After months of speculation, Delta filed for Chapter 11 bankruptcy this week, raising questions about the future of the Atlanta corporate icon and the fate of thousands of local workers. Delta said it arranged $2.05 billion in financing as it reorganizes, and CEO Gerald Grinstein pledged, "Delta is open for business as usual and will continue normal operations throughout the reorganization."
In its filing with the Securities and Exchange Commission, Delta said it wants to streamline its fleet by removing four types of aircraft by the end of 2006. The company plans to deploy smaller aircraft on many of its routes, a reflection of higher fuel prices and fewer passengers in recent years.
Like other carriers, Delta struggled in the wake of the Sept. 11 attacks and could not recover.
Customers to remain
No. 1 priority
CEO Grinstein pledged customers remain Delta's No. 1 priority and travel plans, including the frequent flyer program known as Skymiles remains secure. Consumer analysts said customers can continue buying Delta tickets, but should purchase them on a credit card in case some flights are canceled.
Edward Hasbrouck, a consumer travel expert familiar with airline bankruptcies, said customers need to remember a bankruptcy court, not Delta, is calling the shots. He also said Delta's claims that travel plans and Skymiles remain secure can be "a bit misleading."
"They are not mentioning that all their plans are subject to the approval of a bankruptcy court," Hasbrouck said.
Energy costs on the rise
Metro Atlanta saw an 8.9 percent increase in energy costs in August, the Bureau of Labor Statistics said this past week. Consumers are paying nearly 22 percent more for energy consumption since the year began, and high natural gas costs are expected to hit this winter.
The recent surge in energy costs is primarily the result of higher gasoline prices, which soared briefly to more than $3 a gallon last month. Hurricane Katrina is to blame. When the storm hit the Gulf Coast, it disrupted oil production and supply.
Jobless claims up
Hurricane Katrina continued making economic news.
The storm, which displaced thousands of workers in Louisiana and Mississippi, caused the largest one-week surge in jobless claims in nearly five years. Analysts warned the increase in claims signals more bad news for the economy is probably on the way.
- The Associated Press contributed to this report.
Doug Sans can be reached via e-mail at email@example.com.