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US Delta, Northwest file for bankruptcy
Updated: 2005-09-15 07:14

NEW YORK - Delta Air Lines Inc. and Northwest Airlines, the third- and fourth-largest U.S. air carriers, both declared bankruptcy on Wednesday as the industry's struggle with soaring oil prices and low-cost competition came to a dramatic head. Reuters reported.

US Delta, Northwest file for bankruptcy
A tarmac aircraft director motions for a Northwest Airlines jet to leave a gate at a Northwest wing of the Minneapolis-St. Paul International Airport in St. Paul, Minnesota, September 14, 2005. [Reuters]
With the filings, both made in U.S. bankruptcy court in the Southern District of New York, four of the seven largest airlines in the United States are now operating under Chapter 11 federal bankruptcy protection from their creditors.

Both airlines would likely use bankruptcy to slash labor and pension costs, following in the footsteps of No. 2 U.S. carrier United Airlines, the main unit of UAL Corp.

The bankruptcies could put added pressure on other carriers including industry leader AMR Corp., parent of American Airlines, by putting them at a competitive disadvantage as their bankrupt rivals shed costs and ditch pensions, analysts said.

On the other hand, other airlines could benefit if Delta and others cut back on domestic routes, getting rid of overcapacity that has made the U.S. airline sector the most troubled worldwide.

"The action we have taken is a necessary and responsible step to preserve Delta's value for our creditors, customers, employees, business partners and other stakeholders," said Delta Chief Executive Gerald Grinstein in a release. "Delta is open for business as usual and will continue normal operations throughout the reorganization process."

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