DELTA Ponders Chapter 11

Tuesday, May 11, 2004
Delta ponders bankruptcy
Possibility is raised if cuts not made

By James Pilcher
The Cincinnati Enquirer

Delta Air Lines Monday indicated that it might file for bankruptcy
protection if the financially struggling company can't cut costs soon.
Without those cuts, "we will need to pursue alternative courses of
action intended to make us viable for the long term, including the
possibility of seeking to restructure our costs under Chapter 11," the
Atlanta-based airline said in its quarterly report to the Securities and
Exchange Commission.
Previously, company officials had been cautious when referring to
bankruptcy. Delta chief executive officer Gerald Grinstein categorized
it as undesirable at the company's annual meeting last month.
A bankruptcy court judge can make cuts to labor contracts, even if union
members have rejected such cuts in negotiations with a company.
Spokesman John Kennedy would not comment beyond what was in the report
and would not speculate on any future actions by the company.
Delta's stock closed at $4.54 on the news Monday, down 84 cents, or
almost 16 percent.
US Airways went into bankruptcy in the wake of industry changes after
the Sept. 11 terror attacks - and emerged with cuts in labor contracts.
United Airlines is expected to emerge from bankruptcy this summer.
American Airlines avoided bankruptcy last year only by threatening
bankruptcy, resulting in cuts for its pilots and other employees.
Delta, which operates its second-largest hub at the Cincinnati/Northern
Kentucky International Airport, lost $383 million in the first quarter
alone - and it has lost more than $3 billion since 2001.
Of equal concern to company leaders and outside analysts is that the
company's debt load is maxed out, meaning that it cannot borrow any
more. So Delta has turned to its lone major union, its pilots, for wage
concessions.
Management is seeking a 30 percent pay cut plus other productivity
increases along with a freeze on future pay raises. Delta employs almost
8,000 pilots, including almost 800 based locally.
The pilots are the only organized unit at Delta, which has 8,000
employees locally (including employees of Erlanger-based subsidiary
Comair).
Grinstein and others have stressed that the pilot pay cuts are the only
way that the company can return to profitability.
The airline's branch of the Air Line Pilots Association has countered
with an offer of a 9 percent wage cut and freezing all raises. The union
just got the company to agree to gradually begin recalling 1,060 pilots
who were laid off after the Sept. 11 terror attacks.
But pay-cut talks have stalled recently, with Grinstein saying the 30
percent offer was as good as the company could make.
The union "has attempted to engage Delta in negotiations aimed at
assisting the company in attaining an overall competitive cost
structure," spokeswoman Karen Miller said in a statement. The union is
prepared "to assist in every reasonable way in reducing the company's
cost structure and returning it to profitability and stability."
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"Jim" wrote in message
...
Tuesday, May 11, 2004
Delta ponders bankruptcy
Possibility is raised if cuts not made

Just as long as they're still flying in August, when I use the ticket I
bought from them.

--
"I'll find Fry's coffin, get his corpse and keep it under my mattress to
remind me that he's really dead. That'll prove I'm not insane!"

Goliath & Wildwing's Storage Room
http://anatidae.homestead.com/

"james_anatidae" wrote in message ...
"Jim" wrote in message
...
Tuesday, May 11, 2004
Delta ponders bankruptcy
Possibility is raised if cuts not made

Just as long as they're still flying in August, when I use the ticket I
bought from them.



Rest assured that even if they file for bankruptcy, the airline will
continue to fly. The only airline I'd worry about having a ticket on
right now would be US Airways......



Cassie