http://www.breitbart.com/news/na/D8CKG9383.html
Delta Air Lines Inc. snatched pillows from most of its domestic passengers, and Northwest Airlines Corp. quit offering pretzels. They slashed thousands of jobs and pressed remaining workers to take pay cuts. They renegotiated debt and dropped money-losing flights, but it wasn't enough to keep both airlines out of bankruptcy court.
Ultimately, both were undone by ing fuel prices after Hurricane Katrina. Their other problems _ heavy debt, mounting pension obligations, labor costs higher than their peers _ were serious enough, but could be addressed later. But not the fuel.
Northwest Chief Executive Doug Steenland said there were times in the days after Katrina that the airline was paying nearly $100 a barrel for jet fuel _ almost double its cost at the beginning of the year.
Delta and Northwest both filed for Chapter 11 bankruptcy protection in New York on Wednesday. Both companies said the timing was a coincidence.
They became the third and fourth major carriers to enter Chapter 11 since the 2001 terrorist attacks. The nation's big airlines have lost more than $30 billion in those four years, and the newest bankruptcy filings focused attention on the magnitude of the plight of the nation's big airlines.
By joining the parents of United Airlines and US Airways in bankruptcy, the four major carriers represent more than 40 percent of all available seat miles in the U.S., according to analysts.
"We are reading the first page in a thriller that will end either in resurrection or the death and burial of an entire industry as we know it today," said William Roc e, an airline bankruptcy lawyer in New York.
Both carriers expect to shrink.
Delta said it will reduce its fleet size, and CEO Gerald Grinstein said it's likely more job cuts will be needed on top of the 24,000 job cuts the Atlanta-based carrier has announced since 2001.
"There is no painless way out of this," Grinstein told The Associated Press. Grinstein, who took over Delta in January 2004, vowed to stay with the airline through bankruptcy.
Steenland said Eagan, Minn.-based Northwest would have a new round of layoffs before the end of the year and would cut flights. Company officials said the 26-day strike by unionized mechanics was not a factor in the decision to seek bankruptcy court protection.
Delta's late afternoon bankruptcy filing included its low-fare subsidiary Song, feeder carrier Comair and 16 other affiliates.
Delta listed its total debt at $28.3 billion and assets at $21.6 billion. The asset figure makes Delta's bankruptcy the ninth-largest in U.S. history, according to bankruptcy tracker New Generation Research Inc. Northwest listed assets of $14.35 billion and debts of $17.92 billion.
Both said passengers would not see any immediate effects from the filings, and pledged to honor all tickets and maintain their frequent- flier programs.
Chapter 11 protection will allow the airlines to pursue cuts in wages, restructure of debt and alter its pension and health benefits for workers and retirees. Steenland said Northwest would try to avoid dumping its pensions on the federal government, which is what United did with a bankruptcy judge's permission. Delta's plans weren't clear.
Both carriers have been seeking pension law changes that would let them spread out the payments to their under-funded pensions. Northwest owes $2.5 billion to its pensions over the next two years, and Delta faces billions in pension payments over the next three years. Delta said Wednesday it does not plan to make its next planned contribution to its pension.
Delta, the nation's third-largest carrier, has lost nearly $10 billion over the last four years. In September 2004, Delta announced it would shed its Dallas hub as part of a sweeping turnaround plan aimed at saving the airline.
Northwest, the country's fourth-largest airline, had been in better financial shape than some of its compe ors, with an extensive Asian network and cargo business both thought to be profitable. But it, too, was stunned by the rise in fuel prices and the spread of the SARS virus through several Asian countries, which cut into its business there.
The recession and slow economic recovery in the early part of the decade also eroded airlines' business, and the rise of low-cost carriers such as JetBlue Airways Corp. further stymied the big carriers' rebound.
Delta said it is arranging roughly $2 billion in post-pe ion financing and already received a commitment for $1.7 billion in financing.
Delta and Northwest follow into bankruptcy UAL Corp., the Elk Grove Village, Ill.-based parent of United Airlines, and Arlington, Va.- based US Airways Group, Inc., which is undergoing reorganization for the second time in three years. Fort Worth, Texas-based AMR Corp., the parent of American Airlines, the nation's biggest carrier, teetered on the verge of bankruptcy before winning deep concessions from its employees.
