Mark my words
October 26, 2004 4:01 PM   Subscribe

Delta Airlines to announce chapter 11 tomorrow around noon.
posted by Keyser Soze (58 comments total)
 
Chapter 7: Liquidation. (not going to happen) Chapter 11: Reorganization of internal structure. Don't worry, a lot of other airlines have declared bankrupty in the past. Just a heads up with no proof.
posted by Keyser Soze at 4:04 PM on October 26, 2004


Wow, Keyser. Are you clairvoyant?

[this is bad]
posted by Kwantsar at 4:08 PM on October 26, 2004


Out of curiousity, and possible Ask Metafilter: What happens to cities that have ridiculously huge hubs for these airlines that go bankrupt? Do other airlines take its place?

I ask because I'm strongly considering moving back to Atlanta, but if this happens, does the Atlanta economy take a major hit?
posted by Stan Chin at 4:12 PM on October 26, 2004


On second thought, I'm probably overreacting.
posted by Stan Chin at 4:17 PM on October 26, 2004


This is.. umm..
posted by The God Complex at 4:20 PM on October 26, 2004


http://www.deltadocket.com/


Image Hosted by ImageShack.us
posted by Keyser Soze at 4:21 PM on October 26, 2004


Oh crap, looks like low fare leader ATA is also going belly up.
posted by mathowie at 4:24 PM on October 26, 2004


Out of curiousity, and possible Ask Metafilter: What happens to cities that have ridiculously huge hubs for these airlines that go bankrupt? Do other airlines take its place?


Yes. I lived in Atlanta for 16 years, and people seem to forget that Eastern Airlines used to be the big airline there. Delta was pretty small (in terms of % occupation of airport) at that time. When Eastern went away, Delta (eventually) took over most of the Eastern space/terminals after lengthy price negotiations with the city. Now, of course Atlanta=Delta to most people.

If they just go chapter 11, it may not even mean much of a change. As Keyser said, this just means they have freedom from some of their debt obligations while they restructure.
posted by wildcrdj at 4:28 PM on October 26, 2004


Not Delta! They floss and fly this mofo all over this bitch!
posted by Krrrlson at 4:29 PM on October 26, 2004


After 20 years in the South, I am finally moving away from here permanently in the next month (give or take).

So much for "Delta is ready when you are." ;-P

) It's a southern joke. (
posted by mischief at 4:32 PM on October 26, 2004




By the way, it's not just some debt obligations: It will be for most of their debt obligations. Buying a new plane for instance will be covered, because they have to in order to stay in business. Non secured debts will most likely be substantially dropped.
posted by Keyser Soze at 4:42 PM on October 26, 2004


Those thick, round, big-assed vessels fly up in the sky so deep - it be cryin'. Yeah! You thought it was rain. So bring a towel, cuz at Delta, it's laid out like that! We've got you covered like a jimmy hat!
posted by zwemer at 4:43 PM on October 26, 2004


US Airways declares bankruptcy.
posted by brownpau at 4:48 PM on October 26, 2004


"Most of their debt obligations" is at best misleading.

Bondholders are secured creditors.
posted by Kwantsar at 4:48 PM on October 26, 2004


I think we're going to see a lot of this going on, airlines having major financial troubles and perhaps mergers etc. Right now distillate fuel is priced very very high - which includes diesel, kerosene, and jet fuel; costs on jet fuel are running between +70% and +100% over last year, and is likely to stay high for months, if not for the foreseeable future with what's going on in the world today. Doubling a crucial expenditure like that can really make a mess if your business is already ailing, especially in airlines which operate on razor-thin margins. If their books are a bit tippy in the first place, that sort of thing can really hurt.
posted by zoogleplex at 4:52 PM on October 26, 2004


uh, "are likely." *ahem*
posted by zoogleplex at 4:55 PM on October 26, 2004


To clarify, Chapter 11 is bankruptcy protection. That having been said, the financial presses have been singing the praises of JetBlue, SouthWest, EasyJet, and other low-cost airlines for years. I would not be surprised if more major airlines enter Chapter 11. When they exit, they will have fewer totall employees, newer , more efficient aircraft. All but the specialty travel agencies will disappear as ticketing moves all online.

