Delta Air Lines bankruptcy (2005)
From Invertopedia, the encyclopedia of how things fail
Delta Air Lines, the third-biggest US airline, filed for Chapter 11 on September 14, 2005, saying it had not had a profitable quarter since 2000[1]. CNN put its losses at about $6.1 billion from airline operations since the start of 2001[1]. Delta's own filing said it would have run out of cash before the end of 2005 without bankruptcy protection[2].
What happened
| Before 2005 | Analysts say Delta waited longer than some of its rivals to trim costs.[1] |
|---|---|
| Sep 14, 2005 | Delta files for Chapter 11, and Northwest also files for protection from creditors.[1][2] |
| 2005 to 2007 | Delta cuts about $1 billion in labor costs and reduces domestic capacity.[3] |
| Apr 2007 | Delta wins approval to emerge from Chapter 11.[3] |
The kill shot
Delta carried years of losses into a fuel price spike, and analysts said it cut costs later than its rivals.
Some analysts said Delta waited longer than some of its rivals to trim costs and did not pursue cost-cutting as aggressively as it would have if heading toward bankruptcy early in the downturn[1]. Delta's chief financial officer said liquidity began 2005 at $1.8 billion and fell to $1.2 billion by August 31[2].
References
- ^ “Delta files for bankruptcy, citing soaring fuel costs”. CNN/Money, Sep 15, 2005. Filing, losses, rivals, the pilot concessions, analyst view.
- ^ “Second Declaration of Edward H. Bastian in support of motion to reject ALPA collective bargaining agreement”. SEC Exhibit 99.1, Delta Air Lines court filing, 2005. Labor cuts sought, liquidity, the first Bastian declaration date.
- ^ “Delta exits Chapter 11”. TravelMole, Apr 26, 2007. Debts, accumulated losses, labor savings, exit.