Pilots at Delta Air Lines told of falling cash reserves

Airline Industry Information, August 22, 2005

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The pilots' union of Atlanta-based Delta Air Lines Inc has been advised by the airline that it may be forced to revise the agreement both parties reached in 2004 to avoid a bankruptcy filing. The warning comes in view of the airline's falling cash reserves, due in part to the increase in fuel costs.

The agreement reached last year by the union and the airline included USD1bn in annual pilot concessions, along with a bankruptcy protection letter from the airline stating that it would not seek more concessions unless its cash level fell below a certain point.

The airline revealed on Friday (19 August) that its cash level has fallen below that point, although the threshold level has yet to be specified.

The company had USD1.7bn in unrestricted cash at the end of the second quarter and analysts consider USD1.5bn to be approximately the threshold at which an airline is in danger of bankruptcy, said The Associated Press.

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