Northwest and Delta file for bankruptcy

NEW YORK - Delta Air Lines and Northwest Airlines, the third and fourth-largest US air carriers, both declared bankruptcy yesterday as the industry's struggle with soaring oil prices and low-cost competition led to one of its darkest days.

With the filings, both made in US bankruptcy court in the Southern District of New York, four of the seven largest airlines in the United States are now operating under Chapter 11 federal bankruptcy protection from their creditors.

Both airlines will probably use bankruptcy to slash labour and pension costs, following in the footsteps of No 2 US carrier United Airlines, the main unit of UAL Corp and No 7 rival, US Airways.

With respective assets of US$21.6 billion ($31 billion) and US$14.4 billion, Delta and Northwest became the second and third-largest US airline bankruptcies ever.

Delta's is the ninth-largest US bankruptcy ever.

The filings could put added pressure on other carriers including leader AMR Corp, parent of American Airlines, by putting them at a disadvantage as their bankrupt rivals shed costs and ditch pensions, analysts said.

But other airlines could benefit if Delta and others cut back on domestic routes, getting rid of overcapacity that has made the US airline sector the most troubled worldwide.

- REUTERS