Article - Delta CEO, cuts may not be enough..

[AngieInOH]

http://money.cnn.com/2005/07/27/news/fortune500/delta.reut/index.htm?cnn=yes

Since this is the travel board thought I would post an article I saw on the CNN website. Says Delta will refund any airflight if you find a cheaper one with another carrier.

 

[K&K]

What will it mean for travelers like me who have already booked flights for later this year if delta goes bankrupt?

 

[gw_lit]

What will it mean for travelers like me who have already booked flights for later this year if delta goes bankrupt?

Not a thing!

If Delta files bankruptcy it would be a Chapter 11 "reorganization" to protect its assets from debtors and hopefully arrange new financing arrangements. This the chapter of bankruptcy that United and US Airways are currently operating under. If Delta files, they would continue operating and you won't be able to tell any difference at all in their operations. Whether they continue the new policy of refunding your money if you find another ticket cheaper is a business decision.

Heck, United has been operating under Chapter 11 for around two years now. I wouldn't worry too much, unless of course you're a Delta stockholder! (BTW, I have a few shares left of TWA that I'm willing to sell! )

 

[K&K]

Thanks

 

[Tara]

Not only will it likely not affect most travelers, it can have definite upsides. Airlines that file chapter 11 are subject to more oversight, which means that the government is watching extra carefully to make sure that as they slash costs, they aren't sacrificing safety. In fact, I'd rather fly on an airline under bankruptcy protection (and supervision) than one that was financially hurting but not in chapter 11!

 

[bicker]

Not a thing!

That's true, but wrong.

While Delta would indeed enter Chapter 11 bankruptcy protection first, if they couldn't get a reorganization plan together they would be expected to enter Chapter 9 liquidation. However, the US judiciary has recently proven that they don't have the spine to allow a major airline to go out of business, as Braniff had several years ago. Instead, they've been foisting financial responsibilities off these airlines onto the US government.

So while the folks to whom these airlines owe financial considerations get shafted by judges, we, the American flying public, seem to be much safer in buying tickets on these airlines resting assured that they'll still be flying when our flight date arrives. I've got my own Delta tickets for January.

 

[molly2004]

http://money.cnn.com/2005/07/27/news/fortune500/delta.reut/index.htm?cnn=yes

Since this is the travel board thought I would post an article I saw on the CNN website. Says Delta will refund any airflight if you find a cheaper one with another carrier.

I had booked our October trip on Song. I called to get clarification on the policy. Yes, you can cancel the flight without penalty, but you would not be issued a refund, just a credit that must be used within the year.

And get this...the fare has gone down since I booked my flight. So I asked if they could treat that the same way as if I found a better fare on another carrier. They said I'd still be charged the penalty.

Does that make sense? I guess either way, they get to keep your money so it's a win win situation for them. Bummer! Makes you almost wonder how they could be losing money when they have policies like these.

 

[Tara]

Does that make sense? I guess either way, they get to keep your money so it's a win win situation for them. Bummer! Makes you almost wonder how they could be losing money when they have policies like these.

Airlines have tons of cash and no money, if that makes sense. They need to keep your cash in house, because most owe many dollars for every $1 you pay them. The issue is that all the "legacy" carriers had enormous debt accumulated, particularly during the 90s. Plus most of them increased staffing levels through the 90s at amazing rates. The result was heavily indebted airlines with bloated staffs, ever-rising fuel costs, and unrelenting price pressure from consumers. They were already in trouble before 9/11, but that was the kicker for most -- business dropped off so sharply. If it had just been leisure business decreasing, it might not have mattered so much, but the recession that followed 9/11 caused a big drop in business travel -- the bread & butter of the airline industry.

Climbing out of that hole is difficult and might be impossible -- look at how long United has been in bankruptcy protection. They've changed their organization tremendously (and have about 40,000 fewer employees than they did in 1997 or so -- I can't remember when they peaked). They've had their debts wiped out by and large, they've been released from most of their pension obligations, and they have arranged for funding for restructuring, putting them in many ways at an advantage over the other big carriers. Even still, they've cut costs to the bone, worked to get more efficient, and they are still running at a loss. As it stands, it is *better* for a legacy carrier to go into chapter 11, so long as they can secure investors to help them pull out of it.

Sorry -- I got a little long-winded there! Suffice it to say that I am SHOCKED that Delta is saying they'll refund flights if you find a cheaper one.

 

[MKCP5]

we have a close friend who is a delta pilot. he is taking early retirement this week, not because he wants to stop flying at 51 yo, but because bankruptcy is almost certain by February. He would lose almost his entire pension if he is still there when they file. 600 other pilots are doing the same. I don't know how quickly they will reorganize. I still have unused tickets from eastern airlines when they went belly up , anyone remember them?

 

[bicker]

That is interesting what your pilot friend said: It means that passengers, at least, are relatively safe until at least May. That is assuming that there is a judge out there who would actually allow a major airline to go out of business, which, as I mentioned earlier, I doubt.

 

[Tinkim]

we have a close friend who is a delta pilot. he is taking early retirement this week, not because he wants to stop flying at 51 yo, but because bankruptcy is almost certain by February. He would lose almost his entire pension if he is still there when they file. 600 other pilots are doing the same. I don't know how quickly they will reorganize. I still have unused tickets from eastern airlines when they went belly up , anyone remember them?

That sounds about right. I seem to have a talent for picking the airline for my WDW trip that is on the verge of bankruptcy. Last year it was US Air and I worried until we got home about that one and this year I have booked on Delta for February. Let the worrying begin.

 

[JennSaint]

That sounds about right. I seem to have a talent for picking the airline for my WDW trip that is on the verge of bankruptcy. Last year it was US Air and I worried until we got home about that one and this year I have booked on Delta for February. Let the worrying begin.

Tinkim I wouldn't worry about it. The first time USAir filed chapter 11 we had just purchased tickets and I was worried too. But the airlines still operate as usual. We didn't have any problems. I'm also flying with Delta in February and I'm not worried!

P.S Worst case scenerio is we drive. LOL (I really wouldn't want to do that!)