Northwest and Delta File for Bankruptcy

Delta and Northwest both filed for bankruptcy this afternoon after market close.

Both were expected to file in advance of bankruptcy law changes going into effect October 17th.

Northwest did not receive any debtor-in-possession financing commitments, instead opting to operate with its existing $1.5 billion in cash.

Delta received commitments of up to $1.7 billion in debtor-in-possession financing from GE Commercial Finance and Morgan Stanley and has received a separate commitment of another $350 million from American Express. Amex prepaid the purchase of half a billion Skymiles last year to infuse cash into the airline. One requirement of those funds was that as a first act Delta ask the bankruptcy court to reaffirm the airline’s frequent flyer program liabilities.

I don’t expect immediate changes to either airline’s frequent flyer program. If anything I’d anticipate more mileage bonuses — it’s cheap currency to print and might lure customers who would otherwise book away.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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