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Flying The Nearly Bankrupt Skies -- Again?

Posted By admin || 28-Jan-2009

Delta, the world's biggest airline carrier announced a 1.4 billion loss in the final three months of 2008, according to an article in the Star-Telegram. Delta, which recently emerged from bankruptcy, lost a total of $8.9 billion for the entire 2008 fiscal year. Air travel demand has fallen sharply as consumers face job losses, bankruptcy and foreclosures and airlines such as Delta may be headed for bankruptcy again.

The article quoted Delta Chief Executive Richard Anderson and Delta President Ed Bastian:

"We're facing a very different world this year," Anderson said.

It's not just leisure travelers who are not spending as much, it is business travelers as well.

"They're flying in the front cabin less often," Delta President Ed Bastian said of travelers.

Anderson is right on the money when he says that we're facing a different world this year. There is a major contraction in not just spending; but in the amount of credit available that made all of our prosperity possible over the past ten years. Now, consumers who have no access to cash or credit are facing job losses, foreclosure and bankruptcy. Those consumers don't have the money to fly like they did in the past. Delta, whose bankruptcy reconstruction recently ended, may be facing bankruptcy again because the present conditions are not hospitable to high overhead companies that depend on discretionary spending amongst consumers. Today's present economic conditions state that there is very little and in some cases no discretionary income to spend.

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