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Cracker Squire

THE MUSINGS OF A TRADITIONAL SOUTHERN DEMOCRAT

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Location: Douglas, Coffee Co., The Other Georgia, United States

Sid in his law office where he sits when meeting with clients. Observant eyes will notice the statuette of one of Sid's favorite Democrats.

Thursday, August 12, 2004

Delta Dawn, what's that flower you have on? Could it be a faded rose from days gone by?

8-12-04 wsj headline: "Swooping In. How Discount Airlines Profited From Their Bigger Rivals' Woes; Amid Crisis, Smaller PlayersPicked Up Pilots, Planes From Struggling Giants." Excepts from the wsj article:

"In 1999, AirTran Airways had 46 planes, with an average age of 26 years. Today, it has 76 planes, and their average age is less than three years.

The discount airline has an industrywide depression to thank for that."

"When the big carriers furloughed workers, discounters hired. As struggling airlines abandoned gates, upstarts grabbed the chance for a beachhead at airports never open to them before. And as the biggest airlines canceled aircraft purchases, the discount carriers cut sweet deals to take new planes."

"''We've got cash. We've got liquidity,' says JetBlue's chief financial officer."

"'Conventional wisdom used to be that high oil prices hurt discounters more' because of their low fares, says Dan Kasper, an aviation economist at consulting firm LECG Corp. 'In a perverse twist of fate, the low-cost carriers are doing so much better because they are better hedged.'"

"Now, AirTran isn't shying away from even bigger, and riskier, opportunities. The carrier has staked out some turf in Philadelphia, waiting to see what happens with struggling US Airways. And it has expanded into Dallas-Fort Worth International Airport, creating a mini-hub with flights to six cities. American dominates in Dallas, but Delta also has a hub there it is currently reviewing for possible cuts. AirTran says it went into Dallas independent of Delta's actions but is watching very closely what Delta does.

'We're not counting on something bad happening to someone else,' [AirTran's chairman and chief executive Joe] Leonard says. 'But if something bad happens to someone else, that's all the better.' Mr. Leonard says. 'But if something bad happens to someone else, that's all the better.'" Page two.
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I assume such recent articles in the wsj and the ajc's recent articles concerning Delta and other airlines has caused the Dean of Journalism to try to scare us a bit by writing about a possible Chapter 11 bankruptcy filing by Delta.

The following are excepts of Bill Shipp's column that will appear next week in many newspapers across the state entitled:

If Delta falters, Georgia's economy would take a nose dive

The possible demise or even drastic downsizing of Delta Air Lines . . . would shatter Hartsfield-Jackson Airport and create an economic earthquake that would ripple in every corner of the state.

Georgians, especially metro Atlanta residents, take for granted Delta's nearly 1,000 non-stop flights launched from Atlanta each day to every market in the country. We don't stop to think Delta's use of Atlanta as a hub creates two-thirds of that Atlanta traffic. Hartsfield-Jackson's hustle and bustle are not generated by a huge local demand for air passenger service.

Atlanta's availability of air transport to any place at any time has been marketed skillfully for years. To this day, convenient air travel is most often mentioned as a reason for a company's decision to relocate to the Atlanta region. Our continuing economic progress, not only as a city but as a state, owes much of its economic progress to the aging Atlanta hub.

The prosperity created by Hartsfield airport and its big airline clients has lifted more Georgians out of poverty than all the combined governmental programs in the state's history.

Trace Atlanta's development. At all stages, you will find one constant: We are a transportation center. We have built a brave and beautiful capital city around this bedrock strength, a foundation block that is now at risk.

If the Hartsfield hub falls flat , Georgia's once high-flying economy will be languishing on the tarmac - and the draft to get it airborne again will be a long time in coming.
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OK, so I fibbed a few days, actually several months' worth. This is not Bill Shipp's column for next week. He wrote these words months ago, along with the following:

Georgia faces tough economic times in the immediate future. Too bad some of our elected leaders and even our top commercial execs are too busy studying other matters (indigent defense, gay weddings, futuristic streetcars, etc.) to warn us - or to help construct safety nets to break our fall when one or both of the following economic catastrophes strike.

''Delta is going through some tough times, but it will be OK,'' some business leaders tell us. ''And Hartsfield is growing by leaps and bounds. Just look at that new $1.3 billion fifth runway and all the traffic it will be able to handle.''

Dream on.

Not one of our supposedly all-knowing leaders dares list publicly the collapse of Delta as a shattering possibility that would drive a stake into the heart of Atlanta's economy. A barely used fifth runway could become a billion-dollar reminder of what might have been.

Delta's long-term prospects for avoiding bankruptcy reorganization are not encouraging.

Trace Atlanta's development. At all stages, you will find one constant: We are a transportation center. We have built a brave and beautiful capital city around this bedrock strength, a foundation block that is now at risk. No responsible public official seems to understand or dare move to preserve the most essential element in metro Atlanta's economic vitality.
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Bill Shipp has, among other traits, two unique abilities that make him the Dean of Georgia Politics. One is to be able to put the present into its proper historical perspective.

The other, as a student of Georgia history, is to be able gaze into the future and pontificate of what might be. When Bill Shipp speaks, Georgia damn better listen.

2 Comments:

Anonymous Anonymous said...

Sid, will the potential Chapter 11 mean closure for Delta or mere restructuring with no impact on jobs??? What, if anything, can Purdue do about it?

6:10 PM  
Blogger Sid Cottingham said...

A Chapter 11 will void the labor contracts with the union employees, most importantly, the pilots. Continental was the first airline to use Chapter 11 for the limited purpose years ago. It was a dern successful move, but Delta has gotten itself into worst shape than Continental was at the time.

11:43 PM  

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