SocraticGadfly: Oil prices hit Delta hard

March 18, 2008

Oil prices hit Delta hard

The financially struggling airline is grounding planes as its response to oil prices hitting $110/bbl. It’s also offering voluntary severances to more than 30,000 of its employees, or the majority of its workforce.

I am guessing that this also may have ramifications for on-again, off-again merger talks with Northwest. The main hangup there is pilot seniority; certainly, if enough pilots take a severance offer, that would be open to new discussion. Delta, as the larger airline, said it won’t go ahead with talks unless a seniority deal is in place.

The No. 3 airline is joined in the plane groundings by No. 4 United (mistakenly identified as No. 2 in the linked story). United is grounding older 737s. Delta expects to ground about 5 percent of its fleet capacity and United about 4 percent

Southwest, which flies nothing but 737s, has so far indicated is it going to try to hang on and wait for an even later generation of aircraft rather than replace its oldest 737-300s. However, the United and Delta moves could get it to reconsider, especially if Southwest also spun this as a PR move to address recent questions about Southwest’s airplane inspections and maintenance.

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