Turmoil In The Airline Industry
By Joyce Moed, Reporter

ATLANTA–In recent weeks four airlines have closed its doors–ATA Airlines, Skybus, Frontier Airlines and Aloha Airlines. And Northwest Airlines and Delta Air Lines are proposing a merge.
Turmoil in the airline industry is a subject close to home for the credit union world, which has experienced many changes since 9/11–perhaps when the airlines', and in some cases airlines' CUs, troubles began. After 9/11, several major carriers, including Continental, United, Northwest and America West Airlines forced them to cut a combined 56,000 employees. Boeing had to lay off 20% to 30% of its workforce–about 30,000 employees. Continental was forced to lay off 12,000 employees. America West was forced to lay off 14,000 of its employees.

Perhaps the one saving grace took place in 2003, when the National Credit Union Association OK'd major changes to FOM rules, by allowed federally chartered credit unions to serve an entire trade, industry or profession within a defined geographic area. Then credit unions adopting the new charter, known by its acronym TIP, would be able to serve all hospital workers in New York City, or all airline employees in Miami, or all lawyers in Chicago.

But news for credit unions serving airlines didn't come to a halt then. In 2003, Northwest Airlines severed relations with NWA FCU, after the credit union refused to pay millions to the airline it felt it rightfully deserved due to the credit union's profits. Other credit unions changed its names or became community-chartered. Some sadly were forced to declare bankruptcy.

And last year, the board of Continental FCU rejected an acquisition from Wings Financial FCU, which set the stage for a battle over credit unions' first hostile takeover fight.

And the newest developments of the four new credit union closings may make some people wonder what new developments this will bring for the credit unions that serve these airlines.
Delta Community CU became a community CU in 2005, and since then has served residents of 10 Georgia counties and employees of about 125 companies.

Despite the merger between Northwest Airlines and Delta Air Lines, Delta Community CU says it has no plans to merge with any credit union at present, and is focusing solely on continuing its expansion within the Georgia counties recognized as metro-Atlanta.

The National Credit Union Association is also not aware of any discussion regarding a merging between the credit unions.

"Wings Financial is a federal chartered credit union while Delta Community is a state-chartered institution," said Cherie Umbel, NCUA public and congressional affairs. "NCUA has no information of a potential merger nor a merger application pending. Wings Financial FCU currently has a diverse TIP charter and is able to serve others within the airline industry."

If any of Delta Community Credit Union's members are affected by airlines having to layoff its employees, the CU said it is prepared to help.

"We have a program available to all of our members whose income and/or employment status has been adversely affected as a result of an involuntary furlough, job change, voluntary leave of absence, severance or early retirement program," said Mary Olson, vice president of marketing for Delta Community CU. "These members may be eligible for deferral of loan payments through our member-assistance program. Once they qualify–excluding Visa, first and second mortgage loans–payments may be deferred for a specific period of time."

Aloha Airlines Federal Credit Union in Honolulu is also planning on being able to help any of its members who may need assistance as a result of Aloha Airlines closing.

"We're offering our members who may have been affected an assistance package," said Doug Machino, spokesperson of the 4,500-member credit union. "We are also lifting early penalties."
So far, Machino said the credit union has not received an alarming amount of calls from concerned members.