General Lee
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Delta's Lenders Establish a Committee
By EVAN PEREZ
Staff Reporter of THE WALL STREET JOURNAL
June 29, 2004; Page B7
Delta Air Lines Inc. creditors, taking another step to protect their interests and prepare for a possible bankruptcy-court filing, formed a committee to pursue restructuring talks with the third-largest U.S. airline.
The committee includes Delta debtholders, vendors and its pilots union, which has been in slow-moving wage-cut talks with the airline for a year, said Jonathan Rosenthal, partner at Saybrook Capital LLC, an investment company hired as financial adviser to the committee.
The formation of the committee had been expected and doesn't signal that Delta is any closer to filing for bankruptcy protection. Creditors began discussing forming such a committee last month, when Delta began more openly raising the possibility of a filing if it couldn't get a deal with its pilots union to lower its costs.
"Everyone recognizes that an out-of-court restructuring is very challenging," Mr. Rosenthal said. "But it doesn't mean we shouldn't try."
The committee plans to ask Delta for access to company information in order to determine Delta's restructuring needs. Delta hasn't signaled whether it will recognize the committee, Mr. Rosenthal said.
A spokeswoman for Atlanta-based Delta said the company had no immediate comment because it has no relationship with Saybrook.
With airfares low and oil prices high, Delta has posted more than $3.6 billion in losses dating back to 2001. The airline is under pressure to reduce costs to compete with lower-cost carriers and with its major-airline peers, most of which have lower operating costs. AMR Corp.'s American Airlines and UAL Corp.'s United Airlines, Delta's larger rivals, have lowered their labor costs, using bankruptcy-court protection or the threat of it.
The committee includes about 30 to 40 creditors and represents a "balanced group," including secured and unsecured creditors, Mr. Rosenthal said. He declined to say how much of Delta's more than $20 billion debt they represented. A steering committee of as many as 10 creditors includes a representative of the Air Line Pilots Association Delta unit.
Delta is seeking more than $800 million a year in concessions from the pilots, its only major union. The union is preparing a new concessions offer in the next few weeks. Its most recent offer was valued at more than $300 million a year.
Karen Miller, a spokeswoman for the union, said the two sides haven't scheduled a new negotiating session. She said the union agreed to sit on the creditors committee in order to talk to other parties involved in Delta's restructuring.
"We're still trying to do our part, but it has to be contingent upon contribution from other constituencies," she said. "Labor costs alone are not going to solve the problem."
I think that is smart, and of course--Dalpa is in there trying to help....
Bye Bye--General Lee
By EVAN PEREZ
Staff Reporter of THE WALL STREET JOURNAL
June 29, 2004; Page B7
Delta Air Lines Inc. creditors, taking another step to protect their interests and prepare for a possible bankruptcy-court filing, formed a committee to pursue restructuring talks with the third-largest U.S. airline.
The committee includes Delta debtholders, vendors and its pilots union, which has been in slow-moving wage-cut talks with the airline for a year, said Jonathan Rosenthal, partner at Saybrook Capital LLC, an investment company hired as financial adviser to the committee.
The formation of the committee had been expected and doesn't signal that Delta is any closer to filing for bankruptcy protection. Creditors began discussing forming such a committee last month, when Delta began more openly raising the possibility of a filing if it couldn't get a deal with its pilots union to lower its costs.
"Everyone recognizes that an out-of-court restructuring is very challenging," Mr. Rosenthal said. "But it doesn't mean we shouldn't try."
The committee plans to ask Delta for access to company information in order to determine Delta's restructuring needs. Delta hasn't signaled whether it will recognize the committee, Mr. Rosenthal said.
A spokeswoman for Atlanta-based Delta said the company had no immediate comment because it has no relationship with Saybrook.
With airfares low and oil prices high, Delta has posted more than $3.6 billion in losses dating back to 2001. The airline is under pressure to reduce costs to compete with lower-cost carriers and with its major-airline peers, most of which have lower operating costs. AMR Corp.'s American Airlines and UAL Corp.'s United Airlines, Delta's larger rivals, have lowered their labor costs, using bankruptcy-court protection or the threat of it.
The committee includes about 30 to 40 creditors and represents a "balanced group," including secured and unsecured creditors, Mr. Rosenthal said. He declined to say how much of Delta's more than $20 billion debt they represented. A steering committee of as many as 10 creditors includes a representative of the Air Line Pilots Association Delta unit.
Delta is seeking more than $800 million a year in concessions from the pilots, its only major union. The union is preparing a new concessions offer in the next few weeks. Its most recent offer was valued at more than $300 million a year.
Karen Miller, a spokeswoman for the union, said the two sides haven't scheduled a new negotiating session. She said the union agreed to sit on the creditors committee in order to talk to other parties involved in Delta's restructuring.
"We're still trying to do our part, but it has to be contingent upon contribution from other constituencies," she said. "Labor costs alone are not going to solve the problem."
I think that is smart, and of course--Dalpa is in there trying to help....
Bye Bye--General Lee
