Page 3 Current Events
Delta Air Lines and Northwest Airlines,the third and fourth largest air carriers in thecountry, have filed for bankruptcy protection.The filings, which occurred within minutes of each other, were the result of a long buildup of financial problems for the American air travelindustry.One of the main factors in Northwest’sbankruptcy was the cost of labor. The airlinehad been flying for a month withits unionizedmechanics on strike, after failing to secure con-cessions on wages, and faces a $3.8 billionshortfall in payments to employees’ pensionplans. Both Northwest and Delta were also hurtby competition from smaller, lower-cost domes-tic carriers, and a dramatic increase in the costof jet fuel. Northwest expects a fuel bill of $3.3billion for 2005, significantly higher than itscosts of $2.2 billion in 2004 and $1.6 billion in2003. Delta’s costs are 50% higher than theywere last year.The air travel industry has never reallyrecovered from the slump in traffic followingthe September 11 attacks. Delta and Northwest join United, the second largest American airline, and US Airways, the seventh largest, inbankruptcy, meaning that nearly half of thenation’s air capacity is running on bankruptcarriers. American Airlines, the country’slargest carrier, narrowly avoided bankruptcy in2003, and has returned to profitability.Overall, the American air travel industryexpects to lose a total of $8 billion this year.Northwest, which had been struggling longbefore the attacks, was granted massive taxpay-er-funded bailout packages from the state of Minnesota, in exchange for maintaining jobs inthe state in 1991 and 1994, but another suchdeal is unlikely. Minnesota Governor TimPawlenty, when asked if he would consideranother aid payment, said “Given how farthey’re in debt, it is really beyond the capacityof the government to save the day.”Analysts say that failures of manage-ment to react to changes in the market are asmuch to blame for the poor performance of air-lines as rising fuel prices. A reluctance to alterlabor relations and respond to the threat of low-cost, low-fare upstarts dragged down the largestcarriers. In most cases, the attempts that weremade at cutting costs came far too late. Forexample, until October of 2004, Delta’s pilotswere being paid under a contract negotiatedbefore 9/11. Some critics of the system believethat government aid and the protection of bank-ruptcy court allows large airlines to maintainpoor business practices without the fear of actually being hurt.The nearly simultaneous bankruptcieshave led some in the industry to speculate on amerger between the two carriers. Delta andNorthwest have had talks in the past, but noth-ing came out of them. The merger would be pos-sible, as the carriers have very little route over-lap. Delta, based in Atlanta, primarily servic-es the eastern US, and launches many dailyflights across the Atlantic. Northwest is con-centrated in the Midwest, with extensive serviceto Asia. The lack of overlap means that a merg-er between the two would not significantlyeffect competition in either of their primaryareas of focus, increasing the chance that such amove would be allowed by federal regulators.Both airlines intend to continue flyingunder bankruptcy, hoping to minimize theeffect on passengers, although services willprobably be scaled back as they reorganize andcut costs. Many smaller cities, some of whichare serviced exclusively by Delta or Northwest,are likely to be hurt by the reorganizations.The restructuring of the companies will alsoinvolve delegating more flights to regional part-ners, and of course, cutting jobs. Northwest hasannounced it will begin laying off employees(including 400 pilots) before the end of theyear, and Delta plans to cut 9,000 jobs, on top of the 24,000 it has eliminated since 2001. Deltaalso intends to shed nearly 20% of its fleet. Inthe aftermath of these changes, assuming that nomerger occurs, it is likely that Delta andNorthwest will be more similar to the low-costcarriers, such as Southwest and Jet Blue, whichhelped push them into bankruptcy.
Big Airlines in Trouble, Oh No!
ByAlexWalsh
99 JET BLUE PLANES ON THE WALL, 99 JET BLUE PLANES, TAKE ONE DOWN...Courtesy of Jet Blue
first to admit that I love fuel-cell technology,but at the moment harvesting hydrogen withoutthe use of gasoline is not feasible; therefore thegovernment must give American car companiesincentives to push out hybrid vehicles as fast aspossible. Hybrid technology may not be thegodsend of alternative energy, but at themoment it is the only truly efficient technologythat actually works. The government must wakeup to reality and embrace the technology thathas already been proven to work, otherwise theToyota Prius is going to be the only car on ourAmerican roads.Europeans are way ahead of us when itcomes to harvesting the natural powers of theearth. Homes in Europe are often being builtwith solar power, including windows that cap-ture solar power. Ordinary homes are beingheated by harvesting the geothermal heathoused in abundance in the very earth beneathour feet. Ground source heat pump technologyalready exists and it works, but mostAmericans have never even heard of this won-derful source of home heating power. Our gov-ernment must wake up to reality and give inno-vative companies the tax incentives necessary tocompete with ordinary companies that buildhouses that waste energy. Many state govern-ments, including New York, already do givehomeowners tax incentives to convert to solarpower. Even G.W. Bush’s own home in Crawford,Texas is super-green. Its high-time that thefederal government give tax incentives acrossthe board to individuals and businesses alike tostart harvesting the clean powers of the earth,rather than just sitting back and letting usdestroy the earth with old-fashioned inefficienttechnologies that only cost us humans lots of money and cost the earth all of its natural glory.We are in the midst of a deadly hurri-cane season as I write this. Hurricane Rita isCategory 5, heading towards Texas at themoment. Scientists tell us that this may last 30years or more. Whether you believe that this isdo to global warming or not, is it really worththe risk of sticking with the status-quo when somany good earth-friendly alternatives exist?Some conservative lawmakers toss this kind of advice off as tree-hugging leftist hippie rheto-ric. Take it from a self-proclaimed Reagan con-servative: This is not rhetoric; no, this is themost economically efficient way to take oureconomy forward. It might be worth a look back at the presidency of Richard Nixon; after all itwas Nixon who initiated the most environmentalreform policies of any other president. Fiscalconservatives, its time to realize that environ-mental conservation is the most economicallyconservative road we can take.
Recall the Moron and Don’t Even Try to Makethe Rest of Us Pay for His Idiocy!
ByNatalieSchultzContinued from previous page
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