Problems at Delta Airlines
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Case Code: BSTR135 Case Length: 18 Pages Period: 2001 - 2004 Pub Date: 2004 Teaching Note: Available |
Price: Rs.500 Organization: Delta Airlines Industry: Airlines Countries: USA Themes: Organizational Culture |
Abstract Case Intro 1 Case Intro 2 Excerpts
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.
Issues
The case is structured to achieve the following teaching objectives:
- To appreciate the issues facing airlines in the early 2000s, which were thought to be the most difficult years in the history of airlines
- To analyze the problems facing a major full service carrier in the US airline industry
- To understand the power of unionized labor in the US airline industry
- To study the increasing power of low cost airlines in the US and the sources of their competitive advantage
- To examine the restructuring plan of an airline on the verge of bankruptcy and to analyze its potential efficacy in restoring the airline to profitability
Contents
Keywords
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
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