The lines at the Delta Airlines counters in Atlanta this week were as busy as ever. Passengers were buying tickets, upgrading seats and making reservations for future flights. The only thing missing was any sign that the airline headquartered there had just filed for bankruptcy within the past week.
The planes are still flying as usual for both Delta and Northwest which also filed for Chapter 11 bankruptcy protection late last week. Delta has lost $10 billion since 2001. Northwest Airlines, crippled in recent weeks by a mechanics' strike, has been hemorrhaging $4 million a day.
Both airlines say it will be business as usual for the nation's travelers. It's the airlines' investors and creditors who will be left in mid-air. Workers, too, as history shows most will be asked for more salary and benefit cuts to shore up the carriers.
Four of the nation's major airlines are protected under Chapter 11. Delta, Northwest, United and US Airways all sought the court's protection from creditors.
Normally, if a business can't pay its bills, lenders stay away. But not with airlines. The cash-generating companies have lenders lined up to help them. They often get preference at the top of the payback chain, ahead of folks who have been there for years.
Lenders provide "debtor in possession loans." The Chicago Tribune reports most of them emerge whole in airline bankruptcies. The liquidity is there as cash flow is not jeopardized if they keep flying. Vendors often get pennies on the dollar and employees might lose their pensions but the lenders usually come out ahead.
