US ‘legacy carriers’ struggle

By Administrator |

United Airlines (UAL), Northwest Airlines and Delta Air Lines are all continuing to struggle under the protective blanket of US Chapter 11 bankruptcy protection, although there are some signs that United is making some

progress.
UAL announced in a statement yesterday that is planning to spend $400m this year on refurbishing its aircraft cabins and equipment in an effort to try and lure customers back and as part of its greater effort to emerge from three years of Chapter 11 debt protection.
UAL is the biggest US airline under bankruptcy protection and it is effectively trying to spend its way out of trouble after racking up $14bn in losses since 2000, eliminating 45,000 jobs and making cuts of $7bn.
Meanwhile, Northwest Airlines is still deep in the debt mire, having requested more time to construct a viable bankruptcy exit plan. The airline says it hopes to be able to present this by the end of 2006.Northwest management says it is looking for total annual savings of $2.5bn before it can safely emerge from bankruptcy.
Just to make matters worse, Delta Air Lines has also asked the courts for another six months grace to file its reorganisation plan. Delta filed for Chapter 11 bankruptcy protection on the same day as Northwest.
But some airline sector analysts believe that the long standing overall financial woes of the US airline industry will only start to disappear when overall capacity in the market is cut. Roughly translated, this means that some analysts would prefer to see one or more of the legacy airlines disappear altogether.

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