Actual travel won't get any worse than the six months after 9/11 - moderately inconvenient but far from impossible.
posted by b1tr0t at 4:56 PM on October 26, 2004


zoogleplex: if their books are tippy in the first place, then the airlines should be hedging nearly 100% of fuel costs, rather than the 20-30% that is customary-- but running to the courts has become second nature for the airlines. Bankruptcy law is partially to blame for the constant shambles in which most of the industry finds itself.
posted by Kwantsar at 4:59 PM on October 26, 2004


Kwantsar: hedging will only protect you from changing commodity prices, not consistently high prices.
posted by b1tr0t at 5:08 PM on October 26, 2004


Are there ANY US airlines NOT going into bankruptcy these days?
posted by clevershark at 5:09 PM on October 26, 2004


I agree with you on the hedging, but t's hard to hedge that kind of money when your market capital has gone poof because your stock's gone down a lot since 9/11, and fares have been cut to the bone and all that. Add skyrocketing fuel cost and things get ugly fast.

It's been tough business all around for the airlines for some time, what with brutal price wars, bad economy, less travel, etc. I'm actually surprised that this hasn't happened sooner.
posted by zoogleplex at 5:10 PM on October 26, 2004


Are there ANY US airlines NOT going into bankruptcy these days?

The new ones and the profitable ones: JetBlue, Alaska, Southwest, Song, TED, etc.
posted by b1tr0t at 5:17 PM on October 26, 2004


The Salt Lake City airport has two terminals: one for Delta, one for everybody else, and it's my understanding that a large number of their pilots make their home nearby. No joy in this corner of mudville if this comes to pass, though I'm sure this is not the end for Delta.

On the upside, at least rising star Jet Blue has operations based here...
posted by weston at 5:21 PM on October 26, 2004


And your evidence for this is a link to Delta's home page? Nice.
posted by jjg at 5:33 PM on October 26, 2004


> hedging will only protect you from changing commodity prices, not
> consistently high prices.

Yeah, if today's price is already driving you over the edge you're not going to go out and contract for five years worth of jet fuel at today's price.


> It's been tough business all around for the airlines for some time,

Bring back the DC3 and I'll fly again (grass strips only please.)
posted by jfuller at 5:35 PM on October 26, 2004


Are there ANY US airlines NOT going into bankruptcy these days?

The new ones and the profitable ones: JetBlue, Alaska, Southwest, Song, TED, etc.


Song is part of Delta. And Ted is part of United, which is already in Chapter 11.
posted by jjg at 5:41 PM on October 26, 2004


The Economist had a good article about the Airlines and Chapter 11, but of course, it isn't available online. Here's a snippet. "US AIRWAYS is coming to stand for all the mistakes of the American airline industry. Mismanaged, mired in debt and crippled by a recalcitrant workforce, the airline filed for protection from its creditors under Chapter 11 of America's bankruptcy law on September 12th. It did so despite receiving a loan guarantee for $1 billion from the government's fund set up to bail out struggling airlines in the aftermath of the September 11th attacks.…"
Sep 16th 2004 From The Economist print edition

Basically, all the major airlines are abusing Chapter 11. Go figure.
posted by shoepal at 6:04 PM on October 26, 2004


so over the summer i flew Air Canada, and i have to say it was nice not being treated like cattle. the US airline industry really screws people over, compared to the service you get elsewhere. i don't want dancing naked ladies serving me free champagne or anything, but i've never before had airline food that was actually palatable, and real silverware to boot. i was in the last seat in the back of the plane... seems that Air Canada coach section is nicer than the first class on many US airlines.

so maybe we need some sort of consolidation or something? who knows. i like that there's competition, keeps prices low and all that, but seriously, it's like being proud of competing for a crust of bread when the rest of the world is eating steak and shaking their heads at you sadly for your pride in getting the bread crust...

anyway, if we can get the US government to stop screaming "terrorists! 9-11! we're all doomed!" every five minutes maybe people will, oh i don't know, travel again rather than cower in fear at home, clutching the black plastic and duct tape. that will help the airline industry.

hmmm. i bet no companies making black plastic and duct tape have gone under since 2001...
posted by caution live frogs at 6:32 PM on October 26, 2004


Well, as an Atlanta native, I have to say this is sad. I recall flying Delta as a child. They gave the kiddies pin-on captain's wings insignia and little toy airplanes, and let us go look at the cockpit. Times have changed.

And yeah, it would fuck up the economy if they went out of business - cf. Eastern Airlines, a blow it took Atlanta a long time to recover from. But Chapter 11 is a far cry from that.
posted by crunchburger at 6:43 PM on October 26, 2004


anyway, if we can get the US government to stop screaming "terrorists! 9-11! we're all doomed!" every five minutes maybe people will, oh i don't know, travel again rather than cower in fear at home, clutching the black plastic and duct tape. that will help the airline industry.

