Delta president: bankruptcy was a good thing

photo by Drewski2112

At a recent gathering of the Detroit Regional Chamber's Mackinac Policy Conference, Delta Air Lines president Ed Bastian said that Chapter 11 bankruptcy was a good thing for the newly merged Delta and Northwest, according to a Detroit Free Press article. "Bankruptcy worked for our companies... Now we stand as the strongest airline in the United States and the largest in the world," he said.

Yes, in terms of financial performance, bankruptcy did indeed 'work' for Delta. Just a few years ago Delta was struggling with high labor costs (some pilots at the airline were paid as much as $300,000), high fuel prices, and Song, a low-cost offshoot set up in 2003 to compete with jetBlue that ultimately failed three years later. It filed for bankruptcy in September 2005 and emerged in April 2007 a much stronger carrier, having cut labor costs and restructuring its route network, expanding its list of international destinations. And the merger with Northwest was well-timed and well-executed, with the airlines' route networks containing little overlap.

So even though Delta might be in a relatively strong position, I'm willing to bet that many of its employees have less-than-fond memories of the Chapter 11 process - recent grumblings over executive compensation being proof.