Neither American nor the other traditional carrier, Houston-based Continental Airlines Inc., are in immediate danger of bankruptcy. Continental won a big cost advantage over other traditional airlines after it slashed expenses during two bankruptcies in the 1990s. American may be the strongest financially of the older hub-and-spoke airlines thanks to $1.8 billion in annual labor concessions won in Its parent company actually turned a profit in the second quarter.
Since early 2003 Northwest has been seeking labor concessions, with a target that rose to $1.4 billion after Hurricane Katrina. All along it warned that bankruptcy was a possibility, but only pilots agreed to cuts. Mechanics struck on Aug. 20 rather than accept deep layoffs and pay cuts, and though the airline stayed aloft with replacements, it switched to a reduced fall schedule early and saw more delays and cancellations than usual.
By filing for Chapter 11 now, Northwest and Delta beat an Oct. 17 change in bankruptcy laws that will make it harder for companies to cancel their debts and pay bonuses to managers, and will generally force companies to either exit bankruptcy or liquidate faster.
Since Delta first came to the edge of bankruptcy last year, its pilot ranks have thinned as some have retired early. Retiring Delta pilots can elect to receive half their pension benefits in a lump sum and the other half as an annuity later _ a move that could ensure they received at least some payout even if Delta later filed for bankruptcy. It's not clear how the lump sum benefit would be affected in bankruptcy, but bankruptcy judges have great leeway in approving changes to company operations.
Everyone likes to rip up Southwest, but they are the only one that makes money and are wait for the drumroll.....................
Well managed.
Thats why they arent broke and always begging for money from the government at the food line saying "More please *cue sad eyes*"
Southwest took a bunch of there money and pre purchsed fuel at locked in prices a few years ago...
Like you know you buy fuel at todays prices but take delivery in a year.. I forget exactly how it works..
Last edited by Vashner; 09-15-2005 at 02:01 AM.
And it's fun when they let you help inspect the planes before takeoff
always a critic.
T Park-
When I was in Mexico on vacation this summer, I read a book called The Southwest Airlines Way. Really taught me quite a bit about how communication between departments, full disclosure, and taking care of your employees goes a long way into creating success for everyone involved, from the baggage handlers to the corporate executives. SWA and Kelleher challenges their management to make their subordinates look forward to come to work every day.
I'd probably pay out of my pocket to go to a Herb Kelleher seminar. And I am a really cheap when it comes to motivational and enrichment type of stuff. , I bought the book at Half Price Books.
Check it out if you ever get a chance. Here's the Amazon link.
http://www.amazon.com/exec/obidos/tg...glance&s=books
Thanks.
Herb is a of a guy (republican I believe, if not, he can burn in JK!!!!)
J-6 do you own a business of any sort? Would that be your motivation to want to see his speech?
Or just a big HERB fan?
I'm a services (janitorial and janitorial supplies) broker right now, so I sort of am. I'm trying to get financing to open up a bar and grille in DFW, so readindg about successful business owners and their practices keeps me motivated. Kelleher and SWA are inspiring because while all these other airlines are filing for bankruptcy, and Southwest has to endure BS like the Wright and the Shelby Amendments, they're still making money hand over fist. And it's cheaper to fly with them than anyone else on top of that!
I guess the best example would be if HEB rose out of Central and South Texas to grow nationally and starting kicking Wal-Mart's ass around the block, with happy long term employees and even happier stockholders.
Change the words to bar grille and sports bar and put it in San Antonio and youd be me.I'm trying to get financing to open up a bar and grille in DFW,
SWA has its faults, like EVERYONE in this crazy mixed up world. But they are the best in airlines.
I'm not trying to cue TheWriter or anything here, but San Antonio is probably the best market in the nation to open up a sports bar in right now. Rent and wages are awfully low. The population is increasing by almost 2% a year - many of which are younger, somewhat educated transplants. The best NBA team, very importnat considering that there's 82 games a season. The possible addition of the Saints. Tourists out the yin-yang, includiing rich Mexican nationals with plenty of disposable income. Loyal support of two top-25 in-state college football teams with UT as a top ten basketball team.
