Abstract

Delta Air Lines was the third biggest airlines in the US in the early 2000s. After the September 11 attacks, which led to the decline of the airline industry in the US, many of the major carriers in the industry went bankrupt. Delta was one of the few major carriers that managed to stay afloat. However, in mid 2004, the airline announced that it might have to file for bankruptcy protection if it failed to obtain pay cuts of $1 billion from its pilots, who were the only unionized employees at the airline. The case discusses the problems at Delta and their role in the financial decline of the airline. Issues like the pilot union impasse, increasing operational expenses and legacy costs, falling yields and severe competition from low cost airlines are discussed in detail. The case also outlines the restructuring plan of Delta, and the future of Song, the airline's low cost subsidiary.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

• The issues facing airlines in the early 2000s
• The power of unionized labor in the US airline industry
• The increasing power of low cost airlines in the US and the sources of their competitive advantage.

Keywords

Case, Delta Airlines, Chapter 11 Filing, Hub and Spoke Model, JetBlue, AirTran SkyTeam, 'Song', Legacy Costs, Delta Pilot Retirement Plan, Point-to-Point Flying, Organizational Culture, US Airline Industry, United Airlines, US Airways, 'The Delta Solution'