Delta to Emerge From Bankruptcy… and be Profitable?

Posted by Blain Reinkensmeyer
March 27, 2007 at 8:55 pm

This one confuses me as I really do not know what to expect, Delta Air Lines is set to emerge from bankruptcy protection on April 30th. According to the article I read at yahoo finance (link also posted in today’s stock links this morning), Delta will be focusing on improving customer service and continuing to sell more of its assets to give shareholders more value.

Delta is the 3rd largest airline, but can they really compete with the competition that caused them so much trouble to begin with? When it comes to customer service in the airline industry, the first companies that come to mind are Southwest Airlines (LUV) and JetBlue Airways (JBLU). Even with JetBlue’s negative press attention due to the weather delays and people getting stuck on planes for hours on end, the main memory from that ordeal came from a talk the CEO gave after the whole ordeal settled. I remember watching him and really believing that he was actually customer oriented, and I loved his “learn and move on” attitude. Obviously this is just one person’s opinion, but if you saw or heard about it, perhaps you agree? Anyway, my point regarding customer service is you have to EARN your reputation as a customer service oriented company, and for a company with already a cruddy (for lack of a better word) image to come out and say they are going to focus on customer service, I am not buying it! To me, I will believe it once I see it!

Secondly with selling assets to increase shareholder value, this can only go so far. From the article I read, it seems Comair Inc. which is their feeder carrier may be under prospect for sale. This of course, was according to Cheif Financial Officer Ed Bastain (again a link to the article here). And from the article, this seems to me to be the only major asset Delta could consider leveraging up and making some bank off of. It begs the question, will this really help long term?

All in all I believe the Delta Air Lines come back should be scrutinized and tested until proven successful. I will give the company 6 months to a year on this one, but as of now I am not convinced a turn around is in the future! We’ll see what happens here in April!