You could open a sports bar (with no kitchen) for about $100K including inventory and make your money back within two years in SA. And there's so many potential locations! The city is unique in that is growing in all four directions...which is very rare for a metro area its size. New Braunfels and Seguin are going to be full-fledged suburbs within this decade.
It would be tough to go wrong with a sports bar in Selma right off of 35 in my opinion.
big thing southwest does is have an old fleet of all the same planes. they save a lot of time and money on not having a million different mechanics plus they can buy everything in bulk since all their planes are the exact same...
They also aren't unionized and pay baggage checkers $50,000 a year. Go unions!
Southwest is unionized - they just haven't had a hateful relationship historically. Maybe you're thinking of JetBlue or one of the other LCC's?
Are you sure? I've heard for years that they weren't ... that's why they were able to keep their costs so low....
Are you sure? I've heard for years that they weren't ... that's why they were able to keep their costs so low....
The airline is approximately 81 percent unionized.
http://www.southwest.com/about_swa/press/factsheet.html
Yeah....I just looked it up.
They're just significantly better run, I guess. So does that mean they pay their baggage carriers $50K, too?
actually, Southwest has a relatively "young" fleet...but you are correct that they standardized their fleet...they stuck with the 737 and struck a deal with Boeing to supply all their planes with identical flight deck controls even as they changed over the years...so basically all their pilots can fly any plane in the fleet...unlike these other airlines flying dozens of different types and variations of models...that means that their pilots have to be constantly "checked out" on the various types and "upgraded" versions of the planes in the fleet...and that every day they go to work they could be flying a "different" plane with different control configurations...
Yeah....I just looked it up.
They're just significantly better run, I guess. So does that mean they pay their baggage carriers $50K, too?
I read a book by some lady who used to be the head of the FAA. She said that SouthWest had the least amount of accidents of all airlines at the time.
I haven't used them in years. Mainly because they don't fly into John Wayne airport from SA.
Well, from what J6 said above, they take care of their employees. Perhaps that is why they have such a good relationship with the union?
American Airlines is totally screwed in this process and it will end up hurting us in SA because they are such a big presence in SA because of their Dallas hub...
American is just barely healthy enough to avoid bankruptcy now...with all their major compe ion beating the October 17 bankruptcy deadline they will be able to have a judge cut their costs and overhead and ultimately undercut American on pricing...when American finally goes down they will probably have to be liquidated...
Missed that post the first time around.
But I do know someone at United who checks people in on flights and sometimes drives the baggage cart. He makes close to $50K....and he certainly isn't the only one that is grossly overpaid for the skills necessary for the job....and you basically have to kill someone on duty to get fired...that certainly isn't going to help employee production. I don't see how ANY of them can operate like that.
I think the bigger danger are the overpaid CEOs. It takes a large group of employees to reach the same level of overpayment one CEO can get. Shareholders interests come first, right? I hate CEOs.
I know ... I don't know how many of them lasted even that long.
I remember not too long ago the company I worked for was bought out by a HUGE company and inserted a totally unnecessary "division" president @ $250K a year. With foreign compe ion fierce in that industry, margins are very slim to begin with. He effectively put us out of business...and even better, when he even bothered to show up...he spent his time with his feet up on the desk reading the WSJ or doing his kids' homework. He hated me, too.
SWA is against high speed rail in Texas, and are big lobbiers. They are currently trying to repeal the Wright Amendment so that they can make more flights out of Dallas Love Field.
Just received this a few minutes ago:
"Dear Cardmember:
In response to the changing financial pressures of the airline industry, Delta Air Lines has announced that it is restructuring its organization under Chapter 11 of the U.S. Bankruptcy Code. During this reorganization period, Delta will remain open for business and will continue operations as usual. Delta has expressed its commitment to providing customers with a high standard of service, noting that none of the organizational changes will affect the SkyMiles® program."
... sounds good, but I won't be surprised later if bankruptcy proceedings allow Delta to cancel the financial obligations of Air Miles by zero-ing them.
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