as his rulings, the company, up to now, HAS batted just about a thousand. Best. Greeter (I know...off my board, sorry)

 

[AA80Driver]

Yes, you're right flyhigh. DALPA is clearly trying to get everything it can but the point still remains that DALPA will be solely responsible if DL is forced into bankruptcy because DALPA would not sign a deal AND the pilots still have to give FAR, FAR more in bankruptcy.

Wouldn't it be a DAMNING indictment if DL is forced into bankruptcy after UA and US while AA, whose pilots are not represented by ALPA, managed to make a turnaround outside of bankruptcy. If DL heads to BK to get the cuts from the pilots it needs (and which are absolutely essential before any other stakeholder will help Delta - which they will), the AFL-CIO will have the distinct honor of driving three companies in one industry into bankruptcy because they refuse to work with management. Who gives a rip that DL's ALPA head wants a top ALPA leadership spot if the union gets fingered for sending three airlines to their graves?

[post="190018"][/post]​

Care to back that up by telling us how many of the ALPA carriers went into bankruptcy because the ALPA represented pilots refused to negotiate concessions?

 

[mistified]

Care to back that up by telling us how many of the ALPA carriers went into bankruptcy because the ALPA represented pilots refused to negotiate concessions?

[post="190048"][/post]​

Hummm...... let me think.....
5?

 

[Winglet]

Worldtraveller - AA hasn't "turned around" by a long shot. If US Airways can get away with altering contracts by judicial fiat, then watch Delta and United fall as well. Expect Mr. Arpey to file in the Spring as a "me-too" prepackaged BK. The goal of course is pattern bargaining, or should we say "pattern BK". He' love to get the APAs scope provisions abrogated and turn domestic flying over to a commuter scale contract. AA wants 100 seat airplanes badly, but at commuter compensation. Big, big fight ahead. The next year in the airline industry is going to be really really ugly . . . . . like nothing we've ever seen before.

 

[firstamendment]

As a US Airways employee, I am so incredably sorry to see us becoming the leader of the demoralizing of an industry. The mantra of our managment team is capitulate or liquidate. I am so tired of the threats and the lies that I almost don't care anymore. If the right employer comes my way, I will run from this industry. But until then, I really have no choice. I'm just going to have as much fun out there as I can before the party is over.

I know all this uncertainty is a fairly new thing for most at AMR, UAL, and DAL...but we at US have put up with this for 16 years. Most of us have figured out that you can truely love your job and hate your employer. I feel we have some of the best workers because of it. It's just unfortunate that so many seasoned employees in the prime of their lives will have to start all over, making entry level wages.

No matter how long US has been dying, it is sad to know that more than likely the inevitable will happen and is soon. <_<

 

[WorldTraveler]

Well said, First. Sadly, it is true that as long as financially troubled airlines can remain in business and do so by continuing to cut costs to the bone, other airlines will have no choice to do the same. However, it is an incorrect reading of the situation to think that US is driving the cost cuts at the other legacy carriers. In reality, the cuts at AA, DL , and UA are being driven by the low cost carriers; US simply has provided the framework for those three to use to justify their actions. However, if the other legacies don't cut costs, they will pretty quickly become obsolete. The cost cuts that are occurring among the legacy carriers are attempts to get costs down to LCC levels; part of the reason they are so painful is because they require many of the costs that are associated with being a legacy carrier.

For those who think that Delta pilots would rather take their chance with the judge, read the following quote from the DALPA spokeswoman as quoted in the Atlanta paper:
But Miller, the ALPA spokeswoman, said "I have not heard pilots saying we're better off in bankruptcy other than a few chat room postings," she said. "I think it's in everyone's interest to avoid bankruptcy, where all parties lose control to the bankruptcy court. By reaching an agreement with management outside of bankruptcy, both parties can help shape the contract."

 

[Fly]

Smith Barney analyst Daniel McKenzie on Thursday said he saw a high probability that Delta Air Lines Inc., struggling to cut costs to avoid bankruptcy, could file for Chapter 11 by the end of the month.

McKenzie reiterated a sell rating on Delta shares, recommending that clients sell into recent stock strength, and said in a research note that Wall Street is overly optimistic about Delta's prospects.

"We note that $1 billion in savings from pilots is no guarantee that Delta escapes Chapter 11, and the key point is that the market doesn't fully appreciate the pension issue," McKenzie wrote. "We think there remains a high probability of the carrier filing for Chapter 11 by the end of the month."

