Flying on empty

The announcement by US-based airlines Delta and North West that they are filing for chapter 11 brings to a total of four the number of big name ‘legacy’ US carriers now operating under the Chapter 11 rules, which offer companies protection from their creditors while still allowing them to trade. Alongside earlier applications by the parent companies of both United Airlines and US Airways, this now also means that getting on for 40% of available North American airline seat miles are being offered by companies that are in such dire financial straits that they can’t and won’t pay their bills.

The parlous state of the traditional airline industry across the pond – which has lost a collective £16.5bn in the last four years – has been compounded by falling passenger numbers and spiralling pension deficits, and the spike in fuel prices after Hurricane Katrina has been blamed for this latest bout of woe. But the truth of the matter is that it’s a tough old world out there and only the fittest and most adaptable survive. As US airline bankruptcy lawyer William Rochelle – who clearly has a touch of the John Grishams about him – put it: ‘We are reading the first page in a thriller that will either end in resurrection, or the death and burial of an entire industry as we know it today.’

by
Last Updated: 31 Aug 2010

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