Restructuring / Turnaround Strategies Case Study

Delta Air Lines: Flying Out of Bankruptcy?

Abstract:
Delta Air Lines Inc., one of the leading carriers in the US, filed for Chapter 11 bankruptcy protection on September 14th 2005. Delta’s bankruptcy was ascribed to a variety of factors ranging from September 11th 2001 terrorist attack on the US to soaring fuel prices. Delta, which had survived an initial takeover bid by US Airways earlier in November 2006, was optimistic about its future as an independent airline. On January 31st 2007, US Airways withdrew its subsequent $10.2 billion bid to take over Delta Airlines, after it failed to convince Delta’s creditors. US Airways’ offer for Delta had been viewed by analysts as a deal that would set the tone for airline industry consolidation in the US. What are the implications of Delta’s bankruptcy on the US airline industry? What does the future hold for Delta Airlines? Will the restructuring efforts of Delta be successful? Will Delta emerge out of bankruptcy and retain its independence?

Pedagogical Objectives:

• To understand the contribution of US airline industry to the overall economic performance of the country
• To provide an overview of the US airline industry and the competitive scenario
• To discuss about various factors that contributed to Delta Airlines’ bankruptcy
• To discuss how Delta is trying to emerge out of bankruptcy and it’s restructuring plans
• To analyse the scope and limitations of consolidation in the US airline industry.

Keywords : Delta Air Lines; Airline Industry; Legacy Carriers; Network Carriers; Bankruptcy; Turnaround Strategies; Chapter 11; Operating Cost; CASM; Deregulation; Business Model; US Airways; Restructuring / Turnaround Strategies Case Study; Gerald Grinstein; LCCs