Since the September 11th terrorist attacks, the airline industry has struggled to make notable financial headway. Many of the top carriers in the United States have fallen into bankruptcy or proposed mergers with regional carriers as a means to reduce losses (Fiorino, 2005). Regardless of the specific path chosen for financial development, most of the top airlines have had to live with notable changes to their culture and development. Such is the case with Delta Airlines. Although research clearly shows that Delta Airlines has been able to make strong financial gains while under bankruptcy protection, the tenuous nature of the airline industry, coupled with increases in fuel costs and notable labor problems in the organization have created a situation in which Delta Airlines is currently on the brink of financial collapse (Shields, 2005).
[...] Although Delta Airlines has been a successful airline in the past, it is evident that the organization has not modernized significantly to make it a viable business venture for the future. In addition, it is also evident that even if the organization were to make significant changes that would modernize the business model utilized, there are currently too many competitors in the market for Delta Airlines to be competitive. As such, it is evident that the best possible choice in this case is for management to consider the dissolution of the organization. [...]
[...] As noted by this research, “Delta has significant overlap with low-cost competitors were weak in its most important domestic markets; it is estimated that AirTran at Atlanta, Southwest at Salt Lake City, and JetBlue in Delta's nonhub markets, have on average a 35% unit cost advantage” (p. 6). With such notable differences in prices offered from airlines at the same hub, it is not surprising to find that Delta Airlines could not effectively compete for a significant market share. Unless the organization makes notable changes to its current organizational structure, it is clear that Delta Airlines will not remain a viable competitor in the airline industry. [...]
[...] While this process may indeed enable the organization to compete with low-cost carriers, it will take a number of years before Delta Airlines will be able to perfect a system that has already been perfected by other airlines. As such, there are considerable risks involved with this specific alternative. In addition, in order for Delta Airlines to emerge from bankruptcy and develop a new business model significant capital will be needed to complete this process. Without new investment in the organization Delta will be on able to effectively develop and implement a new business model. For these reasons, the decision to sell the organization is the best solution in this case. [...]
[...] The legacy airlines—United, Northwest, Delta, Continental, American, and US Airways—pay more to fly their planes than less venerable companies like JetBlue and Southwest” (Why do Engber further notes that many older airlines such as Delta have older workforces that demand premium pay. As a direct result of these pressures, older airlines such as Delta are not able to keep pace in the current market. Current data on the position of Delta in the airline industry demonstrates that Delta is not in a position to overcome its challengers. [...]
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