I don't think the problem is a lack of passengers....the problem is high costs and a refusal of the airlines to actually charge large enough fares to cover them. I booked a business trip today from Chicago Midway to New York on American (for NEXT WEEK with no Saturday night stay) and the fare was $190.00! That's cheaper than most hotel rooms in NYC. The problem is that the old line carriers (not just in the US, but in Europe too) can't compete with carriers like Southwest and JetBlue because their costs are so much higher....and the recent increase in fuel prices has only exacerbated the problem.
posted by Durwood at 6:49 PM on October 26, 2004


The price war was mentioned as a reason from my sources, but that is as much information as I have tonight.
posted by Keyser Soze at 6:52 PM on October 26, 2004


Not Delta! They floss and fly this mofo all over this bitch!

Krrrlson, you made my morning.

<--- Atlanta resident
posted by NationalKato at 7:48 PM on October 26, 2004


Song is part of Delta. And Ted is part of United, which is already in Chapter 11.

Right, but Song and Ted were launched recently at survival attempts. Most likely, Song & Ted will be split from their parent companies and continue to live. Alternately, the Song/Ted mode of operations (small planes, minimal service) will rapidly come to dominate the parent, if appropriate financing is found.
posted by b1tr0t at 8:03 PM on October 26, 2004


you know, nothing personal or anything, but this is a pretty fucking lame post.
posted by dogmatic at 8:11 PM on October 26, 2004


"Here is an assertion that I totally can't prove and have no links remotely related to. I must post it to MetaFilter immediately!"
posted by jjg at 8:30 PM on October 26, 2004


Here in Atlanta, Airtran Airways is what is killing Delta... they've taken most of their business through cheaper flights and newer and more comfortable planes.

If Delta does go under, Airtran will pick up the slack.

They're making a ton of money, too. I almost always fly Airtran, and their flights are constantly full.
posted by BobFrapples at 8:59 PM on October 26, 2004


AirTran = ValuJet.

You fuck up as egregiously as ValuJet did, you don't get a second chance in my book -- especially not when you change your name to hide who you are. Not so long as there are other airlines.
posted by ROU_Xenophobe at 9:25 PM on October 26, 2004


exactly, jjg
posted by dogmatic at 9:26 PM on October 26, 2004


When they re-organize their debt under Chapter 11, I imagine the first thing to go is going to be my frequent flier miles. Damnit!
posted by rks404 at 9:30 PM on October 26, 2004


clf, I have the opposite opinion of Air Canada.

I found their staff disrespectful, rude, intransigent, unhelpful, and obstinate, and their airplanes to be rickety junk buckets.

Example: Old guy in front of me has his seat back the entire flight. Okay, being a good citizen, I understand he probably needs that and decide I won't be using my laptop that flight. But when the asshole refused to put it up during the in-flight meal, I complained. Their intransigent staff said they had no policy against him doing that, so they'd do nothing. So, of course, most of my meal ended up being mashed into the back of said asshole's seat. Thank God at least *I* made those Stewards do some work, because without me, they'd consider it a holiday flight.

Then their disrespectful staff proceeded to start passing around donation envelopes and started to play videos for some charity on the airplane asking people to put their foreign change in said envelopes. It's LOW to abuse a captive audience like that. It's like going to a new member's meeting for a cult.

Furthermore, I found the seats on the airline to be positively intolerable for room. Due to the inept design of the aircraft they fly (tight seats with headphone jacks on the INSIDE of the handles, rather than on top) almost all the headphone jacks in the airplane were in various states of disrepair, and if one chose to use them, one would get what I like to term "airplane headphone bruise".

To further my displeasure with their airline, on one flight they were flying us in an Airbus airplane, which the imbeciles they hired to set up the seating arrangement for the flight thought was a 747. So, great, I own the toilet for the entire flight, I guess (it *was* my designated seat/aisle, after all). Perhaps I should charge admission?

And, to add insult to injury, the dimwit stewards(esses) forgot that a flight from the UK to Toronto would probably have almost ALL english speaking passengers. They loaded the plane with half french and half english newspapers in Canada, and guess what, on the way back, no readable newspaper for anybody on the flight (except a couple of Quebecers who were having a good laugh at us all).

The written complaint I filled out during this spectacularly horrid flight was handed to the steward who refused to forward it to his superiors. Unbelieveable. I suppose he figured if the word on the forced donation scam got to his superiors he might be in for an ass whooping. I gave up on sending a complain to Air Canada themselves. Anyone who manages such an intolerable airline is likely to be completely illogical anyways

After all those debacles, I refuse to fly any airline in North America ever again, for the rest of my life (they've been this poor for about the last dozen flights I've taken, so they've had PLENTY of chances to improve). As a contrast to all this, my flight on British Airways was positively magnificent, and I shall continue to export my business with airlines for the forseeable future.

