Delta Air Lines Inc. (DAL)

As of 2008, Delta's fleet ranked as the third-oldest in the airline industry and Northwest's fleet topped the age charts at an average age of 18.5 years. As part of the merger, the new Delta plans to cut costs by retiring the oldest planes of the two fleets. However, the combined carrier's new fleet will prove costly in the near future because of higher future maintenance needs.

Delta has stated that it underfunded its pension in 2008; this means that it will have put more cash into them throughout 2009 unless the market makes a big turnaround.^[1] After posting huge losses in 2008,^[2] Delta cannot afford to make big nonoperating payouts like this.

Furthermore, the company could spend up to $50 million in 2009 on its employee buyout program.^[3] Instead of simply laying off its employees as demand shrivels, DAL will pay its employees to retire early, leaving it with even more overwhelming one-time costs in the midst of economic turmoil.

As Delta and many other legacy carriers cut capacity by reducing flight frequency and destinations served, low-cost airlines like JetBlue and Southwest are actually expanding. For example, in 2008 Southwest announced plans to expand service to Minneapolis, New York City (La Guardia), Mexico, and Canada. Expansion to these new destinations, particularly Minneapolis (NWA's current hub), threatens Delta's profits as these low-cost airlines will force Delta to lower its prices to compete.

Their passenger service has greatly deteriorated. They have gone from number one in the industry which their reputation was founded on. FROM "WE LOVE TO FLY AND IT SHOWS" TO LET ME CHARGE FOR YOUR CHECKED BAGGAGE AND IF YOU ARE STANDING BY FOR AND EARLIER FLIGHT THAT HAS OPEN SEATS ON IT WE ARE GOING TO LET THE FLIGHT LEAVE WITH THE EMPTY SEAT UNLESS YOU PAY $50. THIS IS NOT THE OLD GLORIOUS DELTA OF THE PAST.

In 2007, Delta's Cost per Available Seat Mile (CASM), was the second-highest in the airline industry, reaching 11.9 cents per ASM. In contrast, low-cost carriers like Southwest operated at an average 10 cents per ASM. Furthermore, Delta paid an average $2.24 per gallon of fuel in 2007, the highest in the airline industry. Because of these higher costs, Delta must havfe a higher load capacity in order to stay profitable.