Right idea, but 30 days early.
I previously discussed a likely Northwest Airlines Chapter 11 petition before new bankruptcy rules took effect October 17.
But the apparent speed of filing wasn’t just a new Chapter 11, but a large dose of Chapter K — as in Hurricane Katrina. The New York Times reported yesterday that the rising cost of jet fuel may have been the final staple in the petition, forcing the hand of CEO Douglas Steenland. I still think this was inevitable, but when you start missing aircraft lease payments, you risk having the repo man show up on the tarmac. For some reason that frightens passengers. Delta, in even worse shape, filed the same day.
Former Continental Airlines CEO Gordon Bethune has observed that Northwest and Delta may consolidate operations. This report also describes in a nutshell the sad state of the US airlines industry:
The only U.S. airline that has been consistently profitable in recent years is Southwest, whose stock value exceeds that of all other U.S. carriers combined. The biggest and oldest carriers like Northwest and Delta have high costs and pension liabilities that a young company like Southwest does not have.
Given how Northwest dominates airline service in the Midwest, we now will join much of the rest of the country in flying on bankrupt carriers (United and US Airways are already in the tank).
Something to think about when you are on final approach.
Update (20 Sept 05):A silver lining in this dark cloud? Lawyers get ready to soar.