Comair crash could complicate Delta’s bankruptcy battle

Jeff Bailey writes in today’s New York Times (registration required) that Sunday’s tragic crash of Comair flight 5191 could “complicate the efforts of … Delta Air Lines … to emerge from bankruptcy,” but the complications are not likely to cause direct financial troubles because of large insurance policies that protect airlines like Delta in the event of such crashes.

Instead, says Bailey, “The main business risk [of a crash] is to a company’s reputation.” In Delta’s case, the secondary risk is the further complication of troubles with Comair, the regional carrier that suffered the crash and whose employees have been less accommodating in meeting Delta’s cost-cutting measures than the airline’s own unions.

“In light of the crash,” writes Bailey, “Comair’s management will be busy helping federal investigators and … may be less immediately concerned with Delta’s labor issues.”

Delta, which hopes to emerge from bankruptcy protection in 2007, said earlier this month that it would look to other carriers to operate flights run by Comair as a way to reduce costs. Delta uses regional carriers in part to bring travelers to its major international hubs, and has modeled its bankruptcy plan largely around less-competitive international routes.