Delta Bankruptcy Commentary

September 21, 2005 by Matt McCracken

From a financial advisor’s perspective, the bankruptcy of DAL is just another ding in the armor of the American economy. Airline bankruptcy is certainly nothing new. Don’t we go threw this every couple of decades. When my dad joined Delta; Pan Am, Eastern, TWA and Braniff were the dominant airlines. I remember a close friend our ours ribbing my dad because he worked for “lowly” Delta and couldn’t get a job at Braniff. Similarly, my dad has friends who were shunned by the majors so they had to resort to flying for Southwest.

The lesson to be learned is important. For what ever reason, we refuse to learn from our mistakes. Someday, I’ll be watching the ticker LUV careen down to pennies. Count on it.

As for my clients who retired from Delta, It’s too early to tell exactly what the ramifications will be. I’ve heard countless rumors and I don’t want to speculate on their validity. I will certainly keep you updated. For the time being, we need to stay the course. We’ve been heavily overweighted towards energy commodities which will significantly offset some of the losses you’ll experience in your pension. As I’ve discussed with you in person, energy prices should continue upward as long as our economy doesn’t slip into a recession. At that time, we could see consolidation. Any surprises in the energy market will likely be to the upside. I’ll keep you posted on any news I hear. More Reading: