Delta's independence uncertain

A year ago, Delta Air Lines was struggling to stay out of bankruptcy-court protection. Increasingly, the question for the nation's No. 3 carrier, industry analysts say, is whether it can survive at all as an independent airline.

Buckling under soaring fuel prices and $26 billion in debt, Delta got some relief last week when it sold a subsidiary airline for $425 million. But the sale of Atlantic Southeast Airlines to St. George-based SkyWest only bought Delta time to mull its next moves.

Executives at Delta, which operates a hub at Salt Lake City International Airport, now face a pivotal decision. They can stay the course and try to raise more cash by borrowing or by selling more assets.

Or they can join competitors United Airlines and US Airways and attempt to reorganize in Chapter 11. Heavy debt, shrinking cash and a change in the law giving the airline more flexibility if it files before mid-October appear to be pushing it toward a bankruptcy filing.

But in the brutal new world of $65-a-barrel oil and relentless low-fare competitors, Delta's historic strengths may not be enough to carry it beyond bankruptcy. US Airways, for example, has visited Chapter 11 twice since 2002 and couldn't survive alone. It's being acquired by America West.

"As a stand-alone carrier, Delta is the weakest of the Big Five (American, United, Delta, Continental, Northwest)," says airline analyst Bill Warlick of Fitch Ratings, because it doesn't have as broad an international route network.

Veteran airline analyst Phil Baggaley of Standard & Poor's says that even if Delta were to cut costs and debt in Chapter 11, its post-bankruptcy success wouldn't be assured.

"Whether or not it could be profitable is hard to say," Baggaley says.

Delta says all its options remain open. Says Delta spokesman John Kennedy: "In or out of court, we have a plan."

Harsh realities

Delta has formidable strengths. Its operation at its hometown airport of Atlanta is the biggest airline hub in the world. Delta is a force in New York, the world's biggest air market, and in Florida, the nation's top tourist haven. It is the leading U.S. carrier to Europe in terms of flying capacity.

But, as it wrestles with the question of whether to seek bankruptcy protection in coming weeks, Delta faces these realities: