Subject: Delta Goes to BK Court Received in email. Not sure original source.Tongue in cheek article a pilot in Dallas wrote about a fictional trip to the bankruptcy court.Hope its not too large. "Delta Goes to Bankruptcy Court" A fictional tale, I hope, for your amusement. [This article appeared in the last issue of the DFW Round Up, before we offered our latest concession package.] Judge: Ok, let's get these proceedings started. I understand you are the attorney representing Delta Air Lines, and that Delta Air Lines is seeking protection under the chapter 11 of the federal bankruptcy code. Is this correct sir? Delta's attorney: Yes your honor. Here are the required documents and evidence. JUDGE: I must now review actions by Delta Air Lines leading up to this situation. Please state your case. DL: Your honor, for the past three years, Delta has suffered major financial losses and a dramatic increase in debt. We are now in a position whereby we cannot pay the debt service given our current revenue and costs. We feel, the primary culprit of our financial situation is pilot salary costs and we seek relief from the pilot contract. JUDGE: That's it? Just the pilots? DL: Uh, yes your honor. JUDGE: Well looking at your quarterly financial reports for the past 7 years, it appears you have let your debt level to swell up to around 20 billion dollars, which causes roughly an annual debt service of a billion dollars per year. So I'd like to see where all this debt came from. First, I see that your company engaged in a 2.5 billion dollar stock buyback program. How much is this worth now? DL: Um, virtually nothing. JUDGE: You also spent over 2.5 billion dollars purchasing Comair and ASA? DL: Yes. Both these companies were subcontractors of ours previously. In the case of ASA, there was quality control issues we felt could be better managed if we owned them. As for Comair, by outsourcing to them so much work, we allowed to become a monopoly in our Cincinnati hub. We were afraid they could become a competitor, or be purchased by one of our competitors. JUDGE: OK, I also see that your management then went on an aircraft spending spree, buying hundreds of regional jets for your Comair and ASA Delta Connection division at a cost of an additional few billion dollars. I hope these planes are a wise investment. Are they are cheaper to operate? DL: Well not exactly. These regional jets have a seat cost of around 16 to19 cents per seat mile whereas our existing mainline jets cost about 9.5cents. JUDGE: So then I hope they attract more passengers. They are more comfortable, right? DL: No, they are smaller, offer no first class, no overhead storage, and you have to be a contortionist to use the lavatory. But they sure beat flying a turboprop. We believe we can we create greater demand due to higher frequency when we replace mainline flying with these jets. JUDGE: So you offer more of a product your customer doesn't truly prefer? DL: Yes, but they are profitable. JUDGE: Well how can that be when they cost almost twice as much to operate? DL: Oh that's easy. Delta mainline subsidizes them by purchasing their airplanes, paying for their facilities, providing marketing, as well as reservations, distribution, etc. etc. Basically, we pay all their fixed costs. JUDGE: Well how would Delta mainline be doing if Delta Connection was actually paying their own expenses? DL: Well it doesn't matter, we are all one big company and all the money goes into one big pot, so to speak. JUDGE: Then how do you know if the regional jets are truly profitable? DL: Um, I'll have to get back to you in about four to six weeks on that one. JUDGE: And if all your money goes into one big pot, how is it you figure that your mainline pilot costs are your problem? DL: Look, we need to get our costs down and this is the easiest expense to go after, OK! JUDGE: That is your plan? I did mention you have to have a viable business plan, right? How is your Song operation doing? DL: Great! It is profitable, customers love it, and it has received great reviews from the press. JUDGE: Because you have gotten lower cost pilots at Song? DL: Well your honor, that is not exactly correct. Song uses the same mainline pilots at the same pay rates. JUDGE: Bailiff, can you get me some aspirin? I am getting a headache. Bailiff: Here you go sir. JUDGE: All right, what about these charges of over a billion dollars for terminal improvements in Boston and New York? DL: Well, our old terminals looked "yucky." JUDGE: "Yucky?" How about the 600 million you lost due to the Comair strike? I hope it was worth it. DL: Well, we settled at our last offer, so we didn't really save anything. We figure the difference between what the Comair pilots wanted and what we gave them will have been worth it in about 20 years. JUDGE: And I see a few hundred million dollars spend for stock equity in a South American airline? DL: That airline unfortunately went out of business, your honor. JUDGE: I see. I mentioned that Delta needed a viable business plan. You do understand this would presume a management team capable of competent execution and decision making. It appears as though your management has exercised all the financial restraint, responsibility and competence of a spoiled sorority girl with her father's Neiman Marcus charge card. Were they penalized? DL: Um no. Actually we gave them bonuses. And a separate "bankruptcy proof" retirement trust fund. You have to pay top dollar to keep top talent! JUDGE: And have been able to keep top talent? DL: Well, the funny thing is.............um.......they kind of...........left. JUDGE: All of them? DL: Just about. JUDGE: Shouldn't you raise ticket prices? DL: I'll have to get back to you on that one as well, your honor. You see, a funny thing happened. We tried to save money by cutting out travel agent middle men by forcing our customers to the internet. And we kind of lost control of our product distribution. (Heh, heh!) We believe the customer always goes with the lowest price.