Delta Airlines Emerges from Bankruptcy

The biggest news story in Atlanta right today is the emergence of Atlanta's Delta Airlines from bankruptcy. After 19 months of Chapter 11 protection, Delta is calling itself a "fierce competitor" in the airline industry.

This early emergence from bankruptcy is being heralded as "a great day in Delta's history". It is also a great day for the Metro Atlanta Area. In addition to announcing the chapter 11 exit today, Delta also unveiled a new logo, which is part of a rebranding campaign. This New Delta rebranding cost the company 10 million dollars. During the year and a half that it took to restructure the business and bring financial life to the airline, jobs were eliminated, costs were cut, and the focus of the airline was altered. A major corporation has struggled and found its way back, but many individuals have suffered in the process. Thousands of employees have lost their jobs, and the remaining employers have lost pensions and benefits. Employees are now being promised about $13,000 in bonuses and stock options.

Chapter 11 bankruptcy is an interesting process. First, the debtor files for bankruptcy protection to allow restructuring of debt. They are allowed to say in possession of all assets. Next creditors committee is appointed from among the top creditors. This committee represents other debtors and vote on whether or not to approve the debtors restructuring and repayment plan. In some cases when the committee will not agree to the plan, the plan is forced or "crammed down" on creditors based on the debtor meeting statutory tests. The success rate of chapter 11 bankruptcy is less than 10%.

In Delta's case, Chapter 11 bankruptcy did work, and creditors and employees are breathing a sigh of relief. Here is a timeline of Delta's Bankruptcy proceedings:

September 14, 2005: After a year of cutting Pilots pay and citing high fuel prices for losses, Delta Filed for Bankruptcy.

April 14, 2006: Delta avoids a pilot strike as pilots reach a tentative agreement on more pay and benefit cuts.

April 2, 2006: "Effective date for termination of Delta pilots' defined benefit pension plan."