For more on this story please go to http://money.cnn.com/2004/10/07/news/fortune500/delta.reut/

 

[DLFlyer31]

For those who think that Delta pilots would rather take their chance with the judge, read the following quote from the DALPA spokeswoman as quoted in the Atlanta paper:
But Miller, the ALPA spokeswoman, said "I have not heard pilots saying we're better off in bankruptcy other than a few chat room postings," she said. "I think it's in everyone's interest to avoid bankruptcy, where all parties lose control to the bankruptcy court. By reaching an agreement with management outside of bankruptcy, both parties can help shape the contract."

[post="190536"][/post]​

Do you really think the DALPA representative would honestly say "Gee, we'll just take our chance with the judge." Even if that is what most pilots are thinking, DALPA would NEVER publicly state that.

However, even if DALPA comes to a deal soon, it may not prevent CH 11 for DL. First, DL needs major pension relief, but it is unlikely that they will get it from DALPA outside of BK. Second, DL still needs cuts from the creditors (who so far have shown little interest in helping DL). Third, with fuel prices remaining so high, DL is burning through cash far faster than they had projected. Even projections done a few months ago have proven far too optimistic.

In fact, DL may need bankruptcy in order to ensure DL undergoes a complete transformation and gets costs down to a competitive level (CASM below 9.0 cents). Many hail AA's ability to avoid BK, but in the long run it may come back to haunt them as they are burdened with a tremendous amount of debt.

 

[WorldTraveler]

Have a look at today's news when it came out that ALPA offered DL a new contract.... and DL stock soared.

The pilots will offer a meaningful contract because, just as Ms. Miller says, both parties would rather control their own destiny.

And when the pilots agree to add their cost cuts to what has been imposed on non-contract employees and the cuts which the company has obtained through increasing the efficiency of its operations, the debt holders will restructure Delta's debts which the company has acknowledged need restructuring.
Yes, AA may well come to realize that it did not restructure its debts to any greater degree than it did. However, AA was the first airline that accomplished concessions the size it obtained outside of bankruptcy and they should be commended for that HUGE accomplishment. That doesn't mean AA won't have to go back to its employees for more but they realize their fate is far better than UA's employees right now. Delta is in the fortunate position to be able to improve on AA's restructuring. And NW, which is now being pressured by Wall Street to address its cost issues and looming debt payments, may well improve on Delta's restructuring.

It is foolish to think that all 6 legacy carriers will fall into bankruptcy as UA and US did.

Like Ray Neidl, I've got a couple lunches bet on DL getting the concessions it needs:
"In my opinion, they're going to get the concessions; I've got a couple of steak dinners bet on that," said Ray Neidl, an airline analyst with Calyon Securities Inc. in New York.

 

[mistified]

Delta is in the fortunate position to be able to improve on AA's restructuring.

[post="190688"][/post]​

Fortunate position? I don't read anything about Delta being in any fortunate position. Your statement above may have been true about a year ago. But now????

 

[Winglet]

Regardless, there grossly too much capacity in the system and the weak carriers should not be unfairly propped up by the court to undermine the other carriers . . . . especially US Air which is in such a horrible competitive position and has been so badly managed and looted by it's executives for so long.

 

[WorldTraveler]

Actually, mistified, it is the perversity of the airline industry that Delta's position is worse than AA's so they have a better chance of getting deeper concessions that what AA got. So, yes, DL is more fortunate.

Keep in mind that the concessions that are being sought and will likely be obtained are not one-time. Delta has clearly done the math and said they stand more to gain by burning through several hundred million dollars so they can demand deeper concessions which will be worth billions in the years to come. Delta is executing against a well thought out plan to reduce costs and has carefully calculated what it needs. They now have everyone in a position where they can get what they want or will use the very punitive bankruptcy laws to get even more. Painted in that regard, DL is in a very favorable position.

 

[mistified]

Actually, mistified, it is the perversity of the airline industry that Delta's position is worse than AA's so they have a better chance of getting deeper concessions that what AA got. So, yes, DL is more fortunate.

Keep in mind that the concessions that are being sought and will likely be obtained are not one-time. Delta has clearly done the math and said they stand more to gain by burning through several hundred million dollars so they can demand deeper concessions which will be worth billions in the years to come. Delta is executing against a well thought out plan to reduce costs and has carefully calculated what it needs. They now have everyone in a position where they can get what they want or will use the very punitive bankruptcy laws to get even more. Painted in that regard, DL is in a very favorable position.

[post="190959"][/post]​

Well maybe so.
But I think you are giving them (the DAL hunchos) more credit than they deserve.

 

[Fly]

He gets off on them big time. Something tells me there are Delta posters in his bedroom.

 

[WorldTraveler]

Actually, Fly, the posters are of you.