Katrina Could Bankrupt Three Airlines

In addition to the deaths and property damage caused by Hurricane Katrina, it may be the final blow to sruggling airlines Delta, Northwest, and Independence.

Katrina Forces More Flight Cancellations (AP)

Katrina forced scores more flight cancellations involving New Orleans and other Southern cities Tuesday as airlines juggled their schedules around one of the worst storms on record.

Hurricane-related disruptions also continued to have an impact far more worrisome for U.S. carriers than added costs and lost revenue from the flight turmoil: oil prices that spiked to record highs over $70.

“Overall the storm will hurt, but it’s certainly not the same as the impact of rising oil prices,” said Philip Baggaley, airline analyst for Standard & Poor’s Corp. Any further significant increase, he said, will have “a large effect.”

Those consequences include potentially pushing Delta Air Lines Inc., Northwest Airlines Corp. and Independence Air operator FLYi Inc. into bankruptcy as well as stymieing the efforts of United Airlines parent UAL Corp. and US Airways Group Inc. to emerge from Chapter 11 successfully.

“Today’s jet fuel prices are crushing and could prove to be a knockout blow for some,” said economist John Heimlich in a report for the Air Transport Association, an industry association for U.S. carriers.

For the short term, airlines were scrambling to rearrange flights within the limitations set by Katrina’s devastating path and airport closures. The Federal Aviation Administration said two commercial airports remained closed — in New Orleans and Gulfport, Miss. — with storm-related delays reported at Atlanta’s Hartsfield International Airport.

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James Joyner
About James Joyner
James Joyner is Professor and Department Head of Security Studies at Marine Corps University's Command and Staff College. He's a former Army officer and Desert Storm veteran. Views expressed here are his own. Follow James on Twitter @DrJJoyner.