readywhenyouare

Delta is rapidly losing money with no end in sight. A few will give the "but their cash reserves..." excuse but there is no way Delta would burn through all of their cash before filing for bankruptcy protection. So what would a hypothetical bankruptcy look like as far as employees, hubs, aircraft, and frequent flyer program look like?

As far as hubs go I think they stay about the same with the exception of BOS. It isn't profitable at all and serves no real purpose to the network. It was a vanity project to take on B6 and it hasn't paid off. SLC could probably stand to take more cuts with the retirement of the CRJ-200. I doubt some of the SLC only cities could sustain anything larger. DTW and ATL could also probably see a reduction of domestic flights with international travel being in the toilet. I'm guessing MSP is Delta's most profitable hub since it has a very wealthy demographic and very little LCC competition. I doubt much would change and maybe get some flights upgraded to mainline and serving more as an easy/west connecting facility. SEA and LAX would handle TPAC flying and JFK handling the bulk of TATL flying.

The fleet would remain about the same.

Pilots and flight attendants is where Delta could have a huge opportunity to see labor savings. If a bankruptcy court throws out the pilot contract there would be nothing stopping Delta from bidding out all of the flying. For example, giving Skywest a contract to operate the 737 fleet, Endeavor the A320 fleet, Republic the 757/767 fleet, etc. This would result in significant cost savings and give Delta a huge advantage over their competitors. And it's not without precedence. Lufthansa has done that with with Eurowings. KLM with Martinair. Air France has done this with the A340 using CityJet and Joon to operate them. And then BA/Iberia with LEVEL. A high pilot salary has no relationship with safety. Look at Ryanair and Norwegian as an example for that. Perfect safety records.

Delta Tech Ops is a profit center so I don't see any changes being made there.

ethernal

This seems to be a common thread - that bankruptcies are somehow "good" and that they will be done early and often. That is an incorrect assumption, if only because the owners (equity holders) would never allow it. Existing equity owners are essentially the least senior debt holders. This means that they are either completely wiped out, or if they retain a stake, are heavily diluted (often on the order of 80-90%+).

When viewed from this lens, there is no incentive to declare bankruptcy while there is still a chance of recovery - or even if there isn't. The end outcome for the owners is the same.

ATOBTTR

For anyone who’s a fan of “The Office”

cmd320

Perhaps they could just divest the entire operation to Emirates. I'd fully support that upgrade.

I'd rather not see the day Skywest operates, well anything. Combining Skywest with a 737 sounds like the worst imaginable flying experience outside the original Crappy Regional Jet.

allseas1586

Give Skywest the 739’s and they can fly them for another carrier!!

readywhenyouare

I've always had good experiences with Skywest. All Delta regional jet types are configured the same so not sure there's much to complain about with the operator. I've always found Skywest employees to be the best among the regionals. Shuttle America seemed to have the worst. Almost robotic and did the bare minimum.

cmd320

Never flew Shuttle America, Skywest employees have always seemed disinterested at best in my experience. My favorite were honestly Compass, RIP.

nerdbirdsjc

A Chapter 11 bankruptcy would not, at present, be survivable for a major US airline. With traffic/revenue numbers down 60-80% YoY, and no immediate hope for substantial recovery, it would be nearly impossible to design a plausible restructuring plan that maintains most of the existing fleet and route network.

cmd320

Great, let them all burn.

GagaPilot

As an Airline Captain myself I won't go into my in-depth thoughts on outsourcing flying, but I will agree that a high salary has no correlation with safety. I say this as a Regional Captain with no intention of shooting for mainline anymore after recent events.

BUT, what is of concern to me: Should DL go the bankruptcy route, what impacts could we see (if any) on Skymiles and the Medallion Program? I've got a hefty amount of miles, and have earned PM status the last few years on leisure flying alone, and value the benefits.

TravelingZoomer

In the likely event of a Biden administration (look at the polls not making an OMNI statement here just saying in the event he wins) I would bet more in another airline bailout than a bankruptcy.

What we might get instead is some sort of US version of EU261.

MSPeconomist

I disagree. I've always found SkyWest RJ aircraft interiors to look very old, worn, dirty, and beat up on SkyWest compared to the same aircraft type operated by Compass, Endeavor, etc., where the planes seemed new and fresh.

My favorite example of this was a SkyWest CRJ-900 (which I had the dubious pleasure of flying several times in succession) where the FC lavatory not only was closed because it was inoperable but also had a very permanent-looking sign or should I say plaque to this effect.

I've also noticed that on this aircraft type, SkyWest has glued the doors closed on the (small) bins over the A side seats in FC. On other RJ carriers, this space is useable for small items, which is especially handy if one is seated in 1A.

VFR

BOS was supposed to be built up as a secondary TATL hub for when they could not add more TATL flights at JFK. Delta has a long history in Boston - the new Terminal A was built for them, but then they declared their 2006 bankruptcy six months after it opened and had to scale back. There is a lot more competition in Boston than some of their other hubs though - B6 is huge and has a following, and AA has a ton of seats to their hubs -- DL took the title of second largest carrier at BOS by passengers carried from AA, but then COVID hit and it's AA again. Then there are a ton of BA flights and quite a few other non-JV European airlines to compete with on the transatlantic route. I do think DL may scale back in Boston, but I think they worked too hard to pull out entirely.

SLC was either #1 or #2 in terms of hub profitability pre-COVID. Routes that can't be flown profitably on anything larger than a 50 seater will definitely be cut, but DL knows they have a good thing going for them with their fortress hubs.

More broadly, what does a restructuring bankruptcy get Delta (or AA or UA)? The last round of bankruptcies allowed the airlines to discharge their pensions onto the PBGC, so there are no pensions left to discharge. DL has only one unionized workgroup (pilots), and owns most of their (older) aircraft. There is the potential of getting out of the 717 leases (held by Boeing Capital I believe -- can be bartered for a new aircraft order), or returning some newer leased aircraft, but that cost savings alone probably is not worth bankruptcy.

Yellowjj

You semi answered your question; it's all about leases. If push comes to shove and travel remains restricted and stagnant, leases/orders will be discarded especially on the widebody front since covid has hit international traffic hard. A few aircraft wouldn't make it worthwhile; but when you can potentially reject hundreds that you can't pay for or was going to be parked anyway, then its a winner.

Gig103

Why is it that when a company's bankruptcy is discussed, critics love to go after the staff contracts? How about force Airbus to restructure some debt and leave people's livelihoods alone. Laying off execs is far more cost effective than some senior FAs.

Delta entered willingly into those contracts, but armchair CEOs love to judge the crew value.