Two of the biggest U.S. carriers, Delta and Northwest, could both head to bankruptcy court Wednesday after years of losses, with high fuel costs wrecking their weak finances even further after Hurricane Katrina.
Northwest's board is scheduled to meet Wednesday to decide on a Chapter 11 filing, said Will Holman, a spokesman for the Air Line Pilots Association union, which has a member on the board.
An industry consultant told The Associated Press this week that Delta Air Lines planned a bankruptcy filing late Wednesday.
Delta is the third-largest U.S. carrier, while Northwest ranks No. 4.
Delta's board also plans to meet Wednesday, and the Atlanta-based carrier planned to file its Chapter 11 petition after the markets close, The Wall Street Journal reported, citing people familiar with the situation, reports CNN.
Both companies were completing bankruptcy plans yesterday. Officials at each airline said a final decision had not been made to seek Chapter 11 protection.
A filing by Northwest would need the approval of its board, which is set to meet today, its pilots' union said in a statement yesterday. The union has a representative on Northwest's board. Delta's board met last Friday.
Any filing by either airline would be made in United States Bankruptcy Court in New York. Delta's filing has been anticipated for weeks, but any Northwest move was not expected for several more weeks as it continued to try to win the $1.4 billion in concessions from its labor unions that it said it needed to avoid a court filing.
But the jump in fuel prices in the wake of Hurricane Katrina moved the company's timetable forward, people with direct knowledge of Northwest's position said last night. Still, a lively debate was expected at the board meeting over whether to file now or wait, these people said.
Bankruptcy filings give companies a chance to overhaul their operations and negotiate lower payments to creditors as well as streamline in ways they could not accomplish outside of court protection, informs The New York Times.
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