Delta Bankruptcy Here it Comes

[vc10]

Who knows, perhaps this week will bring news of an equity player and a life boat to maintain the Delta network until the low cost carriers lose their fuel hedges.

Not without further employee givebacks. Chances are, if there's any uncertainty DAL will want to use the old bankruptcy law (to which access is removed on Oct 17) rather than the new.

Any deal with new financiers will be contigent on further wage givebacks. DAL pilots are still paid a lot more than those of, say, United. So givebacks need to be in place by Oct 17. So far DAL hasn't even broached the topic, at least publicly.

The General is right --- there's a lot that DAL could sweep away in Ch 11 that it won't be able to do outside of there. DAL's fleet could get significantly smaller in Ch 11. The RJ50 fleet in particular is likely to get a lot smaller.

But Ch 11 isn't anything to welcome. Both American and UAL had their crises at about the same time. AA decided to do it outside of Ch 11. UAL decided to do it inside. Which has done better since? No question, American, despite not having the tools of Ch 11.

Of course, you could also just argue that United's management is a lot worse than Americans. That would also be true. Unfortunately, DAL's management is not in the same class of that of American.

 

[michael707767]

The General is right --- there's a lot that DAL could sweep away in Ch 11 that it won't be able to do outside of there. DAL's fleet could get significantly smaller in Ch 11. The RJ50 fleet in particular is likely to get a lot smaller.
.

I don't think the fleet will get significantly smaller. I do think you will see an acceleration of the retirements of the 737-200s, 300s and 767-200s, but they were going to be gone soon anyway. What I do think you will see is the leasing companies finally lowering the lease rates. Delta has been paying way above market rates on most of the leased aircraft.