Fuel costs blamed
Airlines
From C1 ning deep concessions from its employees. The other so- called legacy carriers, those with a large presence in multiple regions prior to deregulation in 1978, are Northwest and Continental Airlines Inc.
Continental and American are in no immediate financial danger. Continental had a big cost advantage over other traditional airlines after it slashed expenses during two court- protected reorganizations in the 1990s. American may be the strongest financially of the traditional airlines, thanks to $ 1.8 billion in annual labour concessions it won in 2003. Its parent company actually turned a profit in the second quarter. But even the stronger carriers are finding business harder with fuel prices soaring, carrying crude oil futures above $70 a barrel earlier this month. Some smaller carriers, including Hawaiian Airlines and ATA Airlines Inc., also have filed for protection in recent years. Hawaiian emerged from protection in June. The airline industry was devastated by the Sept. 11, 2001 terror attacks, which prompted many people to cut back on flying. The recession and slow economic recovery in the early part of the decade also eroded airlines’ business, and the rise of low- cost carriers such as JetBlue Airways Corp. further stymied the big carriers’ rebound. Throughout 2004, Delta warned investors that it might have to file for protection if it didn’t get deep wage concessions from its pilots and restructure its heavy debt. Then, last fall, it got $ 1 billion in pilot concessions and another $ 1.1 billion in financing, giving the airline some breathing room. But fuel prices began to soar, and the losses continued. As of June 30, Delta and its subsidiaries had 65,300 fulltime employees and 869 total aircraft that the airline owned or leased. Delta also owns a regional feeder carrier, Comair Inc., and Song.
Delta is the nation’s third- largest airline in terms of annual revenue. Northwest is the fourth largest. Meanwhile yesterday, US Airways Group Inc. announced that creditors had approved its Chapter 11 plan of reorganization, anchored by its proposed acquisition by America West Holdings Corp. A judicial confirmation hearing, scheduled for today, is the final hurdle to US Airways’ exit from protection, which it has operated under twice in three years. The acquisition by America West is expected to close within weeks. Even though America West is considered the financially stronger company, the US Airways name will survive and be used when the nation’s seventhand eighth- largest carriers combine to create the Number 6 airline.