Delta bankruptcy
The number 3 US airline carrier recently ended its run from getting bankrupt by shedding jets and staff and on the other hand raising fare prices.The event saw the company battling over 19 months in a hostile $ 10 billion takeover bid. In another attempt some time back which by analysts was a pointer towards the fact which was not so clear that the airliner was heading towards bankruptcy the airliner was set to sell off one of its regional carriers Atlantic southwest airlines to sky west inc.
This in the wake of rising fuel prices and a high debt that many US based air carriers had to face which also had delta in its list. The deal would have seen delta generate around $425 million which would still leave the debtor with $20 billion dollars to be cleared in the form of outstanding debts. Delta was supposed to use the liquidity to get rid off some of the debt incurred and some of it would be set aside as liquidity to solve other issues. Southeast airliners are no longer a part of the delta airline portfolio and the remaining two divisions would also be on offer for sale.
Delta had to cut down almost one in six jets that would be functional and had cut around 20 percent of the current 60,000 workforce that it had with it. It also saw the company turning in under funded pilots pension plans to a federal pension agency. The domestic sector which sees the airliner enjoying dominance also saw its strength coming down by 10 percent since it filed for bankruptcy which saw the airline having around 84 percent of its seating getting booked as compared to the 72 percent the month it had filed for bankruptcy. That figure was further boosted by around 15 percent in that quarter as compared to the earlier quarter.
The sale of Delta Air elite which was the face of the jet setting corporate consumer base and also the most profitable sector as far as revenue generation was concerned would have sent out wrong signals across the globe and the aviation industry about the Airlines poor financial health of the company and would have highlighted the bitter fact of the company not being able to recover from its debts. US airways, which by many is a rival for delta had already placed a bid for its take over; was held off, which could make the markets see less competition in the absence of delta and a possible monopoly and increase in air fare in case of absence of competition. At a point of time cash rich bidders like Gulf Stream and TAG aviation were also in the wait to grab an opportunity for placing bids for taking over the company.
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