Canadians have simply forgotten how to run an airline ever since Wardair went under. And, despite my mother having received food poisoning from a Wardair meal once, her experiences with Air Canada have also been as poor as mine to the point she agrees, it'd be better to take a risk with a food poisoned Wardair flight than ever use Air Canada's "service" again.
posted by shepd at 10:30 PM on October 26, 2004


It's not a good post. But also, I'm pretty convinced by now that Keyser actually did sell his MeFi account to someone else way back when when he said he was going to.
posted by Ethereal Bligh at 10:38 PM on October 26, 2004


"When they re-organize their debt under Chapter 11, I imagine the first thing to go is going to be my frequent flier miles. Damnit!"

As far as I know you keep those.
posted by Keyser Soze at 11:22 PM on October 26, 2004


That'll teach them to pick on bloggers.
posted by biffa at 2:13 AM on October 27, 2004


Arrrgh. Fuck. Ok, Chapter 11=reorganisation.

Now can anyone tell me if this will have any adverse effect regarding the ticket I bought this morning? (The agency I bought it from is closed for lunch)
/PanicFilter
posted by romakimmy at 4:22 AM on October 27, 2004


Does this mean I should short the stock?
posted by eas98 at 7:14 AM on October 27, 2004


(wishes trains would make a major comeback)
posted by alumshubby at 7:46 AM on October 27, 2004


MetaTalk

Shame, Keyser. You should know better.
posted by mkultra at 7:49 AM on October 27, 2004


alumshubby: try Europe?
posted by cortex at 8:05 AM on October 27, 2004


Well, it's around noon and there isn't even anything about a press conference yet....

so consider your words marked.
posted by dig_duggler at 8:41 AM on October 27, 2004


It's not noon yet. We can still short the stock. Time is running out on this limited-time money making opportunity!
posted by eas98 at 8:46 AM on October 27, 2004


This post maybe would have saved itself in a cool-how-did-you-know kind of way if it happened, but it didn't.

horrible post.
posted by dig_duggler at 11:04 AM on October 27, 2004


Delta's problem isn't debt or the price of jet fuel.

It's their pilots.

I know a guy who works with some of their accounting folks... I don't have a link or anything, but according to him a little over 50% of Delta's operating costs are pilot salary.

These guys buy Airplanes by the dozen, and fuel by the tanker, and their biggest expense is a small percentage of their personnel.

The pilots union renegotiated their contract with Delta before 9/11 when the livin' was easy... they are -- by FAR -- the highest paid pilots out there. They've got senior pilots making mid six-figure salaries and flying 4 days a month.

Everyone else in the company has taken serious pay & benefit cuts. The pilots won't move.

By filing Chapter 11, Delta can get out from under it's contract with the pilots union and replace them with like-skilled employees at a more reasonable rate.
posted by Rob1855 at 11:14 AM on October 27, 2004


shepd is completely correct about Air Canada, the airline that deserves to die.

Fortunately, we in the west have WestJet, which is a great little airline with happy, helpful staff that love their company and love their jobs. What a difference a little employee morale makes.
posted by five fresh fish at 12:27 PM on October 27, 2004


it's after noon on the east and west coasts -- and this post still sucks.
posted by dogmatic at 1:06 PM on October 27, 2004


What is this? Drudge?
posted by skallas at 3:58 PM on October 27, 2004


"Bring back the DC3 and I'll fly again (grass strips only please.)"

Let me steer away from some of the vitriol in the *ahem* air here, and say...

jfuller, I've flown in a DC-3; there was a small commuter airline running out of Portland, ME which was still flying one on a daily route to Boston (Logan) and back during the 1970s when I was a kid. We'd gotten into a car accident in Maine and had to fly back to NJ because the Beetle was demolished (we were all fine, tough little car), and the only flight route we could get put us on this little airline to Boston, and then on Delta to Newark.

What a great old plane that was. I thought it was so cool, at 9 years old, to be on this noisy ol' tail-draggin' prop monster... flew smooth as glass, too. Awesome plane. I'd definitely ride an airline that flew DC-3s... amazing that there are still quite a lot of them flying, considering it's about a 60-year-old airframe.

I still have a set each of Delta and Eastern "pilot" wings and a small white plastic L-1011 model that they gave out to kids. Neat stuff.
posted by zoogleplex at 5:01 PM on October 27, 2004


ahem..
posted by dig_duggler at 3:45 PM on October 28, 2004


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