From Deseret News archives:
How would Delta handle bankruptcy?
Workers, retirees, customers would all be affected
Now, with Delta weakened by a relentless 3 1/2-year financial slump and saddled with high costs, bankruptcy speculation is no joke. The airline itself has raised the Chapter 11 warning flag if it cannot retool to adjust to compete in a rapidly changing industry.
Any court filing is still months away, most industry experts believe. Some say a pay-cut pact with pilots could still buy the Atlanta airline enough time to fix its high costs and regain its competitive form.
But what happens if Delta does file bankruptcy? Many already wonder how a Chapter 11 filing by one of the nation's largest airlines, which operates a hub at Salt Lake City International Airport, would affect customers, employees and retirees.
Here are a few key questions and answers about what would and wouldn't happen in a Chapter 11 case at Delta.
Question: Would a Chapter 11 filing mean Delta is going out of business?
Question: Why would Delta consider filing for Chapter 11?
Answer: If management concludes it cannot reduce the company's high costs and manage its $20 billion debt load, the board of directors could use court protection to essentially freeze its debts and work out a reorganization under a judge's supervision. With a judge's approval, Delta would be able to reject its pilot labor contract and some airport, office and aircraft leases and other agreements to negotiate new terms. Delta's debt-holders and creditors would likely agree to forgive a portion of their claims and to convert some debt to stock or other holdings in the reorganized company.
Question: Would passengers be directly affected by a bankruptcy filing?
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