http://www.enquirer.com/editions/2004/08/25/biz_biz1adelta.html
Wednesday, August 25, 2004
[font=aria,helvetica]Fund bans Delta stock[/font] [font=arial,helvetica]SimpliFares launch amid financial trouble [/font]
By James Pilcher
Enquirer staff writer
In yet another sign of Delta Air Lines' continuing economic troubles, the airline's own employees have been barred from investing in the company by the firm managing its employee stock fund.
U.S. Trust Co., the company overseeing the Atlanta-based airline's employee stock ownership program, had advised Delta workers in an Aug. 9 letter to seek other investment opportunities because of "the widely recognized possibility of bankruptcy if Delta were to fail in its restructuring efforts."
The restrictions went into place Friday.
Delta's stock closed at $4.26 Tuesday, up 7 cents, or 1.7 percent.
It has lost nearly two-thirds of its value in the last 12 months.
http://www.enquirer.com/editions/2004/08/25/delta.jpg
[font=verdana,arial,helvetica]Trunote Presents employees ride pedal-powered four-wheelers hitched to billboards advertising Delta's new SimpliFares around Fountain Square.
(Enquirer photo/MEGGAN BOOKER)
The stock would be delisted and be essentially worthless if Delta were to seek Chapter 11 protection.
Delta officials warn that bankruptcy is inevitable if they can't cut costs drastically in the "near term."
The airline has lost more than $5 billion since the 9/11 attacks, including $1.96 billion in the second quarter of this year.
Delta operates its second-largest hub at the Cincinnati/Northern Kentucky International Airport. It employs more than 8,000 here, including workers at Erlanger-based subsidiary Comair.
Delta's more than 70,000 workers owned nearly 7.2 million shares of the company's common stock at the end of 2003, according to documents filed with the Securities and Exchange Commission. At that time, the shares were worth about $84.5 million. Now, those shares are worth $30.5 million.
Comair has its own plan, and it also includes a Delta stock program as one of many investment options. But no such letter has gone to Comair's 6,000 workers, according to officials with that airline.
At the end of 2003, Comair workers owned about 1 million shares of their parent company's stock worth $12.4 million - those shares are worth $4.26 million now.
Delta is trying to get $1 billion in annual cost cuts from its 7,500-member pilot union (including more than 800 locally based pilots) and cut another $1 billion out of its non-pilot costs. It also is expected to launch a massive turnaround plan over the coming weeks.
This summer, Delta hired U.S. Trust to manage the 401(k) fund, which was worth more than $4.5 billion at the end of 2003.
The letter advised workers to review their portfolios and "consider whether that level of investment (or any level of investment) continues to be appropriate."
The letter went on to say that the Delta stock fund is normally the highest-risk fund offered, "but the risk is even greater in light of Delta's financial difficulties."
U.S. Trust officials did not return phone calls seeking comment Tuesday.
Delta officials would not comment on the letter, saying only that U.S. Trust was hired to avoid any possibility of a conflict of interest.
U.S. Trust made similar comments to employees at American Airlines last year when that carrier flirted with bankruptcy and the firm was managing the airline's fund.
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E-mail [email protected]
[/font]
Wednesday, August 25, 2004
[font=aria,helvetica]Fund bans Delta stock[/font] [font=arial,helvetica]SimpliFares launch amid financial trouble [/font]
By James Pilcher
Enquirer staff writer
In yet another sign of Delta Air Lines' continuing economic troubles, the airline's own employees have been barred from investing in the company by the firm managing its employee stock fund.
U.S. Trust Co., the company overseeing the Atlanta-based airline's employee stock ownership program, had advised Delta workers in an Aug. 9 letter to seek other investment opportunities because of "the widely recognized possibility of bankruptcy if Delta were to fail in its restructuring efforts."
The restrictions went into place Friday.
Delta's stock closed at $4.26 Tuesday, up 7 cents, or 1.7 percent.
It has lost nearly two-thirds of its value in the last 12 months.
http://www.enquirer.com/editions/2004/08/25/delta.jpg
[font=verdana,arial,helvetica]Trunote Presents employees ride pedal-powered four-wheelers hitched to billboards advertising Delta's new SimpliFares around Fountain Square.
(Enquirer photo/MEGGAN BOOKER)
The stock would be delisted and be essentially worthless if Delta were to seek Chapter 11 protection.
Delta officials warn that bankruptcy is inevitable if they can't cut costs drastically in the "near term."
The airline has lost more than $5 billion since the 9/11 attacks, including $1.96 billion in the second quarter of this year.
Delta operates its second-largest hub at the Cincinnati/Northern Kentucky International Airport. It employs more than 8,000 here, including workers at Erlanger-based subsidiary Comair.
Delta's more than 70,000 workers owned nearly 7.2 million shares of the company's common stock at the end of 2003, according to documents filed with the Securities and Exchange Commission. At that time, the shares were worth about $84.5 million. Now, those shares are worth $30.5 million.
Comair has its own plan, and it also includes a Delta stock program as one of many investment options. But no such letter has gone to Comair's 6,000 workers, according to officials with that airline.
At the end of 2003, Comair workers owned about 1 million shares of their parent company's stock worth $12.4 million - those shares are worth $4.26 million now.
Delta is trying to get $1 billion in annual cost cuts from its 7,500-member pilot union (including more than 800 locally based pilots) and cut another $1 billion out of its non-pilot costs. It also is expected to launch a massive turnaround plan over the coming weeks.
This summer, Delta hired U.S. Trust to manage the 401(k) fund, which was worth more than $4.5 billion at the end of 2003.
The letter advised workers to review their portfolios and "consider whether that level of investment (or any level of investment) continues to be appropriate."
The letter went on to say that the Delta stock fund is normally the highest-risk fund offered, "but the risk is even greater in light of Delta's financial difficulties."
U.S. Trust officials did not return phone calls seeking comment Tuesday.
Delta officials would not comment on the letter, saying only that U.S. Trust was hired to avoid any possibility of a conflict of interest.
U.S. Trust made similar comments to employees at American Airlines last year when that carrier flirted with bankruptcy and the firm was managing the airline's fund.
---
E-mail [email protected]
[/font]
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