What's wrong with Delta and Northwest Airlines?

Question

If you are an employee of these airlines, please share with us what you know.

Delta just bought over a billion dollar of CRJ900 airplanes from Bombadier, a Canadian airplane manufacturer. The money they paid for these airplanes will be taken out from the loan Delta just received from its creditors in the amount of $9 billion. Last year, Delta Airlines lost over $5 billion. They have a huge debt as high as $30 billion. Its balance sheet does not balance because its net worth is minus over $10 billions. In other words, its assets are worthless. So if Delta borrowed $9 billion and bought newer airplanes costing over a billion dollars, its debt will continually increased. Delta has been under bankruptcy since 2005. With high fuel prices, Delta will have to survive paying off its debt along with its yearly loss. With a new $9 billion loan and a 2006 loss of over $5 billion, Delta is expected to lose up to $7 billion in 2007.Stock price should fall to $0.30 per share just like last year.

Northwest Airlines still operates 164 DC9 aircraft. DC9 was built by McDonnell Douglas. Douglas no longer exists. It merged with Boeing a few years ago. Northwest received the first DC9 in 1974. DC9, like the Boeing 727, is an inefficient airplane. Both aircraft consume fuel like First World War army tanks. Its stock price is extremely overpriced. It should be where it used to be last year, at $0.35 per share.

With oil price climbing to $78 per barrel before the end of 2007, both Delta and Northwest will find themselves in red ink in a very long time.

Answer 1

Delta is buying new airplanes as part of their revolutionary restructing plan. They are making the most of their bankruptcy and making sure that when they come out of C11 they will be stronger than ever.

And if you look at the estimates for 2007 many forcasters say they will be profitable. They have already saved 8 billion dollars so far this year just be renegotiating airplane leases.

You have to grow to move forward and that's exactly what Delta is going. GO DELTA!

Answer 2

Are you sure Delta bought CRJ900s?

I'm almost 100% sure they had a agreement to only buy Boeing planes, unless you mean ComAir, which Delta owns. And I have also read sites that say by late 2007, Delta will be back into the profit. In fact, this is why they denounced USAir's takeover, because they will emerge from bankruptcy later this year.

And I doubt oil will be $78/barrel before the end of the year.

That's Delta, I'm a little unsure about NW, but it is most likely similar.