enigma
good ol boy
- Joined
- Nov 26, 2001
- Posts
- 2,279
Note: I added the the colored fonts as highlites.
http://www.detnews.com/2004/business/0410/14/b03-303177.htm
Debt mars Delta's recovery
Huge interest payments dwarf savings airline seeks from pilot wage concessions.
By Harry R. Weber / Associated Press
ATLANTA - While much of the public focus surrounding Delta Air Lines Inc.'s turnaround efforts has been on the need for pilot concessions, some analysts believe the carrier's massive debt is a bigger challenge and the one more difficult to resolve outside of bankruptcy.
The nation's third-largest carrier paid $757 million in interest on its debt last year, a figure that has increased more than 50 percent since 2001, regulatory filings show. At that rate, the $1 billion in annual savings Delta hopes to achieve by 2006 from pilot wage and other concessions would be eclipsed by the company's yearly interest payments.
The airline's effort to restructure its debt could soon become clearer. Today is the deadline for a recent debt exchange offer. And next Wednesday, Delta reports its third-quarter earnings, which are expected to provide updates on its debt and available cash.
"In my opinion, they're going to get the concessions; I've got a couple of steak dinners bet on that," said Ray Neidl, an airline analyst with Calyon Securities Inc. in New York. "I think the more difficult thing is going to be restructuring the debt."
The Atlanta-based airline considers its total debt to be $20.6 billion, which includes $8 billion in noncancelable lease obligations on aircraft and other equipment. Interest on its debt was $499 million in 2001 and $665 million in 2002. Through the first six months of this year, Delta had accrued $391 million in interest on its debt, records show.
Delta's scheduled debt maturities on the principal it owes are $230 million for the six months ending Dec. 31, and $1.2 billion for all of 2005, records show. Meanwhile, as of June 30, Delta had only $2 billion in unrestricted free cash, which it has been burning at a rate of $4 million a day.
Its earnings release next week will show how much cash it had as of Sept. 30, which could help determine if it needs to file for Chapter 11.
"If the cash is down to $1.5 billion, I think time has run out," Neidl said.
Delta could stem the increase in its debt and pay off existing debt if it can cut other expenses, like pilot costs, said Joel Denney, an analyst for Piper Jaffray & Co. in Minneapolis.
End
The last paragraph pretty well sums up the general attitude, and frustrates me to no end. The writer spends the whole article, detailing problems which have nothing to do with pilot wages, but ends up with the conclusion that cutting pilot costs is the solution. Dirty barsards.
enigma
http://www.detnews.com/2004/business/0410/14/b03-303177.htm
Debt mars Delta's recovery
Huge interest payments dwarf savings airline seeks from pilot wage concessions.
By Harry R. Weber / Associated Press
ATLANTA - While much of the public focus surrounding Delta Air Lines Inc.'s turnaround efforts has been on the need for pilot concessions, some analysts believe the carrier's massive debt is a bigger challenge and the one more difficult to resolve outside of bankruptcy.
The nation's third-largest carrier paid $757 million in interest on its debt last year, a figure that has increased more than 50 percent since 2001, regulatory filings show. At that rate, the $1 billion in annual savings Delta hopes to achieve by 2006 from pilot wage and other concessions would be eclipsed by the company's yearly interest payments.
The airline's effort to restructure its debt could soon become clearer. Today is the deadline for a recent debt exchange offer. And next Wednesday, Delta reports its third-quarter earnings, which are expected to provide updates on its debt and available cash.
"In my opinion, they're going to get the concessions; I've got a couple of steak dinners bet on that," said Ray Neidl, an airline analyst with Calyon Securities Inc. in New York. "I think the more difficult thing is going to be restructuring the debt."
The Atlanta-based airline considers its total debt to be $20.6 billion, which includes $8 billion in noncancelable lease obligations on aircraft and other equipment. Interest on its debt was $499 million in 2001 and $665 million in 2002. Through the first six months of this year, Delta had accrued $391 million in interest on its debt, records show.
Delta's scheduled debt maturities on the principal it owes are $230 million for the six months ending Dec. 31, and $1.2 billion for all of 2005, records show. Meanwhile, as of June 30, Delta had only $2 billion in unrestricted free cash, which it has been burning at a rate of $4 million a day.
Its earnings release next week will show how much cash it had as of Sept. 30, which could help determine if it needs to file for Chapter 11.
"If the cash is down to $1.5 billion, I think time has run out," Neidl said.
Delta could stem the increase in its debt and pay off existing debt if it can cut other expenses, like pilot costs, said Joel Denney, an analyst for Piper Jaffray & Co. in Minneapolis.
End
The last paragraph pretty well sums up the general attitude, and frustrates me to no end. The writer spends the whole article, detailing problems which have nothing to do with pilot wages, but ends up with the conclusion that cutting pilot costs is the solution. Dirty barsards.
enigma
