Northwest, Delta file for bankruptcy protection
No impact seen on airlines' passengers
By Peter J. Howe, Globe Staff | September 15, 2005
Reeling from low-cost competition and crushing debt and pension costs, Delta Air Lines Corp. and Northwest Airlines Corp. filed for bankruptcy protection last night, pushed over the edge by soaring jet fuel prices in the wake of Hurricane Katrina.
With the filings, four of the seven largest US airlines will now be operating in Chapter 11. Delta and Northwest are joining UAL Corp.'s United Airlines and US Airways Group Inc. Just under half of all airline-flight seats available in the US are now being operated by bankrupt airlines, according to the Air Transportation Association, a trade group.
US airlines have struggled for years to bounce back from the aftermath of the Sept. 11, 2001, terrorist attacks, which struck when the industry was already facing deep strains and scant profits before travel demand plummeted.
But so-called legacy carriers like Delta and Northwest that carry big debt and pension loads and operate expensive hub-airport operations have been especially hard hit. They have struggled to compete with low-cost upstarts such as Southwest Airlines Co. and JetBlue Airways Corp., and Delta has even tried to push into the low-fare market with its own brand, Song, which also sought bankruptcy protection yesterday.
The bankruptcy filings are likely to hurt Delta and Northwest stock and bond owners, potentially leaving their investments worthless. But analysts and airline executives agreed that it should be a virtual nonevent for passengers. Delta is the second-biggest airline at Logan International Airport in Boston after AMR Corp.'s American Airlines, serving roughly 100,000 passengers a week, or 20 percent of Logan traffic. Northwest is a distant fifth at Logan, serving 5 percent of passengers, according to airport statistics.
