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The Honolulu Advertiser
Posted on: Thursday, September 15, 2005

Delta, Northwest file for Chapter 11

 •  How airline bankruptcy affects you

Advertiser Staff and News Services

Northwest Airline ticket agent Tony Egan, left, takes baggage from handler Mike Smallen at Lehigh Valley International Airport in Hanover Township, Pa.

Associated Press

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Delta Airlines CEO Gerald Grinstein, right, speaks to reporters as chief operating officer Jim Whitehurst listens at Hartsfield Jackson Atlanta International Airport after the company filed for bankruptcy yesterday in Atlanta.

Associated Press photos

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The nation's airline crisis deepened yesterday when Delta Air Lines Inc. and Northwest Airlines Corp. both filed for bankruptcy in the face of massive losses, bringing to four the number of big U.S. carriers now operating under the supervision of bankruptcy judges.

Delta and Northwest, respectively the third- and fourth-largest airlines by passenger traffic, said they would continue flying while they try to regain their financial footing — a tall order, given the surge in jet-fuel prices that followed Hurricane Katrina.

The carriers joined No. 2 United Airlines and No. 7 US Airways Group Inc. in seeking Chapter 11 bankruptcy protection from their creditors. Those airlines also continue to operate.

Rarely have four of the largest players in a major business — the quartet carries about half the passengers boarding domestic airlines — found themselves in bankruptcy simultaneously. It's a dubious feat that some analysts said marks the onset of an industry shakeout that many have predicted since the airlines were deregulated in 1978.

Yesterday's filings are not expected to affect Hawai'i's tourism industry, at least for now, local tourism officials said.

"We do not see that it's going to at this point affect Hawai'i," said state tourism liaison Marsha Wienert, adding that she has had conversations with both airlines. "We have heard nothing in regard to it affecting operations in Hawai'i, air seats as well as the personnel."

Northwest operates 10 daily roundtrip flights to Hawai'i and employs 529 people here, a Northwest spokeswoman said. Northwest's 94,644 scheduled seats last month made up 10.5 percent of all scheduled seats to the Islands, state government figures show.

Delta, which has 187 employees in Honolulu and 14 employees on Maui, operates nine daily departures between Hawai'i and the Mainland, an airline spokesperson said. Delta's scheduled seats to Hawai'i last month totaled 71,176, making up about 7.9 percent of the total market, according to state figures.

"I think the Hawai'i routes now are very productive, so in my mind's eye ... airlines in bankruptcy would want to hang on to what were considered their productive routes," said Hawai'i Tourism Authority president and CEO Rex Johnson. "If you noticed during the United bankruptcy, Ha-wai'i didn't lose flights. Other destinations did."

But this latest development underscores the problems in the airline industry and points out how fragile the whole tourism industry is, especially Hawai'i's, which relies on air service, Johnson said.

Joseph Toy, president of Hospitality Advisors LLC, said it's too early to tell. "So far, they've had very high load factors for the Hawai'i market, so I would hope that they would continue to provide the capacity where there's such high demand," Toy said. "But whether that happens remains to be seen."

The bankruptcies could spawn more airline mergers, reducing the number of competitors. US Airways already plans to leave bankruptcy by merging with America West Holdings Corp., the owner of America West Airlines, later this year. The industry's hardship also has enveloped smaller, struggling carriers. Aloha Airgroup Inc., the parent of Aloha Airlines, and ATA Holdings Corp., which runs ATA Airlines, also are operating in Chapter 11.

Advertiser staff writer Lynda Arakawa and the Los Angeles Times contributed to this report.