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Delta Posts One Billion Dollar Loss Since Bankruptcy December 4, 2005

Posted by Andrew in Uncategorized.
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Since declaring bankruptcy six weeks ago, major American legacy carrier Delta Airlines Inc. said that has lost $1.14 billion. Delta management attributed most of the costs to fuel, salary, and interest expenses. Due to bankruptcy proceedings, the carrier was forced to spend an additional $17 million on legal fees. Excluding reorganization costs, Delta lost $472 million in the past six weeks, although the carrier spent over $2.61 billion. Delta’s losses are more than three times that of competitor Northwest Airlines, which filed for Chapter 11 bankruptcy on the same day as Delta. Nonetheless, both carriers are in equal peril of being forced to cease operations unless they undergo equally drastic restructuring. In Delta’s quest to save $3 billion in overall costs, it plans to ask for $325 million in concessions from its pilots. The Air Line Pilots Association (ALPA), the union that represents Delta pilots, has countered that it will only except $90.7 million in wage concessions. If the two parties are unable to agree, ALPA has stated that it will instruct Delta pilots to strike. All in all, with the termination of Delta’s in-house low-fare carrier Song, Delta is on the right path towards profitability. Unfortunately, it will take more than the redistribution of planes to right Delta’s course.